Leadership and Performance Management in Organizations

Introduction

Many organizations are currently dealing with workers in branches that are distributed across different parts of the world. Hence, letting an organization’s leader track each employee’s progress manually and physically can be tiresome, ineffective, or in the worst-case scenario, an impossible approach to determining whether every party is performing as expected and within the set goals. Companies that lack proper management systems risk having employees who may intentionally skip some of their duties, especially after realizing a gap in the way they are monitored.

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This situation is linked to not only poor performance but also to low organizational profitability levels. The need to have all human resources function optimally resulted in the establishment of the concept of performance management. As a result, companies were interested in developing a working atmosphere that was conducive enough to pave the way for workers to give utmost input in their respective lines of operation. Nonetheless, as revealed in this report, despite a huge volume of literature depicting performance management as one of the most praised administrative practices, it is interesting that other scholars have continued to criticize and debate about it for years. Consequently, it is crucial to examine the reason behind such divergent views regarding performance management, including recommending strategies that can be implemented to enhance this practice for the betterment of present-day organizational operations.

Performance Management

Why the Practice is Praised

The notion of performance management has been praised because of its capacity to help organizational administrators in communicating what they wish to be accomplished by workers, including receiving timely feedback regarding the extent to which each of the stipulated aims and objectives is being realized. As a result, companies that have implemented performance management systems record remarkable profitability levels because employees are given the necessary support to deliver their mandates in line with their organization’s vision and mission statements. In a study by Bititcia, Cocca, and Ates (2016), the idea of performance management is presented as helping organizations to ensure that employees know not only what is expected of them but also how to achieve their organizational goals.

However, these authors appear to focus much on the role of workers in boosting organizational performance without questioning the extent to which companies need to invest in their employees as part of their crucial assets. In particular, they depict performance management as a practice that begins with “strategy development followed by the development of specific action plans to achieve those objectives” (Briticia, Cocca & Ates 2016, p. 1572) without capturing the position of organizations in facilitating workers to give their best input. Nonetheless, a close examination of their study reveals that indeed performance management addresses the need for employees’ growth strategies, including reward and recognition schemes among other development agendas as shown in Figure 1 below. Consequently, the tool is applauded for balancing organisational goals and workers’ demands, an environment that encourages their desire to deliver remarkable results and with minimal supervision.

Performance management and employees’ growth strategies.
Figure 1: Performance management and employees’ growth strategies (Briticia, Cocca & Ates 2016).

Human resource teams have benefited hugely by deploying performance management frameworks in their organizations. The implementation of this tool is founded on the awareness that workers do not perform their tasks at the same rate and quality. While some employees exhibit remarkable comprehension and execution of their work, others may contribute minimally to the overall organizational productivity. A study by Hanif, Jabeen, and Jadoon (2016) confirms that indeed one of the reasons companies praise performance management is that the tool enables them to determine each staff member’s extent of input. In particular, it “helps in demarcating good and not so good performers” (Hanif, Jabeen & Jadoon 2016, p. 99). Although these authors do not explicitly mention the issue of workers’ promotion or firing, their perception of performance management implies that organizations use the tool as an unbiased basis for determining employees who deserve salary increments or those who need to be replaced with competent others to boost productivity.

However, research by Ammons (2015) introduces an interesting finding that contemporary managers need to note. Having a performance measurement framework in place is not an indication that employees’ input will automatically result in improved organisational profitability or that administrators will make well-informed decisions. According to Ammons (2015), performance management efforts cannot bear fruits unless all parties involved, including organisational managers, leaders, and HR teams, exhibit executive commitment to the overall administrative idea. Hence, it suffices to conclude that performance management has been praised because it encourages the need for workers, bosses, administrators, and subordinate staff to be dedicated to ensuring that all their efforts are geared towards realising the set goals and objectives as stipulated in their respective organizations’ mission and vision statements. It paves the way for organizational leaders to “demonstrate to their teams that performance information and performance improvement are important to them” (Ammons 2015, p. 10).

Although Ammons’ (2015) concept of commitment resulting from performance management is highly welcome in many organizations, the author seems to ignore other elements that go hand in hand with workers’ devotion to their job. A study by Mone et al. (2011) indicates that indeed employee commitment and engagement are the most sought-after results by companies that embrace performance management. The idea of employee engagement has received much attention in present-day companies because of its impact on overall organizational performance. Mone et al. (2011) introduce this concept as among the results that organizations expect from performance management strategies. Their study points out that indeed many companies that establish performance management frameworks do so with the view of boosting their workers’ engagement capacities. One may struggle when trying to link Ammons’ (2015) idea of commitment to performance management because the author does not give clear-cut actions captured in this framework to enhance employees’ dedication to their tasks. However, Mone et al. (2011) spare readers of such a challenge by pointing out several managerial activities that explicitly or inherently result in higher employee engagement levels. As shown in Figure 1, such measures entail:

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Performance management and employee engagement predictors.
Figure 1: Performance management and employee engagement predictors (Mone et al. 2011).

Nonetheless, although Mone et al. (2011) do not offer a detailed explanation of the extent to which engagement contributes to organizational productivity, research conducted by Jindal, Shaikh, and Shashank (2017) indicates that indeed corporations that recognize the essence of ensuring high levels of workers’ engagement generally attain commendable performance and profitability. Hence, it becomes apparent that high profitability levels linked to renowned companies such as Google, Huawei, and even General Motors, have their roots anchored on employee engagement strategies that are incorporated into their respective performance management frameworks.

Why Performance Management is Criticised

Despite the concept of performance management receiving remarkable praises from diverse scholars as revealed in the above section, it is crucial to realize that the existing literature has documented several authors who have criticized the idea for various reasons. Some of them question its practicality while others regard it as a waste of time arguing that its efficacy has never been proven. Buchelt (2015) seems to take a neutral position regarding the issue under investigation. Nonetheless, the author confirms that indeed performance management has been censured “for its lack of effectiveness” (Buchelt 2015, p. 1966), although less effort is given to substantiate this claim using the available literature.

Hence, it is possible to question the reliability of Buchelt’s (2015) research because it makes sensitive assertions that are not backed by previous studies. However, other scholars such as Chandler (2016) have taken a strong position that presents performance management as an unfounded and conventional idea whose main agenda is to destabilize performance. Chandler’s (2016) stance is well supported by facts that reveal the extent to which employees and managers do not benefit from yearly performance assessments, despite the underlying assumption that such attempts are done to boost their levels of input. In particular, this author indicates that only a negligible percentage of workers (30%) confirm the claim that job assessment structures result in enhanced employees’ performance (Chandler 2016). In addition, the fact that a significantly small number of administrators and workers (13%) and business heads (6%) support performance management is a vivid indication that annual job evaluations do not yield better results and hence the reason it is criticized.

Taylor (2015) also regards performance management as a misplaced idea adopted by the public service sector to mask the prevailing administrative challenges. Although governmental organizations deploy it with the view of transforming their input levels, the study by Taylor (2015, p. 336) confirms that indeed “work behaviours never change significantly in response to performance management”. Nonetheless, this author’s conclusions may be unreliable because the findings are based on real-life observations from a small sample of various public service organizations in Australia. Hence, although this research gives reasons behind the ineffectiveness and, consequently, criticism of performance management, including views regarding inadequately planned performance measurement structure, an insufficient intensity and combination of incentives given, and irregularities in the execution method (Taylor 2015), it becomes problematic to generalize the given findings. Nonetheless, the fact that many of the selected participants do not support the idea of performance management is sufficient to prove that the concept has faced criticism.

Gerrish (2016) presents another interesting finding that reveals that performance management does not yield the expected better results. According to the author, many companies that execute this performance enhancement strategy do so based on what theories suggest regarding its effectiveness while hardly taking time to examine whether its results in the anticipated improvement. Gerrish’s (2016) study that is also focused on public institutions confirms Taylor’s (2015) findings that the strategy produces a negligible performance enhancement impact. The two authors criticize the concept under investigation by arguing that companies strive to quantify performance instead of managing it since the latter can yield the expected improved organizational outcomes. Few researchers have explored whether this finding is comparable to the situation in the private sector. However, Hvidman and Andersen (2014) show that indeed public institutions never realize any benefits from performance management strategies contrary to their private-sector counterparts. This disparity calls for the need to investigate ways in which the concept can be improved.

Conclusions and Recommendations

Contemporary organizations are operating in a competitive business environment that requires them to deploy the best strategies possible to remain operational or productive. It is crucial to realize that business performance and profitability go hand in hand with the leadership and personnel in place. As a result, companies have been keen not only on ensuring proper leadership but also in hiring, selecting, training, nurturing, and motivating their respective pools of employees. Since stakeholders, including leaders, employees, and other interested parties, play a substantial role in contributing to the overall organizational image, it is imperative to monitor and evaluate their input in line with the set goals and objectives. This report has presented the concept of performance management as a tool that has been deployed to boost organizational performance and, consequently, profitability. The idea is founded on the awareness that it not only demarcates the activities to be accomplished by each employee, manager, leader, or any other stakeholder but also provides a detailed manner of conducting all deliverables to achieve the desired results. Nonetheless, findings in this report reveal that indeed performance management has been praised and criticized in equal measures. Hence, organizations that wish to benefit from this idea may adopt the following strategies to improve their performances:

  1. Emphasizing the need for workers’ development and performance enhancement instead of concentrating more on enticements that have diminishing returns such as wages
  2. Shifting from the conventional performance review plan that is executed once a year to adopting a continuous employee assessment strategy that does not allow a counterproductive action to pass undetected or take long before it is addressed
  3. Recognizing and commending exemplary workers as a way of making them realize that their efforts are not ignored
  4. Establishing a computerized structure that encourages constant feedback
  5. Transforming administrators into employees’ continuous trainers

Reference List

Ammons, D 2015, ‘Getting real about performance management: using performance information to improve services is key’, Public Management, vol. 97, no. 11, pp. 8-11.

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Bititcia, U, Cocca, P & Ates, A 2016, ‘Impact of visual performance management systems on the performance management practices of organisations’, International Journal of Production Research, vol. 54, no. 6, pp. 1571-1593.

Buchelt, B 2015, ‘Performance management in Polish companies internationalising their market activities ‘,The International Journal of Human Resource Management, vol. 26, no. 15, pp. 1965-1982.

Chandler, T 2016, How performance management is killing performance and what to do about it: rethink, redesign, reboot, 1st edn, Berrett-Koehler Publishers, Oakland, CA.

Gerrish, E 2016, ‘The impact of performance management on performance in public organisations: a meta-analysis’, Public Administration Review, vol. 76, no. 1, pp. 48-66.

Hanif, A, Jabeen, N & Jadoon, Z 2016, ‘Performance management in public sector: a case of civil service in Pakistan’, South Asian Studies (1026-678X), vol. 31, no. 1, pp. 99-116.

Hvidman, U & Andersen, S 2014, ‘Impact of performance management in public and private organisations’, Journal of Public Administration Research and Theory, vol. 24, no. 1, pp. 35-58.

Jindal, P, Shaikh, M & Shashank, G 2017, ‘Employee engagement; tool of talent retention: study of a pharmaceutical company’, SDMIMD Journal of Management, vol. 8, no. 2, pp. 7-16.

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Mone, E, Eisinger, C, Guggenheim, K, Price, B & Stine, C 2011, ‘Performance management at the wheel: driving employee engagement in organisations’, Journal of Business and Psychology, vol. 26, no. 2, pp. 205-212.

Taylor, J 2015, ‘Closing the rhetoric-reality gap? Employees’ perspective of performance management in the Australian public service’, Australian Journal of Public Administration, vol. 74, no. 3, pp. 336-353.

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