HRM3706 PERFORMANCE MANAGEMENT NOTES WITH CORRECT PRACTICE QUESTIONS 2022.

HRM3706 PERFORMANCE MANAGEMENT NOTES WITH CORRECT PRACTICE QUESTIONS 2022. STUDY UNIT 1: CHAPTER 1: PERFORMANCE MANAGEMENT AND REWARD SYSTEMS IN CONTEXT The Shift From Performance Assessment To Performance Management Performance assessment has a long history based on comparative judgements of human worth. Modern performance assessment developed from sophisticated rating systems designed by work psychologists for military use during the two world wars. Performance assessment was initially used for promotions, salary increases, and discipline (Price 2011:402). Fletcher and Williams (1992:5-8) provide an overview of the development of performance management. They trace the origins of performance management as far back as the First World War, focusing on the period since the 1950s, a decade that involved personality-based appraisal. The focus then was on evaluating performance, but with no intension of improving it. Fletcher and Williams (1992) further observe that, in the 1960s, appraisal practices shifted to a greater emphasis on goal-setting and assessment of performance-related abilities (and more recently, competencies) rather than personalities. The late 1980s and the whole of the 1990s saw organisations undergo a process of rapid and successive change. Almost inevitably, what Fletcher and Williams (1992) call “performance appraisal” became a central mechanism in a more holistic approach towards managing people and business in general. According to Mello (2015:438), the terms “performance evaluation” and “performance appraisal” imply a one-sided judgemental approach to performance management, where employees have limited involvement in the process. Traditional performance appraisal simply involves evaluative supervisory comments on the past performance of employees. According to Houldsworth and Jirasinghe (2006:6–7), things shifted again in the 1990s, when performance management began to be seen as more of a core management process, growing out of its “appraisal” box, and developing into an integrated, strategic and grown-up concept. In summary, the practice that we today know as performance management developed from humble beginnings some 60 years ago. During those early days, the emphasis was on individual competencies of employees. Over the last couple of decades, this has developed into a more sophisticated organisational function. Today, performance management is a fundamental part of a company’s HRM system and recognised as a HR activity contributing to the achievement of the strategic goals of the organisation. Performance Management: Definition 1. Continuous process of  Identifying, measuring and developing performance of individuals and teams  Aligning performance with strategic goals of an organisation  Process of setting goals and objectives, giving & receiving on-going coaching and feedback 2. Alignment with strategic goals  Managers to ensure that employee act & outputs are congruent with  organisation goals  Help organisation gain competitive advantage  PM creates direct link between employee performance and organisation goals Page 1 of 86 Perfor m na ce M nagae ent m W ithin A n Inte g ted H r a u m n Re a s our c e M na ga meent ( HRM) Sy s t em According to Werner, Schuler and Jackson (2012:290), performance management activities should be aligned with the organisation’s internal environment, the external environment and other HR activities. The internal environment refers to the organisation’s business strategy, the company culture and technology. The external environment includes laws and regulations, the labour market and the country culture. Other HR activities refer to performance-based incentives and employee development. The Internal Environment 1. According to Werner, Schuler and Jackson (2012:289–290), performance management activities can only be effective if they are aligned with the organisation’s business strategy and the company culture in the internal environment. 2. Managers should translate the objectives of the organisation’s business strategy into specific behaviours and goals for their employees. When a company’s culture depends on effective performance management, it can be described as a performance-driven culture. 3. Companies with performance-driven cultures share a common focus on monitoring and improving performance. 4. Technology also plays an increasingly important role in performance-driven cultures by making it possible for employees to receive detailed information about their behaviour and performance, which can then be used in their performance development. The External Environment T hee r ek y issue s in ht e t ex a rn l nei rvonm ne tnf i uenl ecpe f r maor cen ma a nemg n e , tna e m ly th e l e gal e v ni r onment h, t l e a bour m a ker ant dt h e count r cy ultur e . 1. The laws and regulations in the le ga enl i ron v enm t serve as the basic principles to ensure the legality of performance management practices. These principles are similar to those for selection practices. These laws and regulations protect employees against negative consequences in the workplace caused by unfair discrimination and the use of inappropriate information when making employment decisions (Werner, Schuler & Jackson 2012:290–294). Page 2 of 86 2. The la b uo rma rketrefers to the geographical area from which employers recruit their employees for particular jobs (Wärnich, Carrell, Elbert & Hatfield 2015:181). Companies must compete for employees and sometimes seek them domestically, in global markets, or both. The characteristics of the labour market are unique and always changing. 3. Different c ou tryn ucu lt res result in different HR practices and how employees relate to the work environment. Performance management does not occur in a vacuum, but through interpersonal interactions. These personal interactions reflect differences in country cultures. When performance goals are set, for example, in countries like Germany and Sweden, employees expect their supervisors to negotiate with them. In India, however, these personal interactions related to performance management are more informal and confidential (Werner, Schuler & Jackson 2012:294). The following are some of the laws that have implications for performance management practices in South Africa:  The Labour Relations Act (LRA)  The Basic Conditions of Employment Act (BCEA)  The Employment Equity Act (EEA) Integration With Other Human Resources And Development Activities PM systems serve as important “feeders” to other human resources and development activities. eg. consider the relationship between performance management and training. PM provides information on developmental needs for employees. Developmental plans provide information on what skills will be acquired in the near future. This information is also in making recruitment and hiring decisions. PM also provides key information for workforce planning. Specifically an organisation’s talent inventory is based on information collected through the performance management system. Finally, there is an obvious relationship between performance management and compensation system. Compensation and reward decisions are likely to be arbitrary in the absence of a good PM system. PM is thus a key component of talent management in organiastions. It allows for assessing the current talent and making predictions in the future needs both at the individual and organisational levels. Implementing of other HR functions, including training, workforce planning, recruitment and selection, and compensation. Demonstrate how performance management systems are linked to other human resource activities. Performance management is not a stand-alone process isolated from other HR activities. The information gathered through the performance management process can be linked to training, development, and workforce planning. Through performance management the development needs of employees are identified, which can then be feeded into the training and development initiatives of the organisation. Development plans provide information on which skills will be required in future. Recruiting and hiring decisions are also based on this information. To do workforce planning, the Page 3 of 86 organisation has to compile a talent inventory, which is based on information collected through the performance management system. “One reason why performance management often falls short of achieving strategic objectives, is the ambiguity about who is responsible for managing the performance management process.” Does performance management fall in the domain of HR departments, line management or senior management? Motivate your answer. Debates about who is responsible for performance management miss the point. Line managers, HR departments, senior management and employees all need to work together to ensure that performance management and feedback are effective and fair to everyone concerned. Complete buy-in is required from senior management when a performance management system is instituted. Employees will buy into the process if they view the process as fair, because they will know what is expected of them. The system should be flexible and responsive to the changing needs of the organisation. Distinguishing Between Performance Management, Performance Appraisal And Performance Feedback A comparison between performance appraisal and performance management Performance Appraisal Performance Management focus is on performance appraisal and the generating of ratings Focus is on performance management emphasis is on relative evaluation of employees Emphasis is on performance improvement of individual employee and their departmental or team performance Annual exercise – though normally periodic evaluations are made. Continuous process with quarterly or periodic performance review discussions Emphasis is on ratings and evaluation Emphasis is on performance planning, analysis, review, development and performance improvements. Rewards and recognition of good performance are important components. The rewarding of performance may be an integral part – defining and setting performance standards are integral components. Designed and monitored by the HR department. Designed by the HR department, but could be monitored by the respective departments themselves. Ownership is mostly with HR administration. Ownership is with line managers; HR administration facilitates its implementation Critical success factors (CSFs) and key performance indicators (KPIs) are used for bringing in objectivity. CSFs and KPIs are used as a planning mechanism.