The fundamental objective of performance management in the modern context of managing organizations, including both profit-making and not-for-profit organizations, is to ensure that employee effectiveness is enhanced and promoted. According to Zaffron and Steve (2009), performance management is a continuous process in which organizational managers and their employees come together to plan, review and monitor the work objectives of each employee as well as their overall contribution to the general performance of the organization.
A case study of the EMGAS Company (UAE) will provide a detailed analysis and understanding of the company’s model for improving employee performance and general corporate performance.
Purpose of the study
This paper aims at developing a comprehensive study of how EMGAS has applied performance management as a corporate strategy to achieve an effective and unique competitive advantage over its local and international rivals. The study aims at revealing the specific methods or strategies employed by the company to enhance and promote employee performance. The overall objective is to develop a comprehensive understanding of performance management in practice.
Key research questions
To achieve its goal described above, the research aims at answering the following questions:
- What is performance management?
- How is performance management applied at EMGAS, UAE?
- How does the company utilize knowledge and practice in performance management to achieve its short-term and long-term goals?
- What are the outcomes of this strategy at EMGAS?
Aims and objectives
The paper aims at developing an understanding of performance management issues in organizations. It will also attempt to analyze the specific strategies employed at EMGAS to develop performance management, aiming at examining the uniqueness of the strategy. In addition, the objective is to compare the specific strategy at EMGAS with the theoretical aspects of performance management, thus determining the effectiveness of applying EMGAS’s model of performance management.
Background to the company (EMGAS)
Founded in the 1970s, Emirates Gas LLC (EMGAS) is the leading supplier of gas in the UAE. It is a wholly-owned subsidiary of the ENOC energy group and thus a property of the Dubai government. It has a large and extensive distribution network for gas in the UAE, with a huge fleet of road tankers operating in five locations within the country as well as in foreign markets. Currently, the company supplies liquefied petroleum gas and aerosol propellant products in prompt.
The aerosol propellant products are used as an alternative to the CFC’s in line with the company’s initiatives to protect the environment. It is the first and the only company in the country to provide this product line, which has helped it to achieve ISO certification. In addition, the company offers commercial propane for consumers who require vapor pressures and uniform fuel characteristics.
Review of Literature
According to Pulakos (2010), performance management is the roadmap for employers to develop, implement and evaluate performance management systems in their organizations. Pulakos (2010) further argues that performance management systems include employee development and performance appraisal of the employees in an organization, which are the “Achilles’ heel” of managing human resources in the modern context. Although this definition appears to be less formal and theoretical, it provides a good overview of the context and composition of what performance management entails.
According to Olsen (2010), performance management (PM) is a process through which organizations align their human resources, other resources and systems to achieve their strategic objectives and priorities.
Aubrey Daniels (2004) is credited with the origin of the idea of performance management. According to Daniels (2004), performance management is a management system that is both scientifically based and data-oriented. In addition, this definition dictates that performance management has three primary phases or elements- measurement, feedback and reinforcement (Daniels, 2004).
According to Swiss (2005), performance management is highly associated with the management of human resources to obtain the required level of performance or the desired results. The definition argues that performance management is “the process of keeping the right people in the company”.
According to Olsen (2010), performance management is confused with human resources. However, it is more encompassing because it comprises of a number of aspects such as processes, metrics, systems and software tools. According to Daniels (2004), performance methodology lacks a specific or single methodology because it spans the whole and complete cycle of management planning and control. Over the last three decades, a number of methodologies have been developed, but none of them has been accepted as a suitable method for use both theoretically and practically. Nevertheless, studies have shown that performance management tools and software that have been in use over the last few decades have far-reaching advantages to the organizations.
According to Nielsen (2013), the benefits of performance management in organizations can be divided into direct financial, the motivation of the workforce and improvement of the company’s management control. First, the direct financial gains include the growth of sales, where employees are required to improve their performance by increasing the outputs of the company. In addition, efficiency reduces costs and stops project overruns. Moreover, studies have shown that performance management aligns the company directly behind the goals and objectives that the top management has set. Performance management decreases the period used to create operational changes or strategic plans because employees are involved in direct communication with their managers.
Secondly, the motivation of the workforce is a major benefit of performance management to the company (Cokins, 2009). For instance, it attempts to optimize the incentive plans to overachieve specific goals. Moreover, performance management improves the engagement of the employees in decision making because every individual has a good understanding of the process and methods used to contribute directly to the levels of achieving its goals (Cokins, 2009). It is also worth noting that performance management attempts to create and increase transparency in the methods used to achieve corporate goals.
Thirdly, performance management is credited with improving management control in organizations. For instance, it improves the flexibility and responsiveness to the needs of the top management. In addition, it improves the process of displaying data relationships while helping the company comply with the legal requirements of auditing.
The researcher used a qualitative study design to extract the information needed to describe the phenomenon. The study used questionnaires to examine corporate leaders, employees and external analysts at EMGAS. Six corporate managers were included in the study, out of which one was the general manager, one was the human resource manager, and the others were line managers in different departments. The study also included 24 employees at different levels, departments and sections, including sales, logistics, human resource and others. Moreover, two external analysts were included in the study, specifically drawn from the Price Waterhouse Coopers, the British company responsible for providing external auditing service to EMGAS.
Interviews were emailed to the corporate managers and the external auditors. The employees received the questionnaires both in email formats and in printed handouts to increase the possibility of returning them. In total, 24 out of the targeted 32 employees returned the completed questionnaires.
The questionnaires directed to the management attempted to address these issues:
- Level of implementation,
- Process of implementation,
- Expected outcomes,
- Real outcomes.
The questionnaires directed to the employees aimed at examining the issues related to:
- The attitudes and perceptions of the existing methods for performance management,
- The employee understanding of the PM and the methods therein,
- The outcomes in employee performance.
On the other hand, the questions directed to the external analysts at PWC aimed at addressing the following issues:
- The type of PM methods in use at EMGAS,
- The level of commitment of the managers in implementing and using PM,
- The real outcomes of the PM methods in use at EMGAS.
The examination of the report by the corporate managers indicated that EMGAS started focusing on PM in the 1990s, specifically using the models employed in European and North American nations and companies. Secondly, it revealed that the company has been changing the methods, but there is extensive use of software tools obtained from the western world. It also indicated that the company has been involving the employees in evaluating and examining their performance, with an aim of making them understand what it entails.
They also reported that the company entices its employees to perform by appraising and developing them online with the modern theories and concepts of managing human resources. It was further noted that the company increased its sales and profitability after the implementation of PM, which is said to have increased by at least 64% between 1990 and 2010.
The employees provided mixed reports because more than 76% of them reported that they were aware of the PM methods and had a good understanding of the protocol, yet the remaining 24% reported otherwise. Nevertheless, more than 97% of them reported that they were aware that the company has been appraising and motivating them to “work harder”.
On the other hand, the two external analysts at PWC reported that the company is one of the few organizations in the country and the region with a well-developed and defined PM protocol, which is based on the methods common in the western world. They appraised the protocol and argued that it was partly responsible for the company’s commendable performance in the last decade.
Discussion and conclusion
It is clear that EMGAS has a well-developed PM that has contributed to the performance achieved in the last 20 years as well as a unique competitive advantage. Over the last four decades, an increasing volume of knowledge in need for performance management has resulted from a large number of research studies conducted to understand various aspects of the issue. It has been shown that performance management is one of the management issues in the modern context, which companies and organizations are attempting to use as a management strategy.
The company should continue involving the employees and line managers in evaluating performance. New software designs should increasingly be used to enhance PM while modern knowledge should be used as a guideline in improving the existing PM methods.
Cokins, G. (2009). Performance Management – Integrating Strategy Execution, Methodologies, Risk, and Analytics. New York: John Wiley & Sons, Inc.
Daniels, A. (2004). Performance Management: Changing Behavior that Drives Organizational Effectiveness. London: Springer.
Nielsen, P. A. (2013). Performance Management, Managerial Authority, and Public Service Performance. Journal of Public Administration Research and Theory, 4(2), 239-244.
Olsen, E. (2010). Performance management. London: OUP.
Pulakos, E. D. (2010). Performance management. Madison, OH: SHRM Foundation.
Swiss, J. E. (2005). A framework for assessing incentives in results-based management. Public Administration Review 65(2), 592–602.
Zaffron, Logan., & Steve, David (2009). Performance Management: The Three Laws of Performance: Rewriting the Future of Your Organization and Your Life. New York: Cengage.