Performance management refers to a real-time process that involves direct communication between employees and their bosses with the view of understanding their responsibilities and/or establishing the expected performance standards within their organisation. Performance management forms an integral part of any organisation. Human resource managers need to know the performance goals of their organisations in an attempt to determine the competencies and standards of their operation. They also need to discover, evaluate, and implement any developments that are necessary for the accomplishment of the organisational goals and objectives.
Performance management is an organisational tool that shapes the behaviour of employees to achieve the desired objectives. This organisational strategy is directly correlated with performance evaluation and change management. Performance management uses the results obtained from performance appraisal to adjust the prevailing objectives and activities to achieve the defined organisational targets. Human resource managers use performance management to analyse how social, political, technological, and demographic factors affect the organisational processes. This analysis helps them initiate changes in areas of the organisation that require adjustment and development to bring about organisational change.
However, the process of performance management involves a number of processes that pose a variety of hurdles to human resource managers. This report identifies and focuses on three key challenges that human resource managers face during the implementation of performance management.
Challenges during Performance Management
The design of performance management system matters a lot during the implementation of the entire process. Thorpe and Beasley (2004) claim that inadequate consultations with knowledgeable management professionals and major stakeholders create design defects in performance management systems. Seeking sound knowledge on the practicability and flexibility of the performance management system not only builds good relationships between employees and their supervisors, but also creates a worthwhile environment for the implementation process. Thorpe and Beasley (2004) suggest that the design of the performance management system should take the needs of the organisation into consideration. Performance management that is characterised by design flaws fails to meet the demands of an organisation, thus resulting in operational conflicts within the organisational structure.
Although external consultants might play a great deal in the design of the system, Faupel (2012) encourages organisations to seek consultants from within their own workforce. Perhaps, internal consultants understand the challenges that hinder accomplishment of goals as well as possible solutions to alleviate the challenges. In addition, the use of the organisation’s workforce reduces the cost of hiring an expert from other companies. Moreover, any necessary amendment becomes easier if an organisation possesses its own personnel to design a system (Faupel, 2012). However, these consultants must have proper knowledge about the design of the performance management system.
A pilot test is vital for pre-assessment of a performance management system prior to the actual implementation. This test requires skilled personnel to monitor the effectiveness and quality of the performance management system. Evaluation of the results obtained from a pilot study enables the designers to detect any flaws existing within performance management design. It places them in a position to assess the design’s correctness and applicability to the organisational structure. Amendment of defects also becomes easier as detection of mistakes precedes the actual implementation (Faupel, 2013).
Moreover, Thorpe and Beasley (2004) suggest that designers should take note of defects that had occurred in former management systems to avoid similar mistakes in the new design. Furthermore, errors in performance appraisal also affect the implementation of the performance management system. Performance management uses the results of performance measurement to determine the proper system design that suits the needs of an organisation. Stone (2013) observes that favouritism due to factors such as race, religion, ‘beautyism’, and status quo leads to biased performance appraisals. Designers, knowingly or unknowingly, use these false measurement results to judge the project management system. This plan results in a flawed system that fails to tally with the needs of an organisation.
Prevailing Financial Limitations
In many cases, financial restraints limit an organisation’s operational strategies. Cuganesan and Donovan (2011) observe that financial limitations lead to a loss of concentration and effort towards the progress of performance management systems. The process of design requires training of personnel, purchase of the facilitation equipment, and hiring of programme designers. In most cases, Busi and Bititci (2006) observe that factors such as resistance from an organisation’s management, limited assurance, and poor organisational support hinder the funding to performance management programmes.
The viability of the system entirely depends on the behaviour characteristics of an organisation’s management. Improper leadership, existence of interest groups, and lack of cooperation within an organisational social structure add to adequate ingredients for limiting the power to fund the performance management system. Thorpe and Beasley (2004) identify that poor organisational and managerial culture lead to misappropriation of funds in many organisations. As a result, these organisations may not have enough finances to support programme management.
Performance management usually involves time–consuming and costly processes. The strategy involves analysis of specific organisational systems and their interrelationships within an organisational setting. In addition, pilot studies that are conducted to assess the performance management system prior to implementation increase the overall cost of implementation. In the case of failure, these tests result in additional costs to an organisation’s budget, thus leading to deterrence of morale and laxity in designing future performance systems (Faupel, 2013).
Even after passing the pilot studies, Cuganesan and Donovan (2011) assert that managers become unenthusiastic to provide a proper response to their employees. Furthermore, meetings to discuss performance measurements with the employees lead to additional micro budgets that overload the overall budget of an organisation. According to Faupel (2013), human resource managers regard regular meetings with employees as wastage of time and costly in terms of resource.
Perhaps, the use of automated performance management is the greatest challenge that most contemporary organisations face. Owing to the dynamism of technology, many organisations have opted to incorporate automated systems to manage organisations. Although technologically managed systems improve the speed and accuracy of management, they have a number of limitations that come with their use. The first benefit of using technology is a disadvantage on its own. Automated systems play a great deal to align employees with their goals and objectives in an organisation (López & Alegre, 2012).
However, in such a manner, automated systems lead to displacement of labour. Performance management personnel lose their job, as the organisations require fewer professionals to handle the automated performance management system. These automated systems increase an organisation’s turnover rates as other employees, in paranoia of being substituted with technologically based systems, seek jobs in other companies.
Moreover, automated systems break direct communication between employees and their supervisors. Face-to-face communication creates good interpersonal relationships that are healthy for the growth of an organisation. From a different dimension, the company loses the benefits it gets from employees and vice versa. Employees lose medical cover, retirement reimbursements and other related benefits. Organisations that run their own insurance corporations also lose customers because of retrenched employees. As a result, employees and trade unions resist the incorporation of automated performance management systems in organisations (López & Alegre, 2012).
Moreover, a technology-based performance management system demands hefty initial capital investment. Organisations risk huge sums of money within a very short time, despite the uncertainties that come with automated systems. The purchase of machine hardware and software requires substantial amounts of capital. Since these automated systems require expertise about hardware and software techniques, organisations have to source expert technologists to design, install, and carry out a pilot study. The need to source new qualified personnel forces an organisation to incur more costs on recruitment and training programmes. The organisation also meets maintenance and replacement costs to maintain the performance management system operational. The imposed system support and legal fees increase the overall budget for the implementation of an automated performance management system (Sorge, 1992).
An additional challenge pertaining to automated performance management is the uncertainty that is associated with the systems’ flexibility. Since the system is based on software development, questions on whether the system will be amended to take account of the emerging needs in the next appraisal period arise. There are also challenges of system compatibility with the existing human resource management system as well as the probability of disrupting such systems during installation of the new technology. Investment in automated management systems also poses security threats to organisations. Cybercrime and related computer crimes have become an area of interest for many high-tech software professionals (López & Alegre, 2012). Such criminals may leak crucial information to fraudsters in case the performance management systems have inadequate security against computer viruses.
Critical Review of the Interview
The discussion below is a critical review of my interview (see appendix) with Dr. Hillary Milestone, a human resource manager of a company that he sought anonymity. The interview method used involved face-to-face communication with the human resource manager. This report uses the information obtained from the interview to give a critical insight into three major challenges that human resource managers face during the implementation of performance management systems.
The Design of Performance Management Systems
Every successful organisation should have operational performance management systems. Performance management is a comprehensive process that utilises the outcomes of performance measurements to scrutinise organisational programmes and processes (Cuganesan & Donovan, 2011). However, performance management programmes that are used by many organisations are usually defective. Flaws that originate from the structural design of the management systems lead to poor organisational development. A survey conducted by Cuganesan and Donvan (2011) indicated that only two out of five workers agreed that their company’s new performance management system had improved their performance by twenty-five percent between 2009 and 2010. Designers have to incorporate the varying behaviours of employees to avoid biasness during its implementation.
In an interview, Dr. Hillary Milestone says that the performance management is an important communicative tool that enables employees realise their mistakes, understand them, and act positively towards corrective measures. He continues to address that performance management enhances the achievement of organisational goals and objectives. However, Milestone emphasises that there is a need to consider the requirements of an organisation during the design of performance management programmes. Faupel (2013) reinforces this statement by asserting that a sound performance management is one that realises and avails the provisions for rewarding employees. Performance management is an involving activity that deals with a number of structured practices and activities that occur within an organisational set up. These practices include decision-making, setting of performance goals, and allocation of resources (Thorpe & Beasley, 2004).
Milestone stresses that the performance management involves a variety of activities, which include performance appraisal, response, and the implementation of the programme. These three elements play interdependent roles to ensure the realisation of performance management. First, performance appraisal provides the basis for performance management. The human resource manager is supposed to conduct at least one performance appraisal for each employee in a year. However, this evaluation can be conducted two or three times in a year depending on other organisational challenges such as lack of funds to finance the process as well as inadequate time to conduct the appraisal (Faupel, 2013).
He continues to explain that the process of appraisal determines the design of the performance management system. Performance appraisals enable human resource managers to realise an organisation’s weaknesses and strengths. Failure to assess the weak points of an organisation leads to future design flaws and unreliability of a performance management system. It is the discrete responsibility of human resource managers to conduct fair and just assessment of employees to avoid future design defects in performance management systems. Secondly, human resource managers have to provide timely feedback to employees. Milestone acknowledges that many human resource managers fail to discuss the outcomes of performance appraisals. As a result, employees fail to discover their weak areas of performance, a situation that challenges the achievement of both individual and organisational goals.
Faupel (2013) suggests that frankness builds trust between the managers and employees. Therefore, human resource managers should strengthen their communication with employees through performance management. Face-to-face communication between the two parties creates a good environment for discussing employee weaknesses and the possible adjustments that aim at improving their weaknesses. Milestone suggests that the last step in performance management is the implementation of the programme. The implementation process demands a lot of support from the entire organisational team. However, this situation is not always the case with many companies. The following subtopic provides an in-depth discussion of the implementation process.
Financial Status at the Time of Implementation
Milestone acknowledges that many organisations have insufficient funds to support the establishment and implementation of performance management systems. Performance management is usually an expensive undertaking for many organisations. Milestone says that the existing financial status of the company at the time of implementation is a significant factor that is considered during the implementation of performance management systems.
Faupel (2012) reveals that many organisations abandon the plans of incorporating performance management at the onset of implementation due to unavailability of sufficient funds to subsidise the process. According to Milestone, the implementation process consists of three major parts. These parts include system design, pilot test, and the execution of the system. Perhaps, the system design is the most expensive part of the implementation process. Whether manual or automated, the system design requires the organisation to purchase the required management items and design specialists (López & Alegre 2012).
For automated performance management systems, organisations have no choice rather than using a big percentage of the investment capital to hire experts. Pilot studies that professionals recommend for testing the practicability and adaptability of the performance management system add further charges to the implementation cost. In case the pilot study fails, designers have to restart the entire process. The final step is the execution of the performance management system. Execution requires the organisation to recruit and train more staff members to enhance their familiarity with the new performance management system (Soriano & Urbano, 2010).
The Use of Automated Performance Management Systems
Technology is quickly replacing formal performance management systems in contemporary managerial structures. In the long term, software-based systems will reduce the costs incurred by organisations during recruitment, performance appraisal, training, and strategic planning (Waal & Kourtit, 2013). According to Milestone, the use of technology is the only way that organisations will achieve their goals and objectives with comparatively lesser efforts in relation to the use of manual systems. With dynamic advancement of chip technology and software development, many human resource managers prefer the use of automated performance management systems that ease organisational processes. The systems make the alignment of employee goals with organisational objectives a simple task without the use of paperwork (Stone, 2013).
An automated system will have a bunch of information at its disposal. With this age of technology, human resource managers have access to efficient online assessment tools that provide real-time information about the progress of an employee. Milestone says that a single mouse-click is enough to display simultaneously the standards of performance and competency of an employee on a computer screen. Hence, organisations have gotten along with the dynamism in technology. However, despite the fact that technology has many virtues, its disadvantages pose great challenges to organisations (Sorge, 1992).
Milestone mentions a number of factors that make the use of technology a burden to many organisations. He classifies the challenges that result from automated systems into two categories. The first challenge arises from the developed software. Software development is the most significant part of any technologically based performance management system (López & Alegre 2012). Programming errors lead to software flaws that can pose great challenges to organisations. Most software-related errors tend to remain unnoticed until they cause significant challenges within an organisation. For instance, Milestone reports a case in his company where three employees earned exaggerated amounts of wages for two consecutive months after its first installation. The company had to inform the former systems software developer about the problem as the company’s software development team could not detect the error.
Plans to amend the software to take into account the emerging needs disrupt the operation of other management systems, thus slowing down the production process. Sometimes, the human resource management system may not be compatible with the performance management system. As a result, programmers spend a lot of time editing the new software to make it compatible with the human resource manager’s system (Waal & Kourtit, 2013).
Milestone says that the second challenge that is related to the use of automated systems arises from implementation problems. The greatest implementation challenge is the initial cost of purchasing and installing both hardware and software requirements. Purchase of computers and software packages becomes an expensive undertaking for the organisation. López and Alegre (2012) acknowledge that it is costly to initiate a new performance management system. These systems are very expensive and time-consuming. The need to equip offices with new equipment requires slowed down operations especially in finance, strategic management, and human resources departments. Their implications on the overall performance include reduced output within a short period. According to Waal and Kourtit (2013), performance management systems lead to convolution and bureaucracy. Training and coaching of new personnel become inescapable.
Human resource managers have to recruit new information technology professionals to manage the newly installed management system. For the organisation, recruitment and training mean additional operational costs that restrain the overall budget for the organisation (Longenecker & Fink, 2013). Installation of performance management systems also leads to replacement of labour. As mentioned earlier, software systems require fewer professionals to manage data and system manipulation. Formal performance management employees lose their jobs to information technology professionals. As a result, many employees and trade unions resist the introduction of software in performance management.
The existence of poor network infrastructure is another challenge that the human resource managers encounter while using software management systems. Mostly, automated performance management systems use external networks and servers that interlink with systems database (Sorge, 1992). Consequently, external network disruptions or failures directly affect the operation of the software in operation. Failure to install power backups also results in similar effects in case of blackouts. These situations may lead to data loss and damage to computers and software. Further procedures to perform data recovery and replacement of machines adversely affect the operation of the organisations.
Lose of organisations’ data leads to mistrust between the human resource managers and employees. In some cases, such shortcomings create tension amongst employees. As a result, the organisations observe reduced employee performance. The last disadvantage of automating performance management system is the creation of communication barriers between employees and their supervisors (Soriano & Urbano, 2010). Human resource managers perform almost every process on the system. Activities such as advertisement, recruitment, interviews, training, and performance appraisals are conducted on the system’s online platform. Thus, there is no need for clients, employees, or other staff members to meet the human resource manager and have a face-face-communication. This circumstance breaks interpersonal relationships between employees and their supervisors (Longenecker & Fink, 2013).
Pertinent Issues Relating to the Use of Technology
Despite the disadvantages that come with the use of technology in performance management, its merits influence the success of an organisation largely. Long-term benefits that accompany automated performance management have driven many human resource managers to incorporate these systems in their organisations. Waal and Kourtit (2013) reveal that many contemporary organisations have used these systems to automate employee performance appraisals, hence saving evaluation costs and time. It is possible to conduct real-time appraisals to monitor progressive performance of employees, even without their prior knowledge.
Employees keep track of their performance on an online platform in any geographical location that is supported by the performance management system (Sorge, 1992). Most importantly, performance management systems align personal goals with the overall objectives of an organisation. This feature enables human resource managers to capture the development of employee goals as well as how such developments influence the accomplishment of organisational objectives (Busi & Bititci, 2006). This managerial approach increases employee motivation towards the performance of the assigned tasks. Generally, access to real-time information boosts processing. Hence, an organisation is enabled to match competitive markets.
Busi and Bititci (2006) suggest that the human resource managers need to find better ways of accomplishing organisational goals. First, they should encourage the use of a collaborative approach in performance management systems. Almost all human resource managers rely on individual performance to assess an organisation’s performance. The use of a collaborative approach to performance management involves the assessment of group performance in comparison with an organisation’s overall accomplishment of goals and objectives. Human resource managers need to seek systems that evaluate the individual as well as group outcomes. Collaborative approach also entails the measurement of organisational performance outside the organisational set up (Busi & Bititci, 2013). This approach entails categorisation of the existing performance measures and relating evaluation methods with their existing applications.
Waal and Kourtit (2013) reveal that many performance management systems evaluate employee goals and objectives only within the organisational setting. There is a need for human resource managers to devise ways of conducting evaluations beyond the boundaries of an organisation.
Performance management is the ultimate tool for optimising organisational productivity, eminence, and effectiveness. Human resource managers are the overall supervisors of many departments within organisations. Thus, they bear the responsibility of devising suitable performance management systems to ensure proper communication between the elements of an organisation. Client and employee satisfaction are key aspects that require the attention of every human resource manager. However, the achievement of such success is a product of good performance management system that takes into account the needs of the entire organisation.
Companies should be encouraged to use software in performance to increase productivity. Undoubtedly, automated systems are quicker than ordinary performance practices. These systems improve accuracy and effectiveness of other organisational systems since they tremendously save the time that is used to perform organisational processes. In spite of numerous disadvantages that are associated with automated performance management systems, the use of technology is inescapable if organisations have to match with increasingly competitive markets. Finally, human resource managers should be encouraged to employ a collaborative approach in performance management. This approach can be incorporated in the management system software to assess group performance. Group performance is highly significant in measuring the overall performance of an organisation.
Busi, M., & Bititci, U. (2006). Collaborative performance management: present gaps and future research. International Journal of Productivity and Performance Management, 55(1), 7-25. Web.
Cuganesan, S., & Donovan, J. (2011). Investigating the links between management control approaches and performance measurement systems. Advances in Management Accounting, 19(1),173-204. Web.
Faupel, C. (2012). Value-Based Performance Management. Advances in Management Accounting, 20(1), 187-208. Web.
Longenecker, C.O., & Fink, L.S. (2013). Creating human-resource management value in the twenty-first century: Seven steps to strategic HR. Human Resource Management International Digest, 21(2), 29-32. Web.
López, P., & Alegre, J. (2012). Information technology competency, knowledge processes and firm performance. Industrial Management & Data Systems, 112(4), 644-662. Web.
Sorge, A. (1992). Human Resource Management in The Netherlands. Employee Relations, 14(4), 71-84. Web.
Soriano, R., & Urbano, D. (2010). Employee-organisation relationship in collective entrepreneurship: An Overview. Journal of Organisational Change Management, 23(4), 349-359. Web.
Stone, R. J. (2013). Managing Human Resources. Milton, QLD: John Wiley & Sons Australia Ltd. Web.
Thorpe, R., & Beasley, T. (2004). The characteristics of performance management research: Implications and challenges. International Journal of Productivity and Performance Management, 53(4), 334-344. Web.
Waal, A., & Kourtit, K. (2013). Performance measurement and management in practice: Advantages, disadvantages and reasons for use. International Journal of Productivity and Performance Management, 62(5), 446-473 Web.
What is Performance Management? An Interview with Dr. Hillary Milestone
The interview was conducted on 2 Friday 2014 at Dr. Hillary Milestone’s eighth floor office at exactly 1.31pm.
[Dr. Milestone welcomes me into his office with a warm afternoon greeting. He has been expecting me since 1pm. I apologise for having delayed for more than twenty minutes. The discussion kicks off for about 26 minutes before I ask the final question to the human resource manager. I exit the office at exactly 2 minutes to 2pm]
Interviewer: Dr. Milestone, what do you understand by performance management?
Dr. Hillary Milestone: Basically, performance management is a way of communication in organisations that enables employees, as well as managers, to understand their mistakes, weaknesses, and strengths. In such a manner, they are able to adjust in accordance with the requirements of their organisation.
Interviewer: You mention that performance management is a way of communication. In which ways do you use performance management in your company?
Dr. Hillary Milestone: Performance management is a tool used to enhance the achievement of organisational goals and objectives. In Dunwell Company, we use a performance management system that takes the need of employees, our customers, as well as those of the entire organisation. We have used performance in a number of ways in this company.
Interviewer: Okay. What makes this approach significant for human resource managers like you?
Dr. Hillary Milestone: [Smiling] As I have just said, performance management serves as a communicative tool between employees and their supervisors. Without performance management programmes, employees would not acknowledge their past mistakes in task performance. It would be difficult for us, human resource managers, to monitor daily behaviour of employees. As you know, employees are the key stakeholders in any organisation. That means their individual performances highly determine the outcome of overall organisational performance and for that reason, human resource managers have to maintain direct communication links with their junior managers and other employees to ensure proper flow of events in all organisational processes.
Interviewer: You claim that performance management is vital tool that ensures interaction between junior managers, other employees and. How do you ensure that the system works well for the organisation?
Dr. Hillary Milestone: Yes, it is a vital interaction tool as well. However, it calls for a joint effort between human resource managers and other members of an organisation to realise the benefits of performance management. Performance management encompasses three major areas of human resource management. Firstly, human resource managers have to carry out performance appraisal to evaluate the individual performances of their employees. Evaluation of employee performance enables them gather adequate knowledge about an employee’s strengths and weaknesses. From such an evaluation, we are able to know which areas need further employee training, adjustment, or replacement. At the same time, we are able to know those employees who qualify for higher ranks in the organisation as well as those who deserve rewards for their hard work.
The second area of concern deals with feedback where most human resource managers fail to perform their responsibilities as required. Employees should know their mistakes so that they can avoid them during future tasks. Altogether, the most important part of performance management is the implementation process. The implementation process calls for a positive attitude towards strengthening of workplace morals and reinforcement of other systems that facilitate employee performance.
Interviewer: What challenges do you encounter during the implementation of performance management?
Dr. Hillary Milestone: Well, there are a number of hurdles in every management system. Performance management is one of those areas of management that face many challenges especially during the implementation process. Performance management is an activity that requires an adequate financial plan. However, many organisations fail to meet this demand on an annual basis. As a result, these organisations are not able to carry on performance management as expected. By the time we launched our company’s performance system, we had postponed the plan twice since the company did not have sufficient funds to service the entire process. We also spend further amounts during recruitment of new staff members. Recruitment meant that the company would spend even more money for training the new employees.
Interviewer: How would you comment on the use of technology in performance management?
Dr. Hillary Milestone: Technology is the cornerstone of every company in the twenty-first century. As human resource managers, we cannot do without proper software management systems. Taking an example of my company, where the employee numbers are quite large, it would be hectic for a human resource manager to monitor every employee manually. It is also difficult to create profiles of each employee on an ordinary filing system. Generally, the use of computer software in performance management helps me a lot in many organisational processes. For instance, I usually use an online system to shortlist job applicants as well as carry out initial interview stages through a series of formulated questions. I have used the system to conduct performance appraisal at any time I need to assess an employee. It also enables me measure the performance of my employees against the overall performance of the company.
Interviewer: You claim that technology is the cornerstone of every company. Have experienced any technology related challenges in your company?
Dr. Hillary Milestone: Yes. Severally, I have encountered challenges with the performance management system especially during power cut outs. At one time, a black out occurred and I the server crashed. Although we managed to recover vital information from the cloud backup, I lost some appraisal results for my junior managers. I had no other alternative other than conducting the appraisal using the ordinary method. However, the company’s hardware and software technicians rectified the system and it became operational again. Since then, I have not had any blackout related challenged since we installed efficient power backups to serve the system in case the power goes off unexpectedly.
Interviewer: Finally, Dr. Hillary Milestone, what would you advise other companies regarding the use performance management systems? How do you see the future of technology in performance management?
Dr. Hillary Milestone: I would advise companies to adopt automated performance management systems since they are quicker and more efficient than ordinary performance practices. The output is ultimately realised in the overall performance of the company. The future of technology in performance management is quite promising. Software systems are very flexible to changes in managerial structure, employee needs as well as customer needs. We, as human resource managers, we cannot afford to lag behind technology.
Interviewer: [Shaking hands] Dr. Milestone, thank you very much for your esteemed time. I really appreciate for the information.
Dr. Hillary Milestone: You are welcome. Anytime. Thank you.
[I exit the office, as Dr. Hillary Milestone prepares to leave for an afternoon meeting with his managers.]