The
Dynamics of Performance Management
Written by: Dr. Gandham Sri Rama Krishna
Published
in International Journal of
Academic Research, Quarterly January-March, 2015, Vol.2, Issue.1(3),
PP.107-111. ISSN: 2348-7666.
Abstract
Performance
management is concerned with outputs – the
achievement of results; and with outcomes – the impact made on
performance. The basic criteria for performance management are accountability,
transparency, completeness, and equity. Different approaches to HR
transformation drive different performance levels. HR leaders believe they are
performing only adequately in implementing initiatives to support change. If
organizations are truly serious about this, then HR must push to ensure that
the staff is trained in performance management techniques. The first step in
performance management is to be clear about an organizational strategy,
performance priorities to accomplish. Transformation of performance practices
can be done by clarifying strategy and priorities, set standards, design
rewards and follow-up. Performance practices brings designed outcome into
measurable goals and incentives that motivate people to reach the goals.
Performance management is only the reliable tool available to the managers for
effectively translating business strategies into firm performance, people being
the key strategic resource.
Introduction
Organizations must manage the flow
of work from product or service demand through order fulfillment to make sure
their obligations are met. To do so, they distribute goals to individuals &
groups and set up job & organizational structures to integrate the varied
output into cooperative whole. They design processes for the work itself and
setup a physical environment that promotes effective and efficient work. Human Resource
professionals are ideally suited to assist in all aspects of this process as
well.
HR transformation initially
focused on making HR operations more efficient and effective through process
standardization and technology. The next generation of HR transformation is
more tightly linked to corporate strategy and to creating business value
through HR services that address a company’s most pressing strategic
challenges. That means anticipating critical workforce trends, shaping, and
executing business strategy, identifying and addressing people related risks
and regulations, enhancing workforce performance and productivity and offering
new HR services to help a company improve and grow.
Performance has two concepts, such
as performance as behavior and performance as outcomes. Performance means
record of outcomes on specific job functions during a specific time period. Performance
management may be defined as a systematic approach for improving individual and
team performance in order to achieve organizational goals. Performance
management is concerned with outputs – the
achievement of results; and with outcomes – the impact made on
performance.
The basic criteria for performance
management are accountability, transparency, completeness and equity. Accountability means that performance
management practices should tie individual & team behaviour and outcomes to
clear goals. Transparency means
that financial and non-financial rewards are understood to public. Completeness means that performance
management practices cover the full range of behaviours and goals required for
overall business success. Equity means
that those who produce more receive more. When performance management
practices are transformed according to these criteria, they help create value.
Transformation of performance management
practices can be done in four steps.
·
A
first step in performance management is to be clear about an organization’s
strategy, performance priorities and what it is trying to accomplish.
·
The
second step, once strategy has been clarified, standards and measures can be
created that match the strategy. A simple test of the right performance management
standards is to set them with customers or investors or both.
·
The
third step, when someone meets standards, both financial and non-financial
rewards should follow. As Bruce Ellig points out, financial rewards have
economic, psychic & social implications and the importance of each is
different for every employee. Transforming financial rewards means making
choices about these three types of income: short-term cash, incentive-based
cash, and long-term equity. Non-financial rewards are also an important part of
transforming performance management practices.
·
The
fourth step, follow-up both feedback on prior activities and what Marshall
Goldsmith admirably calls “feed forward” on what‘s needed – is critical to
performance. Here are some of the choices in providing follow-up: chat
informally, supply data, let people draw their own conclusions, explain the
why; not what do it.
In transforming
performance practices, each of these four steps can be followed and upgrade
performance management. With that line of sight, performance management can
make sure that people understand what they need to do, how they need to do it,
and why they need to do it.
HR have the resources available to intervene in
organizations that are struggling to meet performance expectations to help them
develop skills or redesign structures or processes so that they will be able to
meet those expectations. HR professionals manage the time and energy of the
people in the organization in as focused a manner as any other valuable and
scarce resource. It does this by integrating all the practices that influence
how people allocate their time and energy at work. In influencing the
contribution of the organization’s assets, HR practices results are based on
synergy: the whole must be more than the parts.
Transforming HR
practices is about more than simply making incremental improvements to each
one. HR practices had a measurable
positive impact on business performance because the business leaders and
employees were thrilled to have HR support after living with no HR for so long.
Transformation of HR should not occur in isolation.
Outsourcing
of HR
The organizations
that predominantly outsource report realizing the highest cost savings as a
result of their transformation. However, most organizations - regardless of
transformation strategy - report a disparity in expected versus actual cost
savings, which is worrisome given the amount of due diligence applied to
establishing a transformation program, as well as the implementation of
service-level contracts; one would expect these efforts to drive greater
correlation between expectation and outcome. Outsourcing transactional HR work
enables HR professionals to focus on more strategic work. Thus, outsourcing
increases the likelihood that HR professionals will become more strategic in
thought and action. HR is facing new challenges because on the one hand several
HR practices are being outsourced, and on the other hand, all line managers are
being oriented to HR, so that they take over most of the HR work.
HRM is at fork of the
road-either to continue as a peripheral service function, or to become a
strategic business partner and organizational process consultant-facilitator.
To play the latter role, HRM needs to do the following: Reposition HRM functions
to make them more human develop HR systems help in decision about in-sourcing,
out-sourcing and open-sourcing of HR functions
facilitate implementation of the HR systems provide internal
organizational process internal organizational process consultancy.
HR transformation
continues to focus on rules-based processes, and that may be unlikely to change
soon. Different approaches to HR transformation drive different performance
levels. The disparity in correlating expected with actual cost savings is a concern
for organizations undertaking transformation. While there is widespread belief
that transformation impacts HR’s ability to focus on strategic goals.
Transformation is not driving real change retained HR staff function, Which is
surprising since it could be considered a core competency of HR. HR leaders
believe they are performing only adequately in implementing initiatives to
support change.
Performance
culture
Performance culture
is about creating a culture that measures rewards performance and results. In
the marketing arena, product managers
know that 80 percent of their profit comes from the top 20 percent of their
products. The same principle and ratio can be argued when considering people
management issues. HR must prioritize its time, services and focus on the tasks
and initiatives with the highest impact, while limiting the time it spends on
low performers. Instead of rewarding effort past loyalty and seniority, HR must
ensure that all people initiative and activities focus on measuring and rewarding
business results.
If organizations are
truly serious about this, then HR must push to ensure that the staff is trained
in performance management techniques. This means imparting a thorough knowledge
of the processes involved and providing them with the capabilities to coach and
mentor better performance from employees. Line managers need to take complete
responsibility for this critical process, as HR exists to provide guidance.
HRM can transform the
organization into a human system by developing their commitment, integrating
the individual employees with the organizational culture and through processes
achieving performance.
Transformation
of the HR function
The
field of HRM has been undergoing a dramatic change. Driving its transformation
as such factors as competition, globalization, technological innovations and
market evolution. The present scenario unprecedented changes in the HR
functions. This radical transformation of HR function has been instigated by a
complex nexus of forces: pressures to reduce costs, higher expectations of
customers, the constant drive to meet global competitive challenges and
opportunities offered by advancements in information technology. The mix of
these forces accelerates the transformation of the HR function in ways not
envisioned a decade ago.
Changing resource
functions as direct internet-based shifting increases and line managers develop
their recruiting skills. If HR professionals are to survive and prosper under
the new agenda, individual behavioural and attitudinal change must start now.
HRM itself has changed over a period of time though “Peace, Stability and
Growth” remained the focal points and in their importance.
The transformational
functions of HR will include the following: HR people must pursue these.
·
Talent
management; searching, nurturing, mentoring.
·
Among
the most important issues ranked were leadership development and succession
planning, HR technology, workforce planning, executive compensation and
diversity, respectively.
·
Climate
of trust, equity and involvement change management, including mergers and
acquisitions leadership.
·
Ethics
and social responsibility.
·
Reward
system.
·
Work
organizations must place HR at very high level, including their boards, and
make demands on HR as the strategic function.
These developments
produce a transformation in the management of human resources, in which MNCs
play the catalyst role.
Transformation
Strategy and HRM
At the level of the
firms, privatized enterprise must be transformed into “high performance
organizations”. They involve a difficult, long-run cultural change within the
firm, a change in the whole approach to management, its development to a new
level. The government, employer’s organizations and trade unions can
significantly contribute to this transformation.
Companies began to
look at ways to revamp their HR departments. The role of business partners has
been subject to a wide range of interpretations. Some companies have chosen to
appoint hundreds of them; others have appointed just a few. One large
organisati8on with 60,000 employees has 350; another, with some 50,000
employees, has just two. A 2004 study of 20 American companies by price water
house Cooper’s Saratoga institute found a median ratio of one Hr business
partner for every 1,000 employees.
Conclusion
The first step in
performance management is to be clear about an organizational strategy,
performance priorities to accomplish. Transformation of performance practices
can be done by clarifying strategy and priorities, set standards, design rewards
and follow-up. Performance practices brings designed outcome into measurable
goals and incentives that motivate people to reach the goals.
Performance
management is an approach to managing human resources which is designed to tie
HR polices securely into a framework of achieving the strategic goals of the
business. Performance management is only the reliable tool available to the
managers for effectively translating business strategies into firm performance,
people being the key strategic resource.
HR transformation comes from the
context of business and from the expectations of stakeholders. Where they
identify which capabilities are most critical to their organizations future
success. Re-designing HR means understanding what work is strategic and what
work is transitional. In transforming HR professionals, the first step is to be
clear about what is expected for success in the field, by considering HR roles
and HR activities.
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