Function of Performance Management
As the name signifies the function of performance management is to identify, monitor and maintain effective strategies in order to effectively plan, develop, recognise, rate and reward the performance of employees of an organisation. Through performance management the organisations ensure that their strategic goals are being met appropriately. For any business to flourish keeping a track of only the profits and losses is not sufficient as this will not give a clear picture of the organisation’s status. Hence an innovative and contemporary concept of appraising the performance of the employees has displayed better results in the long run.
It is a common practice to link the functions of performance management to just the performance of the employees of an organisation. The measurement and enhancement of the performance of the organisation in the market is also the function of this management discipline. Hence both – the employees’ performance as well as the overall performance of the organisation leads to the accomplishment of set objectives.
The functions of performance management can be theoretically linked to the casual model. According to this model each organisation should define its own unique concept of performance measurement parameters based on the organisational characteristics. There are 3 stages, which popularly explain the casual model. They are: (a) outcome (b) processes (c) foundations.
Many performance management experts have tried to set up different frameworks of performance management. Kaplan and Norton (1992) as well as Keegan, Eiler, and Jones (1989) have strongly recommended a framework of performance measurement based on the balanced picture of the organisation’s business activities. They have also emphasised on different parameters for internal and external measures, effectiveness and efficiency measures and financial and non-financial measures. Another framework insists on the importance of the overview of the performance of an organisation for proper functioning of performance management.
The EFQM (European Foundation for Quality Management) model of performance measurement has tried to put forward the broadest dimension to identify the functions of performance management, in a scenario where there is total confusion and dilemma about what the dimensions of measuring performance should be. Even the PMM (Performance Measurement Matrix) has not been successful in setting up an exact dimension of measuring the performance management dimensions so that the functions of this field could be successfully identified. However it has provided a framework through which the professionals can identify the areas that need greater focus and the areas where omissions can be applied. Bititci et al. (1998) feel that the performance measures should be an integration of the organisation’s hierarchy and work patterns in order to understand the functions of the performance management of the organisation in totality. Whereas Neely and Adams (2001) believe that one of the functions of performance management should be to focus on issues like shareholder value or the cost of quality that has been incurred, to address the required performance issue. Hence the conceptual/ theoretical framework is as diverse as the number of researchers and experts in this field. All of them address different but important issues. The framework to be followed should be chosen based on the nature and characteristics of the organisation. While one framework might look highly appropriate for one organisation, it might not bring in the desired results for another organisation.
In all the fields of management, the term ‘performance’ is a common word. Lebas and Euske (2002, p.67) rightly observe that “Despite the frequency of use of the word, its precise meaning is rarely explicitly defined by the authors even when the main focus of the article or of the book is performance.” Lebas and Euske have reviewed the various literatures available on this subject and have come to the conclusion that there are diverse ways in which performance management can be perceived. The multi-person concept of performance management is stressed in many literatures.
Researchers like Corvellec (1994), and Neely, Gregory and Platts (1995) associate performance with efficiency and effectiveness. According to Kaplan and Norton (1992) and Lebas (1995) the function of performance management is to judge on a set of complimentary as well as contradictory parameters, the achievement of the set objectives. Some literature has focussed on the issue of identifying the processes that can lead to the desired results in future. It has also been identified that every person or organisation has its own concept about performance. So performance management would naturally differ from one executive to another and also from one organisation to another. Since the concept of performance changes for the evaluator if he looks at it from an insider and an outsider’s point of view, the studies focussed on this subject do not come to a common conclusion. However all the researchers believe that performance is directly related to a domain of responsibility. Different notions based on the domain of responsibility helps in understanding of performance management of different organisations. To quote Lebas and Euske (2002, p.75) “Performance exists only if outcome and results can be described or measured so that they can be communicated for someone to decide to do something within the shared model of casual relationships.”
Based on the review of various literatures it can be inferred that the function of performance management is to create an alignment within an organisation so that the set objective are achieved by the efficient use of the available resources. Performance management is not possible without the extensive discussions between all the decision makers or managers of an organisation.
Debates and issues
It has been recognised by everyone that performance management is an integral part of any organisation or professional in this era of cutthroat competition. As mentioned above different organisations, professionals and researchers have different notions on this subject, so there is bound to be debates. Some feel that the managers are the cause of most of the problems in an organisation. So the function of performance management should be to help the managers in clarifying expectations, requirements, priorities, standards and objectives. Also there is need for providing adequate information, guidance, encouragement and support to the managers to perform well and contribute in the overall performance of the organisation they are working for. It is believed that the problem in performance of the managers arises because of setting unattainable or unreasonable standards or goals. Changing priorities or tasks arbitrarily is also one of the culprits of poor performance. Hence the function of performance management should be to look upon these issues. Solving these issues might help in better performance.
The managers feel differently. They argue that they should not be made responsible for under performance. They feel that underperformance is a result of lack of confidence, skill, knowledge and interest on the part of the individual employees. On the basis of their experience they believe that many workers who work under the managers are highly careless and uncooperative towards their work. They do not try to get their priorities right as they lack application and effort. Due to all this they do not understand the objectives set by the managers and negatively affect the overall growth of the organisation. So the function of performance management according to them should be to spruce up the capabilities and dedication level of the employees at the lower level of the hierarchy. Since the majority of employees are at the lower level of any organisation, the managers feel that performance management should begin from them and then reach to the top level.
There are others that present a different aspect of the debate. They feel that there are certain other factors that should be looked upon by the performance management team. More than senior or junior level employees the main hindrance of great performance are some factors like unavailability of resources, lack of overall co- ordination between the different levels of employees of an organisation, interference from outsiders, sudden changes in the job requirements due to internal or external pressures, eruption of a crisis situation, etc.
Evaluation of debates
All the three angles of the debate present a different story. If amalgamations of the three angles are done, the issues can look convincing. No one factor is solely responsible for underperformance. So the function of performance management should be to work at all the three areas. In some organisations one area might require more attention while in the others another issue would need to be worked out more but looking at the all the three aspects is necessary to ensure the desired implication of performance management.
The diversity of theoretical frameworks, different literature reviews and debates should never confuse a good performance management professional. These can be treated as the guiding force in achieving the following functions of this management discipline:
Setting of the performance objective.
Identification of development and training needs.
Review of the past and present performance of individuals as well as review of their collective performance.
Improvement of performance in future.
Identification of criteria for salary increment.
Building proper communication skills and healthy work culture.
If these functions are properly initiated then positive implications would not be far away.
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Fisher, M., 1996. Performance Appraisals. London: Kogan Page Limited.
Lebas, M., and Euske, K., In Neely, A., 2002. Business Performance Measurement: Theory And Practice. UK: Cambridge University Press.
Bititici, U.S., Carrie, A.S., Turner, T., and Lutz, S., 1998. In Bititici, U.S., and Carrie, A.S., (ed.), Integrated performance measurement systems: Implementation case studies. In Strategic Management of the Manufacturing Value Chain: Proceedings of the International Conference of the Manufacturing Value Chain, Troon, pp.179-184.
Corvellec, H., 1994. Performance: From one language into another or the mutations of a Notion. Paper presented at the 17th EAA Congress, Venzia, Italy.
Kaplan, R.S., and Norton, D.P., 1992. The balanced scorecard: measures that drive performance. Harvard Business Review, 70 (1) pp.71-79.
Keegan, D.P., Eiler, R.G., and Jones, C.R., 1989. Are your performance measures obsolete? Management Accounting, 70 (12) pp. 45-50.
Lebas, M.J., 1995. Oui, il faut definir la performance. Revue Francaise de Compatabilite, July-August, pp.269.
Neely, A.D., and Adams, C.A., (2001). The Performance Prism perspective. Journal of Cost Management, 15 (1) pp. 7-15.
Neely, A.D., Gregory, M., and Platts, K., 1995. Performance measurement system design: a literature review and research agenda. International Journal of Operations and Production Management, 15 (4), pp. 80-116.