Performance Management, therefore, combines various management methods that support each other in striving for improved performance in organisations.
The concept of performance management and the debate over the effectiveness of performance management programmes have been of interest among human resource professionals for many years (Lawler & McDermott, 2003). As organisations seek ways to improve their competitive edge while maintaining or cutting budgets they are looking towards their human resources to provide more value for money. Performance management is seen as a key element for success in today's increasingly competitive environment (Anonymous, 2001). Indeed, a review of its theoretical foundations indicates that performance management should achieve the stated and, while there is empirical evidence to that effect, the fact remains that its implementation is problematic.
Performance Management, as a management method, has three major components, each of which is based on management theories. The first component is strategic planning, involving short and long term goals and objectives, as well as defining the mission and future vision of an organisation and each of its divisions. The second component has to do with constant measurement of variables from the various parts of an organisation. The third component is feedback. The use of teamwork is emphasized in all three major components of Performance Management. The Goal Setting Theory, Total Quality Management (TQM), Reinforcement Theory, and Job Characteristic Theory are used as theoretical bases for Performance Management. The main emphasis in Performance Management is on direction, measures and feedback, to redirect and/or celebrate. Goal setting provides an important basis for management methods, such as strategic planning. Workers must know exactly what results are expected from them and receive feedback on actual results which are based on measurements. Strategic planning involving goal setting, both long term and short term, a plan of how to reach the goals, measurement, and feedback are the main factors in Performance Management.
Proceeding from the above stated, it appears that the management theories in which Performance Management is grounded, predefine it as a successful approach to managing an organisation's workforce towards greater productivity. While numerous scholars have tended towards this opinion, the fact remains that Performance Management is a topic of controversy. If one is to objectively evaluate Performance Management, it is necessary to review the criticisms which surround it.
3 The Dilemmas of Performance Management
In spite of frequently cited problems with traditional, standard performance measurement systems, most companies continue to rely upon them so this practice continues to be vital to organisations. Research at the Center for Effective Organisations suggests that performance appraisal represents the key element in the overall human resource management of an organisation (Mohrman, 1990). The judgments of