Performance Management Processes Analysis

Executive Summary

Introduction

The company concerned is a registered migration agency based in Melbourne with three overseas offices locating in major cities in China. The company employs over 20 professional employees with two departments namely Nasra Student Services, and Nasra Migration Services. The company hereafter is shorted for Nasra Group.

Purpose

Justify the concept of performance management and the practical effect in Nasra Group. Identify the connection between human resource development and the performance management process and their contributions to the effectiveness of Nasra Group’s operation.

Scope

Look at performance management from a theoretical and practical perspective taking into account relevant business analysis.

Method

Information was collected from own experience and the management personnel within Nasra Group whereas arguments were based on journals, textbooks, and websites.

Limitations and Assumptions

The limitations of the report were minimal, relating mainly to the rigid time frame set for the completion of the submission and the confidentiality of some sensitive information that was involved. It is assumed that all the theories and arguments were of great relevance and were overall correct.

Performance Management Defined

Armstrong (2002) defines performance management as a process designed to improve organizational, team, and individual performance. In their view, it is very much a holistic and systemic process bringing together issues of organizational performance, managerial effectiveness, individual performance, skill development, and reward management. These five aspects are integrated through Human resources and line managers working together, with staff, to achieve the organization’s desired outputs and outcomes (Tomlin et al 2002).

Aims of Performance Management

Improving organizational effectiveness, motivating employees, and improving training and development as the three main reasons for introducing performance management. The identification of individual training needs to be a main purpose of schemes. Other purposes included setting objectives and targets and providing feedback on performance; changing the organizational culture and linking pay to productivity (Herman, 2005).

Performance management concentrates on the overall achievements of the organization and ensures that all actions are linked strongly and directly to the strategic direction of the organization (Grant, 2007).

Stone (2002) sees the key elements of performance management as being the creation of a shared vision of the organization’s strategic objectives; having performance objectives for each strategic business unit, function, team, and individual; using a formal review process of progress towards these objectives; linking performance evaluation with employee development and rewards to motivate and reinforce desired behavior. Armstrong (2002) sees performance management as bringing new, integrating features, it is regarded as a normal interactive process between managers, individuals, and teams, not an administrative chore imposed from above; it is based on agreements on accountability, expectations, and development plans – it measures and reviews performance by reference to both input/process factors and output/outcome factors; it is a continuous process, not relying on a once-a-year formal review; it treats the performance review as a joint process which is concerned primarily with looking constructively towards the future; it can provide the basis for performance-related pay decisions and it attaches much more importance to the ‘processes’ of forming agreements, managing performance throughout the year and monitoring and reviewing results.

Performance Management – the Practice

Nasra aims at providing the customer with superior consulting services – those who have been employed would be trained with customer service skills. Employees within the company would gather every week to communicate the progress of each task that had been assigned, any new projects that are coming up as well as the discussion of rapidly changed migration legislation. The weekly gathering also serves the function of an experience exchange meeting whereby recommendations, suggestions, experiences gained whether good or bad can be brought out by all employees. Bonus and commission were paid on basis of bringing new customers and successful visa applications. Employees are responsible for the case following ups and communication with various government departments and other organizations such as colleges; whereas managers would be supervising and reviewing employee performance. Informal training is carried out on regular basis to enhance employees’ knowledge with updated legislation and any new precedents that have been ruled by the Department of Immigration and Migration Review Tribunal, thus, maintaining and improve the quality of the work done. Personalized task schedules are installed in employees’ individual computers reminding of case deadlines and requirements whereas through an intranet, the progress of each case can be easily viewed and monitored, and that information can be freely exchanged and customer inquiries could be better answered.

Poor Performance and Factors contributing to Poor Performance

The motivator-hygiene theory exhibits that man has two separate and autonomous need systems that do not interact. The first being the motivator range transacts with man’s need for psychological growth. However intrinsic job factors such as achievement, recognition, responsibility, the opportunity for growth, and enjoyment of the work itself fulfill the needs. It is the motivator factors that provide man with job satisfaction. The hygiene range transacts with man’s need to evade pain from his environment and is met by increasing extrinsic job factors such as salary, status, company policy and administration, good interpersonal relationships, etc. It is the hygiene factors that keep man from states of dissatisfaction. Thus, explicit to motivator-hygiene theory is the assumption that satisfaction and dissatisfaction are separate and autonomous conditions of job attitudes. The existence of motivator factors can present satisfaction. The existence of hygiene factors can avoid dissatisfaction (Luis, 2004). Similarly, employees’ overall performance will be poor or dissatisfactory if the desired targets are not achieved. And unsatisfactory work performance can be the result or outcome of many reasons which can be categorized in terms of stress, being deficient in impetus, lack of communication, clashes within the organizations, and so on. When talking about stress we can term it as an impairment of spatial memory formation resulting in poor performance (Grant, 2007).

There may be several factors contributing to poor performance at work. However, some of them are explained here. Emotional tiredness, depersonalization, and diminished personal accomplishment are some of the factors conducive to employee’s poor performance at work. Emotional fatigue/ tiredness describes the sentimental, feeling states of the individual categorized by low emotional reserves and low energy. Employees feel unable to give of themselves at a psychological level. Tony (2006) concludes that emotional fatigue is the key dimension of a stressful experience. Stress can occur in any sort of job, position, department, or organization. It may be due to the working environment (physical surroundings, office/factory design, and amenities), the job itself (a lot/too little to do, contradictory roles and responsibilities, badly designed shifts or schedule), home/work interface (dual-career problems, conflicting demands of work and home), career development (career uncertainty, stagnation, status, pay and conditions, insecurity and low social value of the work). Some employees bring family setbacks to work; far more take work worries home with them adding on to the stress level.

Depersonalization is an attempt to manage the emotional stresses of one’s work. It is an issue for poor performance as it is characterized by negative, skeptical attitudes and feelings about one’s clients. Research by Kenneth (2007) on burnout (blow) recognized that the failure of workers to emotionally distance themselves from a seemingly continuous display of client problems could lead to impaired performance and hinder the quality of care. He states that excessive detachment, or depersonalization, could also lead to less effective functioning on the job eventually contributing to poor performance.

Diminished personal accomplishment refers to the affinity to assess oneself negatively. Herman (2005) refers to diminished personal achievement as a decline in one’s personal feelings of capability and flourishing work achievement. While Aubrey’s (2004) ideas on feelings of reduced personal achievement are related theoretically to such phenomena as self-efficacy. Also, Luis (2004) states that reduced personal achievement is especially observed in persons with poor self-esteem. Further disagreements, arguments within the workplace or organization generate poor performance among the employees which also means that the organization’s goals are not clear within the organization and its people.

According to Green (2000) motivation also known as a stimulant for performance is an important factor for the development of an individual’s performance. No motivational drive gives a meager performance which can be an outcome of poor employee satisfaction which will result in low retention and low morale of employees with high absence rates. Factors such as the low outcome of incentives and lack of appreciation from the higher staff add to poor performance by a member of staff. Not achieving the desired level or standard also lowers the motivation in both the employee and the organization.

Measurement of Performance Management

Measurement is a crucial element in all performance management systems. The very nature of measurement in itself provides information as to what aspects of performance are considered important (Tony, 2006). However, Williams (2002) outlined that if measurement is to be useful in performance management, it has to be forward-looking and concerned with performance improvement while Armstrong 2002 suggests that the measures should be objective and relate to results and observable behaviors.

Sources of Performance Information

Performance management systems tend to have, as one of the unstated purposes, the objective legitimizing the authority structures of the organization. In the case of Nasra, managers in charge in different departments are been regarded as the source of information, as they tend to be responsible for task allocations – to do this, they need information about the performance and behaviors of the employee to effectively allocate these tasks; and they are the ones who usually in some degree of proximity to the employee and, therefore, in a position to make some judgments about performance behavior (Tomlin et al 2002).

Measurement of Individual Performance

In Nasra, individual performance has been measured by defined objectives. Nasra who is concerned with consultation services and documentation processing services had long determined some standards, such standards consist of the manner that the service is been carried out; the general format of the documentation; the seriousness of deadline in visa applications, and so on. However, the standards are not rigid, they are reflections of the implied standard operating procedures within the migrate services industries and are created by the employees themselves. They are objective and results-oriented as well as encouraging innovation, creativity, and performance improvements through increased employee motivations. Individual performance in Nasra is been observed by its management and has been reviewed and evaluated on weekly basis by comparing with the prescribed standards in all aspects depend on the job that one is taking.

Measurement of Organizational Performance

According to Herman (2005), a performance measurement system serves important purposes for an organization – it supports judgment; monitors the effect of strategic plans; assesses performance; diagnoses; manages a continuous development process; motivates; compares as well as records development.

According to Luis (2004), the performance of an organization should be measured in five main areas: the involvement in the achievement of strategic objectives; extent of quality; quantity and volume; efficiency and value for money and external and internal customer satisfaction.

Nasra’s performance is been measured with the number of tasks on hand; visa applications’ successful rate; quality of the applications that have been submitted; feedbacks from customers and the Department of Immigration and Migration Review Tribunal.

Theoretical Framework – the Performance Management Cycle

Nasra’s performance approach could be explained by the theoretical framework called the performance management cycle which is based on the ‘plan, do check act’ cycle.

Performance agreements are the platform in which the employee and the line supervisor discuss and agree on the performance expectations for the performance management cycle (Tomlin et al 2002). It is individual targets based on organizational or work unit goals, it describes the work to be done, the results to be attained and the quality (skills, knowledge, and expertise) and competencies required to achieve these results; it also identifies the measures used to supervise, review and assess performance (Armstrong, 2002). In short, performance agreement correspond both the what and the how well of performance (James, 2007).

Performance planning is disturbed with such actions as formulating the organization’s vision and tactic and defining what is meant by performance. (Williams 2002). A performance plan is a record of intended actions to deliver on the agreement.

Performance development is a process that operates along with performance agreements and planning in an annual period. Williams (2002) defines performance development as taking a process perspective, including such activities as business process re-engineering, permanent process development, benchmarking, and total quality management.

Formal performance review is a component that is ‘appraisal’ in performance appraisal schemes or the assessment of the individual’s performance against the agreement. According to Armstrong (2002), it should involve all employees equally concerning with all aspects of performance including skills and competency levels, hence avoiding the over-promotion. The framework for performance management is provided by the performance and development plan, which is the outcome of performance planning.

It should be known as to ‘what to measure and ‘how to follow it during the planning process. It should be defined as to what will be improved. As the strategic goals surge from leaders to the grass root, each individual should be assigned performance goals for a time. Planning should strictly stick to the tenet and instructions leading to merit system principles, barring personnel practices and equal employment prospects. But it must also address the poor performance whereas promoting and rewarding the excellent performance making a meaningful distinction among employees based on performance and contribution. A personal development plan for individuals may include proper training, development actions such as self-managed learning, training, mentoring, project work, job enlargement, and job enrichment. Planning must encourage a continuous process with prominence on repeated development and enhancement of performance and should be constructive enough to promote self-management and self-motivation. Set expectations and then set ‘SMART’ objectives which means it should be specific, measurable, achievable, realistic, and time-bound making it persistent towards the required goal (Armstrong, 2002).

In a successful organization, assignments and tasks are monitored or considered continually. Monitoring means constantly measuring performance and providing ongoing feedback to employees and workgroups on their progress toward reaching their goals. It can be examined through the use of appropriate monitoring techniques which include feedback through focus groups, questionnaires, surveys, and judging their performance. These techniques not only help in developing the skills of individuals but will gain in overall benefit for the organization.

Performance management and review processes can help to achieve cultural change, but only if the change is managed vigorously from the top and if every effort is made to bring managers and staff generally on board through involvement in developing the process, through communication, and through training (Armstrong, 2002). Employee developmental needs are appraised and addressed in an effective organization. In this example developing means increasing the capacity to perform through training, giving homework’s that introduces new skills or higher levels of accountability, improving work processes. Hence training is a crucial part of performance perfection and to oblige the employees for execution of the allotted tasks. During training, employees should be taught sufficient information and practice leading them to skilled behavior, which will result in the organization’s benefit. Motivation also plays a vital role in developing employee’s aptitude which can be done by consigning their responsibilities and fulfilling their needs as linked by many scholars with their different motivation theories. Many diverse motivational theories of which five major approaches have led to an understanding of motivation are Maslow’s need hierarchy theory, Herzberg’s two-factor theory, Vroom’s expectancy theory, Adams’ equity theory, and Skinner’s reinforcement theory. Maslow’s theory of needs has some very fundamental propositions for management in this present world of knowledge which can help the managers for motivating their employees through management style, job design, corporation events, and compensation packages by fulfilling their physiological needs (proper breaks to purchase sufficient essentials of life), security needs (by providing the safe working environment, retirement benefits, and job security), social needs (by creating a sense of area for the employees), respect needs (appreciating and valuing employees by recognizing their achievements), self-actualization needs (challenging employees and providing challenges to reach their full career potential). Whereas also mentioned earlier Herzberg characterized motivation into two factors: ‘motivators’ such as achievement and recognition, produce job satisfaction, and ‘hygiene’ such as pay and job security, produce job dissatisfaction (Aubrey, 2004). Skinner’s theory simply declares that those employee’s behaviors that lead to positive outcomes will be repeated whereas behaviors that lead to negative outcomes will not be repeated (Herman, 2005). Vroom’s theory is based on the conviction that employee effort will lead to performance and performance will guide to rewards (Tony, 2006). Adam’s theory states that employees’ challenge for equity is accomplished when the ratio of employee outcomes over inputs is equal to other employee outcomes over inputs (James, 2007). Knowing what motivates employees and incorporating this knowledge into the reward system will help identify, recruit, employ, train, and retain a productive workforce which requires both managers and employees working together (Walker, 2007).

Rating or evaluating means evaluate employee or group performance besides the elements and principles in an employee’s performance plan and assigning a summary rating of record. It is based on work performed during a complete appraisal period. Appraisal provides a means by which the organization can assess the involvement of individual members of staff (or groups) and encourage them to attain higher criteria of performance. This is achieved by providing employees with a response on their current performance, influential training needs, and arrange career paths. Successful strategies, however, have proved hard to achieve; performance standard is often poorly defined with no clear objective measures on which to base decision; bias and discrepancy may weaken the validity of ratings; and it is difficult to judge the assistance of individuals working in jobs of varying complexity, particularly if they are part of a team environment (Lawler, 2005).

However, according to (Armstrong, 2002) arguments against ratings have been elevated such as ratings are largely subjective and it is difficult to achieve consistency between the ratings given by different managers. A further serious problem with ratings is created when organizations have ‘forced distribution’ or ‘quota’ systems. Organizations that do not have performance-related pay may sometimes also avoid the use of performance ratings as part of the review system, and instead have a separate pay review in which managers are simply asked to indicate whether they want to award an exceptionally high increase, an above-average increase, a below-average increase, or no increase at all. There have been popular approaches to ratings but Richard (2006) pointed out when he said that ‘the use of ratings to compare individuals (even overall performance ratings) for so long a central element of appraisal forms and processes, is now declining’. To conclude we still have methods such as 360-Degree which is extensively used by many organizations since they perceive that the advantages outweigh the disadvantages (Armstrong, 2002). However, its outcomes and results are superior in quality, quantity, and/or impact to what would ordinarily be expected at this level and persist in overcoming problems and puts forth extra effort to accomplish difficult assignments when demands are very grave, seeking out new responsibilities, assignments, and opportunities to contribute beyond what is expected. Hence it exhibits the highest standards of professionalism.

Rewarding means recognizing employees for their performance and recognize their contributions to the organization’s assignment. When designing a rewarding method two limitations are important to be significant. Many organizations make the oversight of offering rewards that are superior at attracting employees but fall short to motivate them to perform. To motivate performance, an organization must offer rewards for performance that pull people towards high-performance levels (Lawler, 2005). Also, it should not just attract and motivate people, but also keep the deserving ones. It also needs to stress that people are rewarded for performance and skillfulness development. If this is inferred into the right combination of reward system practices, people will be motivated to excel and those who excel will be motivated to stay because they will be highly rewarded (Aubrey, 2004). For a performance pay plan to operate effectively, three conditions are necessary: The rewards offered need to be large enough to motivate individuals groups, there should be a confirmed link between actual performance and subsequent reward, and the scheme/ plan should be perceived as equitable with the same rewards forthcoming for the same effort (Lawler, 2005). These circumstances, however, have rarely been met. Despite the growing popularity of performance pay in most public sectors, the track record of such schemes has been poor (Richard, 2006). Other chief factors underlying the collapse of performance pay schemes have been unacceptable financial support from governments, an environment of supporting change, lack of organizational reliance, and opposition from unions (Kenneth, 2007). Further trait critical to the success of performance pay schemes, Walker (2007) argues, is that they should be part of a basic reform process and not basically “grafted onto any obtainable management system”.

Rewarding individuals well in the lack of organizations performing well may, in the short-term, seem like delight people right, but it cannot last as too many competitors will take advantage of the situation and ultimately make it impossible for an organization to reward its employees well.

Human Resource Development and Performance Management

Human resource development is the process that focuses on training and development of the employees of their awareness, skills, and aptitude in relevant fields. It assists in civilizing both organization and individual’s performance. The human resource development should be incorporated and in line with the performance plans to be carried out. DeSimone Werner & Harris (2002) outlines that performance management goes beyond the annual appraisal ratings and interviews and incorporates employee goal setting, coaching, rewards, and individual development. As such, performance management focuses on an ongoing process of performance improvement, rather than primarily emphasizing an annual performance review. It can therefore be seen, the interdependent relationship between performance management and human resource development, whereas human resource development assists performance goal getting, it is performance goal setting and comparison that decide the type and nature of human resource development. Without an appropriate human resource development program, an organization’s performance can never be completely satisfied, yet without a specific performance goal and plan, no human resource program can ever be properly set up.

In the case of Nasra, after observation from employees’ daily work performance and comparing the overall performance with its expected performance, managers in charge of different departments would implement proper training and development programs to improve efficiency and productivity.

Pay and Performance

The contemporary trend for the linkages of compensation to the performance management process is that more and more organizations are opting for a system of ‘base’ pay with a variable component for all levels of staff (Tomlin 2002). As said in Williams (2002), reasons for introducing a performance-related pay system are to deal with incremental systems problems; reward and motivation; promotion of cultural and organizational change; improving communication; improving recruitment and retention, and individualizing industrial relations. However, how directly is pay linked to performance? This varies according to the level of employees and the presence of formal performance management.

Rewarding means recognizing employees, independently and as members of groups, for their performance and recognizing their contributions to the agency’s mission. Rewards could be a ‘present’ for the outstanding performers in the organization who have improved their performance that achieved the goals and developed the organization’s performance. For the high performers, it is compensation for the result of their efforts; for them and the employees who have been rewarded, it also serves as a motivation to affect their responsibilities and development to be improved which could in turn increase productivity, effectiveness, and competitive for the organization. The reward could also be for members of groups, the purpose of which is to encourage the members to have a good relationship with the members, ability to have a team working and co-operation skill (Porter, Bigley & Steers, 2003).

For employees, there are financial and non-financial awards. Financial rewards consist of a cash bonus, paid holidays, share ownership, stock options, paid costs, and other related to finance; whereas non-financial rewards include promotions, awards, holidays, and paid educational and study programs (Porter et al 2003).

However, it was suggested that employees typically want to be paid commensurate with the quality of their job performance. Yet, doing so requires a carefully constructed pay program, a commitment from supervisors, and well-orchestrated communications to employees about their pay.

As previously mentioned, Nasra does have a rewards program running. It offers employees commissions for each new case and customer that they bring in, whereas, staff would be rewarded a bonus for every successful visa application that they deal with, these can be considered as financial rewards. However, non-financial rewards are taking place in Nasra too, in the sense that it offers the opportunity for employees to be more updated with the latest information by holding regular informal training sessions. Considering Nasra is a relatively small business, it can be concluded rewarding is important to its performance. And that, the pay system in Nasra is an effective method in inducing individual motivation and efficient performance.

Evaluation of Existing Performance Management

In light of Walker (2007), the criteria of performance management effectiveness consisting of identification of constituent groups of at least three – the organization, line managers, and the employees; identification of constituent goals of which each group will have a set of goals and identification of specific objectives. In short, the organization is seeking information for developing performance and on which to base rewards whereas individuals seeking valid performance feedback and important extrinsic rewards.

Nasra as an organization itself is hoping to increase employee performance and productivity; encourage employee motivation; clarify and communicate what is expected of employees; plan work; identify training and development needs; to determine administrative decisions (Williams 2002).

Managers within each department are willing to encourage employee motivation; to increase employee performance; to avoid interpersonal conflict; to build and maintain good interpersonal and working relationships; to enhance one’s status within the company; to manage impressions; to develop employees’ competence; to enhance employees’ self-esteem and other aspects of well-being.

Employees within Nasra are expecting positive feedback for their performance; avoid interpersonal conflict; build and maintain good interpersonal and working relationships; manage impressions; identify and meet development needs; know where one stands for the future; develop personal competence; enhance self-esteem and other aspects of well-being; defend against criticism; convey upward feedback; have interesting and satisfying work; seeking improvements to working conditions (Kenneth, 2007).

Based on the previous discussion about Nasra, it is believed that the overall performance management in place – such as communicating the organizational and individual performance every week; performance goal setting; planning, performance review, regular training, and development program and continuing and consistent rewarding programs are relatively effective. The informal management of performance is serving as a channel of communicating organizational and individual expectations and performance.

Recommendation

Given the informal nature of the performance management in Nasra, it is recommended that the process be formalized in line with the expansion of the business. Effective communication is of vital importance within the process of performance management. Given Nasra’s organizational structure, it is recommended, channels of communication are expanded to include electronic communication such as those applied in government sectors and banks to boost efficiency.

To be successful, Nasra should not ignore the importance of the rapidly changing factor – technology. Creating a website that contains the most updated migration information would be meaningful – not only is time-saving it that the companies activities overseas can be easily assessed, it also brings in new business opportunities and improves productivity. However, once the website is built up, it is up to Nasra to implement brand new performance strategies. Nasra should also develop training programs to help employees gaining computing and data processing skills to fill their skill and experience gaps.

It is also recommended that Nasra should freely dispense information about the business, about its financial performance to build a trust relationship with employees of which shows the company’s respect for their ability to understand and contribute to the business as a whole. As much autonomy as Nasra can handle should be given to employees to make employees happy with minimum supervision and more decision-making power, and Nasra should consider providing flexible work arrangements so that employees can make better adjustments with their work-life balance. Last but not least, Nasra should also relate its performance management with possible hiring and retention strategies to keep the talents and attract new talents’ entry.

Conclusion

Performance management whereas closely related to other business operation strategies is an important part of one wishes to be successful. Effective performance management especially if integrates with appropriate human resource development and rewards programs, increases the organization’s productivity and efficiency, and motivates employees’ working and self-esteem. And that Nasra is a great little illustration of the essence of performance management.

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