Organizational development of performance management systems help to create results focused companies. Even though the benefits of these programs can be apparent different layers of management have varying degrees of commitment. Understanding how layers of management perceive the issues surrounding performance management can be beneficial in helping executives both design and implement such systems.
Performance management and appraisal process often suffer from a lack of continuity of purpose throughout the organization. There are almost no clear agreements on the outcomes of performance management and the appraisal process in its overall contribution to organizational success (Aberdeen Group, 2007). Each layer of management appears to have different opinions on how these systems help the organization and may be utilizing them in divergent manners.
Proper performance management encourages higher levels of organizational effectiveness. Organizational effectiveness is seen as the financial performance that includes budgets, operations, products/services, assets, human resources (Yeo, 2003). Each of these aspects contributes to creating a more efficient workplace that helps the financial viability of the business.
Organizational effectiveness can also be seen in terms of processing factors. According to Roy, et al. organizational effectiveness can be seen as,”…the net satisfaction of all constituents in the process of gather and transforming inputs into output in an efficient manner.”(2005, pp. 252). In this perspective it is the ability to efficiently and effectively take organizational inputs and turn them into sell-able outputs.
Performance management and effectiveness should not be seen as an isolated incident or from a single measurement. It should be considered at the individual, process and organizational level in order to align all of the organizational elements to the strategic objectives (Yeo, 2003). Taking a more holistic approach will give a better perspective of the varying components that ensure the organization is operating at its optimal level.
Once these elements are properly aligned organizations should start seeing higher levels of revenue and outputs. Prior research helps highlight the clear links between the impact of performance management systems and the business strategies on the overall effectiveness of the company (Chang, 2007). As elements become more aligned the amount of waste begins to decrease.
According to research conducted by Nankervis, Stanton, and Foley, (2012) on views of performance management in organizations within Australia a number of variances in the perception of the effectiveness of such programs were found. The study investigated line, middle and senior managers across a range of industries.
Of the 304 responses 55.6% were executives, 12.8% were middle managers, 14.5% were HR professionals and 9.2% were line managers. The study used both online and mail surveys in order to understand the varying perspectives on performance management within companies. The findings were as follows:
- 1. Executives and HR professionals reported that the performance management system aligned with their vision and cardinal values. Line managers were the least supportive.
- 2. HR professionals were more focused on the strategic aspects of performance management systems and their broader organizational outcomes.
- 3. There were few differences between the responses of layers of management on performance management systems such as business awareness, flexibility, financial understandings and alignment of employee with organizational goals.
- 4. Executives valued the connection of staffing strategies with performance management more than HR professionals and line managers.
- 5. A high percentage of performance management system development did not incorporate line management perspectives in design or implementation.
- 6. Executives and HR professionals were more pleased with their performance management systems than middle management.
The results of the study indicate that executives were most supportive of the strategic implications of performance management systems. Human resource professionals were secondly supportive of such efforts. Middle and line managers focused on operational and implementation perspective and were least satisfied with the results. The authors indicated that executives can be seen as sponsors of performance management, HR as its advocate, and middle and line managers as practical end users (Nankervis, Stanton, & Foley, 2012).
Aberdeen Group (2007). Enhancing operational results with employee performance management, June, UK.
Chang, l. (2007). The NHS performance assessment framework: Limitations and implications. International Journal of Public Sector Management, 20(2): 101-117.
Nankervis, A., Stanton, P. & Foley, P. (2012). Exploring the Rhetoric and
Reality of Performance Management Systems and Organisational Effectiveness – Evidence from Australia, Research and Practice in Human Resource Management, 20 (1), 40-56.
Roy, M., & Dugal, S. (2005). Using employee garnishing plans to improve organizational effectiveness. Benchmarking: An International Journal, 12 (3), 250-259.
Yeo, R. (2003). The tangibles and intangibles of organizational performance. Team Performance Management: An International Journal, 9(7/8), 199-204.