Performance Management Systems

An Experiential Approach

Arup Varma, Pawan Budhwar, Arup Varma, Pawan Budhwar

• Publisher: SAGE Publications Ltd
• Year: 2019
• Print ISBN: 9781473975750, 9781473975743
• eBook ISBN: 9781526453655
• Edition: 1
• Topic: Business
• Subtopic: Management
• Index: Business

An experiential and skills-building approach, exploring the realities and complexities of performance management and encouraging a reflective, adaptable outlook and equipping readers to conduct performance management in the future.

 

The book presents the theoretical underpinnings and the practical applications of key topics in detail, with practical concepts or skills highlighted in terms of how they fit into the Performance Management system. Learning features include: 

 

"Developing PMS Skills" boxes, highlighting a particular skill

"PMS in Practice" boxes, showcasing real-life examples from around the world

"Experiential Exercises", to encourage active learning

 

A comprehensive suite of free online resources, including PowerPoint Slides, full journal articles, and self-review questions an be found at https://study.sagepub.com/varma

 

Suitable for Performance Management modules on Human Resource Management, General Management and Organisational Behaviour courses.

1 Performance Management in Context

Arup Varma

Pawan S. Budhwar

Chapter Learning Objectives

• Understand how the concept of work has evolved over the years
• Understand the critical role of the performance management process in managing work
• Understand why PM can and should be modified but not eliminated

Chapter Skill Objectives

• Learn how to tell the difference between PM and PA
• Learn why rater training is a critical part of an effective PMS
• Learn about the different components of an effective PMS

Introduction

Ever since the first humans decided to lift and move stones, there were others telling them what to do, how to do it and sometimes, why they were doing what they were doing. Of course, there were others ready to criticize how the work was being done. In other words, while performance management (PM) may have emerged as a formal discipline only in the last century (see DeNisi & Murphy, 2017), we believe that the art of PM has been around forever. Of course, PM has evolved over the centuries, and continues to evolve – over the decades, for example, we have seen the emphasis shift from manual work to knowledge work, reflecting the shift from a manufacturing economy to a knowledge economy, etc. Similarly, for some time now, the discussion has centered around how some human beings will soon be replaced by robots in the workplace, and how human resource (HR) systems need to catch up and make required adjustments accordingly. Ironically, if robots did start to populate the workplace in large numbers, PM would be the key HR system that would have to be vastly re-engineered along with employee relations, since robots would still have some human supervisors, subordinates, and colleagues. What is ironic, however, is the fact that with almost amazing regularity, one reads in the popular press that some well-known organization has decided to get rid of its PM system, replacing it with one-on-one feedback and supervisor–subordinate conversations. Of course, what the organizations are unintentionally admitting is that they don’t do a good job of PM, and that this is what led to the decision to get rid of it, or modify it substantially – such as, getting rid of the numerical scales, and replacing those with some other form of evaluation, such as ranking.

We believe that there are numerous problematic issues with this approach. But, first, it is worth noting that the constant re-evaluation and critical commentary is typically aimed at and restricted to PM systems and processes, not other HR activities, such as recruitment and selection, or compensation, etc. To us, this is clear evidence of the importance of PM over the other HR systems and processes. Not surprisingly, many organizations have managed to successfully outsource all or parts of the other pieces of HR – such as recruitment and selection, or compensation, etc.

Next, since PM is the critical process through which organizations can manage their employees’ work – setting goals, assigning and evaluating work, and distributing punishment/rewards (Fletcher, 2001) – it is important that organizations emphasize this process and pay close attention to the design and implementation. Indeed, as Schuler and Jackson (1987) have noted, PM systems play an important role in the successful implementation of organizational business strategy. Yet, it seems that the potential impact of PM is either not understood fully, or ignored due to its complexities. We have noted, with some amusement, that in spite of well-documented problems with accounting procedures of numerous major organizations one rarely, if ever, hears calls for disbanding accounting procedures or getting rid of audits and balance sheets or income statements and the like. In the same vein, nobody seems to recommend that these be replaced by mere conversations. What we find quite disappointing is that quite often, HR professionals themselves seem to join this chorus, calling for the abolition of PM systems. It is our contention that this is a result of two major factors: (i) a lack of proper rater training (see, e.g., Roch, Woehr, Mishra, & Kieszczynska, 2012), and (ii) the tendency of many practitioners, and some academics, to confuse PM and performance appraisal (PA). While PA is a critical part of the PM process, the other pieces (e.g., goal setting) are important pre-requisites, and the failure to properly incorporate them into the PM process is a major reason for the dissatisfaction with, and overall failure of, the PM system.

The Present Volume

This is where this book will make a major contribution, since it is designed to address these very issues. First, we cover the whole gamut of performance management, from goal setting to evaluations to discussing the key issues involved in implementing a PM system. Next, we emphasize the practice of PM, by adopting an experiential approach. This method will allow the reader to apply the theoretical learning through experiential exercises, so as to gain a deeper understanding. Further, we also provide practitioner experiences to help bring alive the material discussed in each chapter.

In support of these goals, this book includes several unique features that help distinguish it from other similar volumes. These include:

• Learning and Skill Objectives – in addition to the usual learning objectives, the introduction of distinct skill objectives and individual skill boxes populated throughout the text provides integrated skills development.
• ‘Developing Key Skills’ boxed feature – these recur throughout chapters and highlight a particular skill that is relevant to the surrounding chapter content and are mapped against the skills objectives.
• ‘PMS in Practice’ boxed feature – these appear in every chapter and highlight real-world examples, drawing on practitioner experiences with PM, and PM-related happenings, from around the world.
• Highlighted Key Terms – we provide a glossary of key terms at the end of this text.
• End of Chapter Summary – each chapter concludes with a summary that helps link the content covered to the objectives listed at the beginning of the chapter. This is specifically designed to help reinforce the content.
• Review Questions – we provide review questions that are focused on actual analysis, not rote learning. In addition, we provide a dedicated section of self-review questions for self-directed study.
• Case Studies – each chapter includes a case study, with application-oriented questions, designed to help the reader apply the materials learned in that chapter.
• Experiential Exercise – each chapter also includes an experiential exercise, which is designed to encourage active learning.
• Further Reading – at the end of the chapter, we provide a recommended reading list, which includes journal articles, book chapters and relevant websites.

Structure of the Book

The book is divided into three main sections. The introduction section includes two chapters, and outlines the context and setting for PMS. Here, the authors discuss the underlying concepts which are core to the interpretation and operation of PMS. In Chapter 1 (this chapter), Arup Varma and Pawan Budhwar (also the book editors) present the logic behind the volume, and discuss the structure of the book. In Chapter 2, Subhash Kundu, Archana Mor, Naresh Khatri, and Hoa Do discuss the connection between PM and business strategy. As we noted earlier, effective use of PM can help organizations implement their business strategy successfully. Keeping this in mind, Kundu and colleagues discuss the importance, and process, of aligning PMS with the strategic plan of the organization. Further, these authors also emphasize the importance of customizing PM systems to match and reflect the organization’s culture. In addition, the authors discuss the process of writing effective mission statements and help the reader understand how to align goals with strategy.

The second section covers the core components of PM systems, and describes each in detail. First, in Chapter 3, M. Haris Minai, Shailendra Singh, and Arup Varma discuss goal setting, a key pre-requisite of PM, as proper goal setting can ensure that individual employees know exactly what is expected of them along with relevant deadlines and standards.

The authors help the reader understand the process of goal setting and its logical place in PM systems, and further explain the theories behind goal setting. In addition, this chapter is designed to help the reader learn to identify goals that can help to motivate employees towards superior performance. The chapter is also geared towards an understanding of the various formal processes of goal setting and emphasizes the importance of cascading goals from the organizational level to the individual level. From a skills perspective, the authors guide the reader through the process of selecting goals for behaviors, developing goals through a participative process so both supervisor and subordinate may contribute, and finally guides the reader to understanding how to create a developmental goal versus a performance or task-related goal.

In Chapter 4, Pete Norlander and Arup Varma address a critical piece of PM that is often ignored or glossed over in other books on the subject – performance information. Here, these authors start by helping the reader understand the critical role of information in the effective administration and practice of PM systems. The chapter also helps the reader understand that information systems can assist in PM, and also discusses a variety of models for capturing and using performance information. The authors are also careful to remind the reader that performance information isn’t perfect and that it is up to the organization and its managers to develop strategies to combat bias and paralysis.

In terms of skills objectives, the chapter helps the reader learn the role played by organizational HR, and employee relations strategies and task requirements, in shaping information processing in the organization. In the same vein, the reader is guided through the process of creating an information gathering strategy for his/her organization. An important part of the information gathering and use process is the ability to critically assess the strengths and weaknesses of different sources of information in the organization, as well as learning to effectively interpret and analyze performance information and create new knowledge about drivers of individual and organizational performance. These topics are covered at some length in the chapter.

Next, in Chapter 5, Caitlin Sockbeson and Angelo DeNisi address the twin topics of performance definition and measurement. These authors address the key learning objectives of (i) understanding how to define performance at different levels in the organization, (ii) identifying different purposes of measurement, (iii) understanding different types of measures, and (iv) exploring the measurement of performance beyond the individual level, e.g., at the team level. This chapter also addresses key skills objectives including (i) learning to consider the goals of the organization when defining and measuring performance at all levels, (ii) recognizing the dangers of focusing exclusively on outcome measures, (iii) learning to differentiate between different measurement techniques and their pros and cons and, finally, (iv) recognizing the characteristics of effective performance measures.

As the authors note, in order to determine how well an organization is doing, as well as the degree to which individuals and teams in that organization are performing acceptably, it is important that organizations determine and define performance standards – in other words, it should be clear what acceptable performance levels are, and appropriate measures should be developed to measure performance accurately.

Following this, in Chapter 6, Sockbeson and DeNisi tackle the issue at the core of the PM system – evaluating performance. Ironically, both practitioners and ...

Table of contents

• Cover
• Half Title
• Acknowledgements
• Title Page
• Copyright Page
• Acknowledgements
• Table of Contents
• Endorsements
• About the Editors and Contributors
• Your Guide to this Book
• Go Online
• Preface
• Foreword
• 1 Performance Management in Context
• 2 Performance Management and Business Strategy
• 3 Goal Setting
• 4 Performance Information
• 5 Defining and Measuring Performance
• 6 Evaluating Performance
• 7 Motivation and Feedback
• 8 Supervisor–Subordinate Relationships
• 9 Performance Management for Expatriates
• 10 Implementing a Performance Management System
• Appendix: High Performance Work Systems as a Source of Competitive Advantage: Lessons from NTL (India)
• References
• Glossary
• Index