Performance management and strategic human resource management - Essay Example

PERFORMANCE MANAGEMENT AND STRATEGIC HUMAN RESOURCE MANAGEMENT TABLE OF CONTENT ............................................................................................................3 Introduction.......................................................................................................4 The Appraisal System …...................................................................................5 Process that enables Performance Management System to Develop …...........7 Integration of the Workforce in Performance Management ….........................10 Conclusion …....................................................................................................12 References ….....................................................................................................15 Abstract The paper examines three fundamental components of performance appraisal and performance management as an essential component of human resource management. The paper identifies that total performance management is a means of linking up a firms strategic goals and strategic human resource goals with the actual performance of members of the organisation. This is done through the creation of metrics that reflect the realities of the firms strategic plans and its implications in reality. Performance management is different from performance appraisal because the latter is an isolated process that does not integrate elements of the firms strategy. The research studies the linkage between strategic human resource management and corporate strategy. It establishes that performance indicators set in the strategic plan forms the impetus for performance management. And this include the direct targets and expectations of the human resource management unit and component. The study also concludes that workers are essential in all performance management processes and drives. Workers need to be given important information and sensitization before performance management processes commence. Once it is done, workers must be made to give their feedback on how to improve the system and enhance the processes. This enables a firm to attain optimal and improved results from their performance management processes and systems. Introduction Performance management is a critical aspect of strategic human resource management. Its predecessor, performance appraisal was somewhat isolated. However, performance management is born out of strategic human resource management. Strategic human resource management is defined as an approach to human resource management that has the goal of using people most wisely with respect to the strategic needs of the organisation” Storey, 2001, p75). This means strategic human resource management involves linking the human resource management unit of an organisation with the strategy and top-level agenda of the organisation. This is done through the translation of strategic objectives to the processes and procedures of the organisation to the human resource unit of the entity. Strategic human resource management is “the pattern of planned human resource activities intended to enable an organisation to achieve its overall goals... by “strategic” we mean the activities should be systematically designed and intentionally linked to an analysis of the business and its context” (Price, 2010, p267). Performance appraisal is now a component of performance measurement which is a natural part of the strategic level of an organisation. This is because management has the obligation to ensure that the parties in the organisation are working according the to strategic plan and strategic framework that is set up by the top level management. Thus, as a strategic business unit, the human resource management unit of an organisation has the obligation of checking and ensuring that the skills of workers in the organisation meets the appropriate or expected standard. This forms the basis and foundation of management performance system. This paper examines the relationship between the appraisal system and the strategic human resource management and performance appraisal. This shows how performance appraisal evolved into performance management. This will be done in three main components. The first component will critically evaluate the concept of total performance management systems and the processes that businesses go through to formulate and institute performance management. The second section evaluates the processes that enables performance management to develop. This will outline the way performance management connects with strategic management and strategic human resource management. The third component of this research will involve a critical review of how workers and employees can be effectively integrated into the performance management process in order to attain the best results and ensure that the best elements and aspects of strategic human resource management is attained. The conclusion of this paper will involve a critical explanation and presentation of the core findings of this study. This will include amongst other things, the establishment of the relationship between performance management and strategic human resource management. This will provide information about how the two factors and concepts operate and how they have been developed and can be further developed for the best results. The Appraisal System The traditional appraisal system involved a method through which workers performance could be observed and documented in a somewhat isolated manner (Armstrong, 2009). This was done through the process of setting independent an unique targets by the HR department. This was common in the period of personnel management where the management of workers was somewhat an isolated process. “A performance system that evaluates employee performance on the basis of all the time spent at work – both functional jobs and special project performance” (Stanleigh, 2013, p43). Total performance management is a periodic system and process through which targets for employees in a given period is brought to the fore and measured in order to ascertain whether the members of the organisation are meeting their targets or expectations or not. Employees, like any other unit of an organisation have expectations and standards. They are required to attain certain results and live up to a certain standard. Thus, the essence of total performance management is to find a system of ensuring that the performance of an organisation is appraised and also, further action is taken to attain the highest and best result and output from workers in a given corporate entity. However, as time went on and the old personnel management process evolved into a strategic-oriented human resource management system, performance appraisal evolved onto performance management. “The core of performance management is the actual measurement of the performance of an individual or group. Performance measurement or performance appraisal is the process by which someone 1. Evaluates an employees work behaviours by measurement and comparison with previously established standards; 2. Documents the results and 3. Communicates the results to employees and other stakeholders” (Griffin and Moorhead, 2013, p155). Performance management is therefore concerned with setting up standards and expectations that will be utilised in evaluating the affairs of a worker or group of workers in order to match actual results against expectations. “A performance management system comprises the processes and activities involved in performance appraisals” (Griffin and Moorhead, 2013, p155). Performance appraisals are often periodic cycles that are carried out from time to time and this is often done once a year (Rowe, 2010). It involves the analysis of the objectives and an overview of how employees will be evaluated in relation to their performance and efforts in a given period of time. In other words, performance appraisal is an attempt to come up with a set of targets and expectations that are based on the HR and organisational expectations for work and performance. With this as yardstick, the human resource management unit gathers information about the actual effort and the actual processes that were adhered to within the period. This will given them information about what transpired in the period at hand and this is scientifically compiled and corroborated in order to present various reports on how each employee performed and how the performance affects and reflects in the results and processes of the organisation. “Performance appraisal is the ongoing process of evaluating and managing both the behaviour and outcomes in the workplace” (Grobler and Warnich, 2010). This is because performance management can best be viewed as a series of activities and processes that are carried out to come up with a system for continual monitoring and evaluation of employee performance. This is done by taking information and data about the performance and the effort of workers and employees in an organisation in a consistent manner. This enables the human resource management unit to come up with a method and a process of dealing with issues and matters as and when they occur in each period. Through this, comparative analysis can be made and evaluations can be made in order to come up with solutions on how to deal with issues and matters. Another definition of performance appraisal is that it is “... it is a systematic evaluation of an individual with respect to performance on the job and an individuals potential for development” (Core HRM, 2013, paragraph 4). This definition of performance appraisal involves another element which is often not discussed by other writers – the ascertainment of the workers potential for development. Performance appraisal in the context of performance management seeks to provide a scientific framework within which the worth of employees can be assessed from a realistic and a reasonable method or approach. This is done in a way and manner that the potential for improvement and development can be documented and identified in order to find the right method or approach for improving performance in future. Thus, appraisals have to do with what has been done and what will be done in future (Harrison, 2012). The purpose of performance appraisal is to offer feedback to employees and supervisors, make salary and promotion decisions and provide information for HR planning (Schwartz, 2013). Therefore, the appraisal system must be planned and positioned in a way and manner that these ends and expectations will be met throughout the evaluation processes and its related activities. This enables the planners of an appraisal process to come up with a method or system of analysing and evaluating the appraisal process in order to come up with the best results. Process that enables Performance Management System to Develop Performance appraisals are part of a wider and broader performance management process or system. This is because performance appraisals are not an end itself, but a means to an end. And that end is to ensure high and optimal performance management. The performance management system is “a regular interacting or interdependent group of activities, strategies, goals and procedures through which human talent in an organisation can be effectively utilised. Properly used, a performance management system supports the philosophy that people are an organisations most important asset” (Schwartz, 2013; p29). This implies that performance management is a combination of processes and activities that are meant to come together to ensure that the human resource management unit of an organisation works together to attain results that has been set by the persons in the top tier of the organisation. Total performance management is a strategic activity and hence, it brings together the different components and units of the organisation in order to carry out processes and activities that improves employee activities and processes. This is done by tracking the performance standards and expectations of service providers and also improving or enhancing the output of different stakeholders and units of a business. Performance management is a cycle or process that involves four main stages: planning, development, implementation and review (Stanleigh, 2013). There is the need for a performance management system to be planned in a way and manner that it reflects the strategic goals and strategic objectives of the organisation. Grobler and Warnich (2010) identify that every firm has a set of strategic goals and strategic objectives. These goals and objectives are long-term, organisationwide targets set by the top managers of the organisation and this forms the broad framework within which all the different units of the organisation can carry out their activities. Thus, strategic goals and expectations form the main tone within which all units of an organisation can work. The human resource management unit of organisations are a strategic business unit. In other words, is a function unit that is important and critical for the attainment of the organisations ends and goals. Thus, the human resource management unit has to translate the strategic goals and expectations to its own goals. And this is done by defining some important targets that will be attained by the HR department. The HR manager and his team will have to ensure that these targets are put in a measurable format and this will enable them to carry out regular reviews and regular evaluations that will examine whether the targets are met or not. Kandula identifies that in order to develop a performance management system, there are three main things the HR unit of the organisation needs to do: Auditing, Designing and Executing (2012). In the auditing phase, the HR unit will have to analyse the firms expectations and desires from a strategic perspective. With this, they will examine what actually happens in the work place and identify various kinds of realities. With this in mind, they will design an appropriate method of maintaining higher standards and proceed to implement the core plan of performance management. Varma et al also state that in developing a performance management system, there is the need for a number of steps to be fulfilled. This include “set work goals, determine performance standards, assign and evaluate work, provide performance feedback, determine training and development needs, and distribute rewards” (2012, p15). Thus, the performance management system culminates in the definition of work goals and the identification of performance standards. This include the pointers of the ideal level and ideal standards within which the parties in the organisation need to operate and carry out their activities. It also defines the framework within which feedback and improvement can be defined and carried out. This spate of the development of performance management is meant to provide a realistic framework within which peoples performance can be observed and their needs and corporate expectations can be addressed in the organisational context. The performance management system ensures that there is a business-HR partnership that enables the company to get the best form its workers (Kandula, 2012). It enables the fulfilment of individual and collective needs and expectations and also enables a firm to institute a high performing culture in the entity (Kandula, 2012). Performance management system is also vital and important because it has to do with the development of a fair system of analysing and evaluating staff performance and rewarding or encouraging it where necessary (Kandula, 2012). Another aspect of the development of performance management system is the fact that it involves the integration of performance management and its review into the entire culture of the organisation (Werner and DeSimone, 2008). This means there is a logical and accepted method or process through which performance can be recognised and rewarded or punished where necessary. Integration of the Workforce in Performance Management As identified above, performance management is a part of the human resource management plan. It is in the larger context of the strategic business unit. Hence, it has a connection to the strategic level of the organisation and is a transposition of the strategic targets of the organisation via the human resource management unit. The human resource management plan needs to have employee performance development plans and targets (Armstrong, 2009). This involve the identification of key results and expectations that the human resource unit and has and the key planning needs and expectations (Gobler and Warnich, 2012). These elements and aspects of organisations provide the method through which the strategic plans of the organisation is translated into human resource targets and standards. And this include the various processes and procedures that are instituted in order to ensure that the elements of the strategy of the organisation can be turned into a reality through the human resource management unit or department. Thus, a human resource management unit of an organisation will need to identify the needs of the organisation and come up with ways of monitoring, evaluating and carrying it out. Thus, for each unit or each job position in the organisation, there is a corresponding set of measures that must be developed in order to assist in the evaluation and analysis of the needs of that component (Oakland, 2012). This provides the impetus for the creation of standards and expectations that the evaluator or the measurer will need to be sensitive to. The process usually involves the creation of some metrics that can be used as the basis for the identification of processes and procedures that can be utilised in dealing with the needs and expectations of the members of the organisation in each of the positions in the organisation. The setting of the standards and targets will need to be defined and calibrated in relation to the strategy and process of the strategic plans of the organisation (Smither and London, 2010). Blazey (2009) identifies that in order to attain results, there is the need to engage the members of the workforce in order to be successful in performance management. First of all, the HR unit has to identify the relevant aspects and elements of the workforce. This involves the identification of the different groups and the different segments of the organisation in order to define what they actually need. The second element is to develop the work members and the people in the organisation who are crucial and must play various roles in helping the organisation to attain its results. This include training and enlightenment on their roles and requirements in the playing of various roles to ensure that performance management is carried out. Thirdly, a successful performance management can only thrive in a system of open communication, culture of high performance and constant engagement with the workforce (Blazey, 2009). Therefore, there is the need for the organisation to set up a system through which performance management processes and procedures can be discussed openly with staff members and their insights and inputs can be taken so that the firm can attain results and the staff members will be cooperative. With such an environment created and attained, there is the need to translate processes to goals and action plans (Krausert, 2009). This will involve the identification of various metrics and a timetable for the integration and identification of methods of dealing with performance appraisal, performance monitoring and performance analysis. Through this, the human resource management unit of an organisation can come up with a reasonable and appropriate method through which to formulate realistic and practical steps for the attainment of results. Employees must be made to understand and appreciate the importance of the key success factors and this include many processes and attributes that are essential in the process (Houldsworth and Jirasinge, 2012). Mone et al go on to identify that employee engagement is often enhanced and improved if the staff members and the management come together to attain a consensus on performance indicators and performance targets. This is because performance management works towards providing optimum results and in cases where there is a divergence or difference in view between workers and employers, there is likely to be issues. Thus, there is the need for some kind of agreement and continuous improvement of the linkages and connections between the parties. Graves (2011) also identifies the importance of letting an employee know the processes and requirements before and after the entire process is conducted. This is because there is the need for the employee to understand what is being done and how it is being done. And once it is completed, there must be feedback given to the employee through his manager. This will enable the employees to feel they are fully aware of the processes and also work to provide information where necessary in order to ensure that the whole process goes on well and is done in good faith. Conclusion From the research it is identified that every firm has a strategic framework. The strategic framework involves long-term decisions by the highest authorities in an organisation and this affects all units of the organisation. These strategic target direct and shape the organisations foreseeable future. The human resource management unit is a strategic business unit that is coordinated and utilised in the attainment of results for a firm. Hence, the human resource management unit of every organisation has to operate within the strategic framework and scope of the organisation. Hence, they need to translate their obligations from the strategic plan into real goals. In order to do this, successfully and make the best use of employees, they have to set real targets for evaluating and reviewing performance of employees. This is done by drawing a performance appraisal system which must be managed and coordinated reasonably to attain results. Strategic human resource management involves the identification of pointers and elements that will be put together for the attainment of results. Performance appraisal is a method of defining metrics and targets for the identification of results in the organisation. In order to attain this end, most organisations will need to conduct an audit of the current status and processes of the human resource environment, design an appropriate framework for checking this and execute it. This forms the scope and process within which targets and procedures can be defined and utilised in order to undertake a constant review and evaluation of existing trends and procedures in the human resource base of an organisation. Total performance management systems involve the process within which a firm sets up a holistic approach to utilise all relevant resources and processes to gauge and evaluate the trends of workers. This is done by identifying and setting some key performance indicators and targets and defining how they will be measured. Afterwards, the management of the organisation needs to come up with a comprehensive plan for the measurement of staff performance and its evaluation. This provides guidelines for the actual executors of the process of performance management. Strategic management and strategic human resource management are interlinked. Strategic management uses ways and means of dealing with all units and all components of the organisation. Strategic human resource management is a transposition of strategic targets and plans for an organisation. And this provides the basis for the creation of performance targets. Thus, performance management involves matching up actual results with the strategic targets. This provides guidance and directions for the appraisal and evaluation of different units of the organisation. Finally, it is identified that the role of the workers in a performance management cycle is central and essential. Workers are important and they are the main essence for performance management. Hence, there is the need for management to engage workers and try to work with them to attain results by communicating directly with them and trying to find ways and means of working with them to attain results. Other writers also identify that performance management needs to be styled in a way and manner that will enable workers to see it as a form of employee engagement. This will involve the use of performance management as a system of getting employees to provide their inputs and views on issues and matters relating to a given issue or matter. References Armstrong, M. (2009) A Handbook of Human Resource Management Practice London: Kogan Page. Blazey, M. (2009) Insights to Performance Excellence 2009 – 2010 New York: ASQ Press. Core Human Resource Management . (2013) Human Resource Management: Managing People at Work [Online] Available at: http://corehr.wordpress.com/performance-management/performance-appraisal-methods/ Retrieved: February 12, 2014. . Graves, S. (2011) “Performance or Enactment? The Role of the Higher Level Teaching Assistant in Remodelling School Workforce in England” Management in Education 25(1) pp15 – 20 Griffin, K. and Moorhead, G. (2013) Organisational Behaviour: Managing People and Organisations Mason, OH: Cengage. Grobler, P. A. and Warnich, S. (2010) Human Resource Management in South Africa Mason, OH: Cengage Harrison, R. (2012) Learning and Development London: CIPD Press. Houldsworth, E. and Jirasinghe, D. (2012) Managing and Measuring Employee Performance London: Kogan Page. Kandula, S. R. (2012). Performance Management: Strategy, Interventions and Drivers London: Prentice Hall. Krausert, A. (2009). Performance Management for Different Employee Groups. London: Springer. Mone E., Eisenger, C., Guggenheim, K., Price, B., Stine, C. (2011) “Performance Management at the Wheel: Driving Employee Engagement in Organisations” Journal of Business and Psychology 26(2) pp205 – 212 Oakland, J. S. (2012) Total Quality Management: Texts with Cases London: Routledge Price, A. (2010) Human Resource Management Mason, OH: Cengage Rowe, P. (2010) Performance Management Manual Clearwater, FL: United Personnel System. Schwartz, A. E. (2013) Performance Appraisal: Appraisal and Meeting New York: AES Publishing. Smither, J. W. and London, W. (2010) Performance Management: Putting Research into Action London: Wiley. Stanleigh, M. (2013) Maximising Employee Performance Through a Total Performance Management System Toronto: Business Improvement Architects Storey, J. (2001) Human Resource Management: A Central Text Mason, OH: Cengage Varma, D., Mudhwar, P. S. and DeNisi, A. S. (2012) Performance Management System London: Taylor and Francis. Werner, J and DeSimone, R. (2008) Human Resource Development Mason, OH: Cengage. Read More