1)Evaluate the findings of the authors in regards to changes in the design, implementation, and
effectiveness of performance management systems since earlier studies were conducted.
2)Analyse the claims of the authors in relation to the level of satisfaction, the training of users, and the
involvement of employees with performance management systems.
3)Support your argument with evidence from the study and other real examples where possible.
Performance management serves the purpose of decision making while developing the skills of
employees. Developing and managing human capital involves making decisions on pay
increases, transfers, promotions and retirements (Pulakos 2004). The appraisal information
gathered is applied as a guide to employee training, experience evaluation and other mentoring
and development activities (Hillgren & Cheatham 2000).
The role of performance management can only be felt if the attitudes, skills and commitment
levels of those people responsible for its implementation are wholly on the exercise while
owning the appraisers together with the appraises (Lawler 1994). The effectiveness of the whole
program can be eroded by perceived unfairness in the exercise hence procedural fairness and
distributive justice must seem to prevail at all time during the entire implementation process. The
critics of the PM system are convinced that the PM system only satisfies short-term performance
while jeopardizing the long-term organization plans by building fear among the staff while
encouraging unhealthy competition and rivalry among the employees (Deming, 1982). Managers
are mostly frustrated by the performance management standards as they attempt to address its
challenges and expectations (Lawler 1994).
According to Rheem (1996) companies that utilize the PM effectively perform better financially
than those that have not implemented the PM system in their HRM structures.
The role of performance management has changed greatly since its inception. Its prim role of
performance measurement of setting performance objectives seem to have been surpassed by
other pressing management issues like determination of staff training and development needs
which according Nankervis & Compton (2006) rank on top of the HRM list with a rating of
89.2% while appraisal of past performance, alignment of objectives and development of
competencies are also on top of the list ranking closely at 88.9%, 75.5% and 56.6% respectively.
At the bottom of the list are setting of performance objectives, retainment of caliber staff and
change of organization culture and which were ranked as 2.4%, 27.55 and 28% respectively. The
major traditional functions of the Human Resource Management (HRM) and Performance
Management (PM) of dismissal, discipline, the retention of the high caliber staff and
organizational change are no longer the prime responsibilities of the departments.
However, performance management (64%) is still favored as a management tool compared with
other hybrid systems (21%) such as trait-based appraisal systems or the management by
objectives (MbO) systems (7%). About 65% of the respondent confirmed consistent use of the
PM system while almost 75% of all the PM have been largely developed by the HRM specialists
while only a paltry 12% are reported to be imposed by respective head offices.
According to Nankervis & Compton (2006) the trend towards modern, customized and
sophisticated performance system that are effectively designed to align the goals of the
organization and individuals including company objectives. However the satisfaction of
performance management by HR Professionals has declined compared to the earlier studies that
were carried out 1990. The ratings dropped and registered a range of 84% to 20% as highly
effective while 49% registered as effective. The best systems of performance management are
enshrined in ideal principles of organizational strategic alignment and individual employee goals
whose outcomes are transparency, equity, consistency, friendliness in view of clear links of
salary review and human capital development.
Strategic management elements have also been introduced on the PM systems to make more
effective and powerful. The introduction of the Balanced Scorecard brought in fresh impetus to
the system that was slowly becoming ineffective. By assessing the company’s values and
mission, the targets and objectives of the Balanced Scorecard (BSC) can be carefully articulated
to reflect the needs of the company. However, only 25.5% of the total respondent who took part
in the survey had implemented the BSC in there PM system. According to those respondents
who have implemented the BSC system, 95% of them are satisfied with the performance of their
PM systems as the systems are now consistent and focused towards the attainment of the
organizations goal (Nankervis & Compton, 2006).
- Ineffective and less attractive systems reflect none of the qualities above and which suffer
from inadequate communication systems, lack proper feedbacks or any technical training.
Nankervis & Compton (2006) states that “…satisfaction levels with present
systems have deteriorated since the earlier studies, the training of system users
has declined, and the involvement of employees in the review of their own and
their team’s performance is not yet well implemented. The dissatisfying factors
remain those of all previous studies, and indicate the guiding principles that HRM
professionals should use in order to further develop their performance
management systems – alignment, integration, commitment, collaboration,
feedback, outcomes, and user-friendliness” (pg. 100).
The success of the Performance management system or its failure is greatly hinged on the
attitudes and skills of the implementing officers together with the perception of the employees.
Any form of bias or unfairness being perceived or otherwise, can ruin the whole purpose and
objective of the performance management system. The level of commitment and decisiveness of
the implementing officers in the HRM department is of utmost importance if the system is to
succeed (Hedge and Teachout 2000). Recognition and other forms of rewards that accrue to best
performing staff must be clearly outlined and the procedures effectively communicated to all the
employees (Wilson 2001).
Nankervis & Compton (2006) concludes that “…section reports only the
qualitative responses of the sampled HRM professionals of the perceived
effectiveness of their present performance management systems. The study did
not include quantitative measures. Although the majority of respondents (69%)
report general satisfaction with their present performance management
systems, ranging from 49 per cent ‘effective’ to almost 20 per cent which are
‘more than effective’(16%) or ‘highly effective’ (4%), more than 30 per cent
are less than satisfied…” (Pg. 93)
The level of satisfaction for the PM is far above average and its effectiveness and application is
what really matters.
To conclude, the performance management system has gradually changed from its previous roles
of setting performance objectives to development and training of employees. Its success depends
entirely on the attitudes of the implementers and the perception that the employees will have
when implemented (Nankervis & Compton, 2006).The introduction of the Balance Scorecard
into the system has added a new positive strategy in the management and implementation of the
performance management. Its application is still limited but it has registered great success in all
areas that it has been implemented. The performance of the PM system is effective if it’s
implemented positively and fairly across the whole spectrum without any bias. The most
effective systems of performance management should be protected under the ideal principles of
organizational strategic alignment and individual employee goals whose outcomes are
transparency, equity, consistency, friendliness in view of clear links of salary review and human
capital development. These traits can only be recognized if the attitudes and behaviors of
employees are positive and the system is free from any form of bias.
Hillgren, J.S., & Cheatham, D.W., 2000, Understanding Performance Measures: An Approach to
Linking Rewards to Achievements of Organization Objectives, Scottsdale, AZ:
Hedge, J., M. Teachout, 2000, Exploring the concept of acceptability as a criterion for evaluating
performance, Group and Organization Management 25(1): 22–44.
Lawler, E., 1994, Performance management: The next generation. Compensation and Benefits
Review 26(3): 16–20.
Nankervis, A.R. & Compton, R. L., 2006, Performance Management: Theory in Practice? Asia
Pacific Journal of Human Resources, vol. 44 (1)
Schuler, R.S., 1992, Strategic Human Resource Management: Linking People with the Needs of
the Business, Organizational Dynamics, 22, 19 – 32.