PERFORMANCE MANAGEMENT (Literature View)
Name: Priyanka Jadhav [MBA-HRM]
Strategic performance management system in uncertain business environment: An empirical study of the Indian oil industry
Akhtar, et al (2018) reports Business performance management describes the processes, methodologies, metrics and systems needed to measure and manage the performance of an enterprise. Traditional performance management systems were based on financial and productivity measures but the alternate measures proposed in last more 25 years have strategic focus and incorporate variety of performance measures such as efficiency, effectiveness, productivity, quality, customer satisfaction, innovation and employee satisfaction in addition to financial. Globalization and modernization have created a business environment uncertain with associated risks which has necessitated the incorporation of various types of flexibilities such as strategic, technical, operational, information system (IS), etc. Critical success factors and implementation issues also need to be incorporated to succeed. The purpose of this paper is to present the strategic performance management system (SPMS) designed, incorporating flexibility and implementation issues, and its effectiveness empirically validated from Indian oil industry. The key performance indicators (KPIs) help to measure the progress of the companies, business units, projects or individuals compared to their strategic goals and objectives. Different frameworks and models of SPM have been developed in last three decades, incorporating a variety of performance measures such as efficiency, effectiveness, productivity, quality, customer satisfaction, innovation and employee satisfaction in addition to financial to produce world-class enterprise performance; Six Sigma (1985), activity -based costing (ABC) (1988), total quality management (TQM), EFQM excellence model (1991), Malcolm Baldrige National Quality Award (MBNQA) (1987), balanced scorecard (BSC) (Kaplan and Norton, 1992, 1996) and performance prism (Neely and Adams, 2001). These models are not free from implementation issues and failures like other management tools and frameworks. Few studies have brought out the reasons for unsuccessful implementations and failures of BPM. The dynamic business environment due to globalization, liberalization and modernization is posing great business risks. The turbulence and uncertainty in business environment necessitate the incorporation of various types of flexibilities such as strategic, technical, operational, information system (IS), etc. (Sharma et al., 2010; Sushil, 2012, 2015, 2016). The implementation issues and critical success factors also need to be taken care of in the model.
Successful performance management? Apply the strategic performance management development cycle!
de Waal et al (2007) reports this paper seeks to provide a method which increases the chance of successful implementation and use of a performance management system (PMS). This method should incorporate both the instrumental and behavioral sides of performance management, be based on a solid theoretical foundation, and have been proven in practice. The method is called the strategic performance management development cycle, which consists of three stages: 1. design a strategic management model, 2. design a strategic reporting model, and 3. design a performance-driven behavioral model. The workings of the cycle are illustrated with a case study of a publishing company which used the method during the implementation of a new PMS. Applying the strategic performance management development cycle makes it possible for an organization to create in a short time period a new PMS, which will then improve the organization’s results dramatically. In order to deal more effectively with the pressures and changes, organizations are looking for effective management techniques. There is growing consensus that effective approaches to management offer organizations competitive advantage. The strategic performance management development cycle consists of three stages. In stage 1, design a strategic management model, the organization establishes the strategic structure which is the foundation for the development of the PMS. The starting point of each PMS is setting up a consistent responsibility structure. It is essential that there is consensus throughout the organization on “who is responsible for what”. The roles and responsibilities of each management level are made clear, and the chosen management style is applied consistently throughout the performance management process. Based on their accountability, managers and employees can set up action plans for their own area of expertise. High-performance organizations deliberately create clarity and a common understanding of the company’s mission, strategy, strategic objectives and strategic goals, which results in a commonly held strategic mind-set among organizational members. These organizations create a firm-wide understanding of individual, group, departmental and divisional contributions toward achieving the strategy, and clarity of purpose and action.
How HR Is Using Generative AI in Performance Management
Alexandria et al (Aug 9, 2023). HR pros are using generative artificial intelligence (GenAI) for recruiting, employee communications and learning tasks, they’ve been slower to use it for performance management. HR leaders and industry experts alike have been wary of the potential for creating problems like review bias in using ChatGPT for the sensitive and often highly charged process of providing performance feedback. HR leaders have begun to install safeguards that govern the technology’s use and are forging ahead to use generative AI in ways that save managers time, make the administrative parts of the performance management process less tedious and seek to improve the outcomes of performance reviews. SHRM Online spoke with three experts in performance management for insights and real-world examples of how ChatGPT is being used today in organizations and how the technology might be applied in the future to improve the efficiency and effectiveness of the oft-maligned performance review process. Experts say generative AI, when used effectively, not only can save managers time, but also helps create more understandable and thus actionable feedback for employees. One way it does that is by taking bare-bones bulleted lists or notes compiled by managers about employee performance and—once managers use good prompts—transforms them into a more comprehensive and cohesive performance review draft.
How different are performance management systems? Empirical typology of performance management systems
Kadak, et al (2023) contingency theory claims that there is no best way to organize a corporation, to lead a company, or to make decisions (Morgan, 2007). It suggests that the optimal course of action is contingent or dependent upon the internal and external situation of the company. Thus, contingency theory claims that also Performance Management Systems (PMSs) in business companies have been shaped based on the company’s internal and external tensions. Principles of PMSs PMS is a systematic approach to measure the performance of the organization and to use these results in management to improve efficiency and effectiveness. PMSs are considered as effective reactions to conceptual and practical calls faced by firms in changing world (Nudurupati et al., 2021; Cuccurullo et al., 2016; Choong, 2014; Hoque, 2004). However, research on PMSs also presents drawbacks associated with the implementation and use of PMSs (Couturier & Sklavounos, 2019; Choong, 2014; Taticchi et al., 2012; Bourne, 2008; Franco-Santos et al., 2007; Neely, 2005; Bourne et al., 2000). Moreover, different performance consequences of implemented PMSs are found mixed and contradicting (de Waal, 2018; Franco-Santos et al., 2012; Bedford et al., 2008; Yu et al., 2008; Neely, 2008; Davis & Albright, 2004; Malina & Selto, 2001). Development stages of PMSs The implementation of a PMS is a long-term process and during it the PMS evolves continuously. The differences between newly created PMSs and PMSs that have been used for years can be significant. Tangen (2005) sees this as a development process of a PMS. He suggests that the firm should start with designing the lowest level of a PMS. Later when the firm is completely prepared it should progress to the next level and then to the highest level. It takes time to develop a PMS as well as that an organization needs to build up experience in performance measurement before being able to handle an advanced PMS. Hurrying may have negative consequences, an impatient firm that directly attempts to reach the highest level of a PMS will probably fail. Each level has its period of experimentation and learning before being fully embedded into the organization (Tangen, 2005). Speckbacher et al. (2003), Franco-Santos et al. (2012) and Tangen (2005) also proposed levels on PMSs in different development stages.
The purpose of this study was to extract empirically a typology of PMS and show the relationships between the types and the success of PMS. The framework of the study was based on the chain model. This framework gave us a strong theoretical ground to select the variables describing the intrinsic characteristics of PMS.
Explaining success of performance management systems: The role of chain of key factors
Laitinen, et al (2019) In this study, our objective is to develop a statistical model explaining the relationship between the characteristics of the performance management system (PMS) and the performance of the firm. PMS can be defined as the process of quantifying and improving the efficiency and effectiveness (performance) of an organization. PMS plays a central role in the management of a modern organization. If it designed and used properly, PMS can help an organization implement its strategy and improve its performance (Kaplan and Norton, 1996; Rompho and Boon-itt, 2012). In this case, PMS can be considered successful, because the ultimate goal of any management system is to improve performance. However, if the design and implementation of the PMS are not carried out with care, PMS can lead to dysfunctional behavior and impair the performance of the entire organization. In that case, PMS can be regarded as failed. Thus, it is important to analyze the relationship between PMS characteristics and the performance of the firm. We think that the results about impacts of PEU and competition on the PMS and on performance at different levels provide practical contribution of this research. Namely, the levels of PEU and competition should be taken into the account when designing, adjusting and assessing the PMS of organization. In addition, if a firm in case of a considerable increase of environmental uncertainty wants to be sustainable and continuously successful in new conditions, there is a need to strengthen the chain of KFs in PMS. The same PMS cannot successfully support firm management in conditions of high and low uncertainty, and therefore an adjustment is needed.
Environmental and performance management forces: Integrating “greenness” into balanced scorecard
Länsiluoto, et al (2008) These studies are focused solely on environmental management and they have not considered general performance management systems (PMS) at the same time ([6] Bansal, 2005; [46] Wagner, 2007). Only a few studies have simultaneously considered environmental and performance management. These studies usually adopt statistical methods to investigate the correlations between environmental and financial performance. Sustainability is defined as those activities of companies demonstrating the inclusion of social and environmental concerns in business operations, and in interactions with stakeholders ([48] van Marrewijk and Were, 2003). There is also a large number of other sustainability definitions ([12] Byrch et al. , 2007; [13] Callens and Wolters, 1998; [28] Lloyd, 2005; [44] Sustainable Washington, 2008; [47] van Marrewijk, 2003). [12] Byrch et al. (2007) used a cognitive mapping technique and they found great differences in the definition of sustainable development between organizations and individuals. For instance, [13] Callens and Wolters (1998) define sustainability as a way of behavior, a way of living and a way of thinking. Sustainability definitions are in general based in some way on [10] Brundtland’s (1987) report. The report defines sustainable development as an operation that meets the needs of the present, without compromising the ability of future generations to meet their own needs ([10] Brundtland, 1987). Sustainability has three aspects; economic, environmental and social ([4] Azapagic, 2004; [16] Dias-Sardinha and Reijnders, 2005; [22] GRI, 2008). We focus on the environmental aspect and how it concerns an organization’s impact on living and non-living natural systems, including ecosystems, land, air and water ([22] GRI, 2008). Measuring the level of social sustainability of a business is not an easy task because social indicators must take into account both the many interests of employees and the company’s social impacts at the local, national and global levels ([4] Azapagic, 2004). Furthermore, many of the variables such as protection of human rights are difficult to quantify ([4] Azapagic, 2004). The discussion section describes the theoretical contribution and limitations of the study. Theoretical contributions relate to the analysis of the implementation forces behind an EMS and a PMS, plus the investigation of the change in source of driving forces and the simultaneous analysis of the EMS and PMS.
Performance Management: A Roadmap for Developing Implementing and Evaluating Performance Management Systems
Qamar, et al (2016) reports Performance Management: A roadmap for developing, implementing and evaluating performance management systems, mere purpose of this booklet is to provide Human Resource (HR) professionals with useful guidelines for developing and implementing effective performance management systems. The essence of book is targeted to achieve optimum organizational goals by unbiased assessment of employees. The author comprehensively elaborated different sources through which information of employees evaluation can be obtained. It includes managers, peers, direct reports or customers and this type of rating is often called as 360-degree feedback and the crux ingredient intricate in this process is unbiased feedback which needs careful rectification, management and control of feedback, whose inculpation in performance management system is a dominant feature. The most appropriate way suggested by book, for ongoing evaluation of employee’s performance is collection of feedback from different rating sources in order to negate the concept of personal biasness and to introduce Competency Models for the conviction of effective organizational outcomes. The author exquisitely divided the book according to stages involved in performance management, embarked from Performance Planning and covered up to the legal considerations that can crop up the perfect execution of performance management System. First fiv e par ts of book delv e abou t e s s ent ial s trate gies requ ired for implementation of effective performance management in the organization and rest of the contents of book are written to delineate performance evaluation and performance re view, th r o u gh th e pro c e s s of ali gnmen t w i t h ot her HR sys t e ms i n wh i c h communication, automation, pilot testing and training of employees and managers are key themes of this book. The major functions performed by design team of performance management according to book should be able “to provide input to the representatives of their constituencies” which notify that design team should search out requirements or preferences of organization by having strong linkage with managers and employees of company and after that various recommendations and decision could make on the basis of these observations. The other task of design team is “to disseminate information about the system”.
HR TechnologySmart HR: Just how good is the new people management software? Human resource technology is taking off. High-impact, quantitative software solutions, like performance management packages, have caught management’s imagination. Technology is freeing-up HR managers to become more strategic about staff development. The objective is better organisational performance. But just how technology-driven has HR become?
Story, M. et al (2003) Integrated, web-based human resource solutions that link the everyday ‘admin’ stuff with other HR functions like training and competency development, have been on HR managers’ wish-lists for years. But it’s only since the recent advent of single-solution software that it’s become ‘do-able’. Variations of this software are now available, but most organisations are just starting to contemplate and appreciate the potential and the power that’s increasingly within reach. Beyond the back-office applications, enterprises are using sophisticated HR software to drive business plan and performance management processes. Management wants to identify, nurture and retain top talent by using online information. Automation is key So what does this software technology deliver that HR managers couldn’t ante-up before? The short answer is nothing. But the difference, says JADE Star general manager Karen Dale, resides in the integration and automation of the processes. Put simply, integrated HR software solutions attempt to: Free-up employee administration time, automate numerous manual tasks, improve communication across workforces, streamline reporting requirements, Enhance the recruitment process, provide faster and easier access to up-to-date workforce data, identify employee skill and competency gaps, and, Help implement strategies to improve performance.
The growth of performance management culture; HR & Recruitment
Taylor, W. et al (2005, Apr 16) reports CREATING a high-performance culture is a priority for a growing number of companies. What this buzz phrase usually refers to is a workplace where staff perform at their optimum because they know what they are accountable for and are committed to achieving clear goals that are linked to its strategy. Achieving such a culture is a challenge. Effective performance management will engage staff and is the best tool for driving execution strategy. A key reason why performance-management systems are disappointing is that people confuse performance appraisal and performance management. A top-down annual evaluation of a person’s performance, often used to determine a pay increase or a bonus, is performance appraisal, not performance management. Performance management is ongoing between a manager and staff members in which they jointly create a performance plan, discuss development activities and hold frequent informal discussions and coaching sessions. Pay can still be linked to a person’s performance but it is only one part of the process. The challenge for many organisations is that performance management relies on managers and staff having frequent and honest discussions, and in most this simply doesn’t happen.
CONCLUSIONS:
In conclusion, the integration of performance management and environmental considerations is crucial in the modern business landscape. Organizations that effectively incorporate environmental metrics and sustainability goals into their performance management systems not only reduce their environmental impact but also improve their overall business performance. This approach aligns business objectives with environmental responsibility, which can lead to enhanced brand reputation, cost savings, and long-term viability. By fostering a culture of sustainability and making it an integral part of performance management, organizations can contribute to a greener, more sustainable future while reaping the benefits of improved operational efficiency and competitiveness. Furthermore, as global awareness of environmental issues continues to grow, organizations that prioritize environmental considerations in their performance management strategies are better positioned to meet the expectations of customers, investors, and regulatory bodies. This proactive approach can also lead to innovation, as companies explore sustainable practices, products, and technologies to remain competitive in an evolving market.
In essence, the integration of environmental aspects into performance management is not only a moral imperative but also a strategic advantage. It allows businesses to align with evolving societal values, reduce risks associated with environmental non-compliance, and seize opportunities for sustainable growth. By taking this comprehensive approach, organizations can navigate the dynamic landscape of business while contributing to a healthier planet for future generation
Reference –
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