2. Performance Management System
Alignment of Individual Performance with
Organizational Goals
Goal Management
Use of Performance Management Process
Performance Management Process
Employee Performance Goals
Clearness about individual expectations
Enhance Employee Commitment
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3. Cont…
SMART Goals
Tying employee standards into strategic business
decisions
Alignment of top-level business goals with specific
department
Translate of business plan into specific deliverables
Encouragement of employees
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4. Cascading Goals Downward
Cascade goals down to individual and teams
Increase value across board
Increase employee understanding towards
organizational goals
Setting of expectations for managers
Sharing of status report
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5. The Performance Review Cycle
Discussions between the managers and the
employees
Performance review Stages
Before performance review
During performance review
After performance review
Identification of training and development needs
Design of Action plan
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6. Measurement of Employee
Satisfaction
Align employee satisfaction with performance
management process
Competencies-based performance management
Attain sustainable competitive advantage
Enhance employees’ productivity
Improve customer satisfaction
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7. References
Cardy, R. L. & Leonard, B. (2011). Performance Management: Concepts, Skills,
and Exercises. USA: M.E. Sharpe.
Houldsworth, E. & Jirasinghe, D. (2006). Managing and Measuring Employee
Performance. UK: Kogan Page Publishers.
Krausert, A. (2009). Performance Management for Different Employee Groups:
A Contribution to Employment Systems Theory. Germany: Springer.
Locke, E. (2009). Handbook of Principles of Organizational Behavior:
Indispensable Knowledge for Evidence-Based Management. USA: John Wiley &
Sons.
Olsen, E. (2011). Strategic Planning Kit for Dummies. USA: John Wiley & Sons.
www.assignmenthelpexperts.com
8. Cont…
Paladino, B. (2010). Innovative Corporate Performance
Management: Five Key Principles to Accelerate Results. USA:
John Wiley & Sons.
Pope, E. C. (2005). HR How-to: Performance Management. USA:
CCH Incorporated.
Pulakos, E. D. (2009). Performance Management: A New
Approach for Driving Business Results. USA: John Wiley & Sons.
Rao, T. V. (2004). Performance Management and Appraisal
Systems: HR Tools for Global Competitiveness. USA: SAGE
Publications.
www.assignmenthelpexperts.com
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In current business scenario, in order to align employee activities and achievements with the success of the companies, organizations use different techniques to appraise employees. Companies use goal management to link individual performance to organizational goals. It helps organizations and their employees to focus on the most important and pressing priorities in order to get success in the market. Additionally, organizations also design an effective performance management system in order to link employee performance to organizational goals (Paladino, 2010). Design of this system is important for organizations to attain competitive advantage in the market.
The main aim of companies behind setting an effective performance management system is to ensure that different processes, departments, teams and employees are working together in an effective manner to attain overall organizational goals. A process is used by organizations in order to make and implement an effective performance system within the business. At the initial stage, companies set employee performance goals in order to an effective performance appraisal system (Cardy & Leonard, 2011). Goals help individuals to decide the tasks on which they should direct their efforts. In this way, setting specific goals make it clear; the expectations from the individual. It is the reason that they can give their best towards organizational goals.
It is necessary that firms set SMART (specific, measurable, achievable, reliable and time oriented) goals so that they can better align organizational goals with the individual performance. SMART and challenging goals can be more motivating for employees because they provide a sense of accomplishment when achieved. In the next step, managers try to tying employee standards into strategic business decisions. In order to attain overall organizational goals, firms make strategic business decisions with the consideration of all internal and external factors. It will be beneficial that while framing strategic business decisions, companies tying employee standards with these decisions. It is because it will help individuals to align their performance with organizational goals.
At the next level, organizations focus to create a link between employee performance and organizational goals. In this concern, organizations try to align top-level business goals with specific business units and departments. In order to effectively link individual and organizational goals, managers need to understand the organizational strategic plan including strategies, objectives and goals (Locke, 2009). After this, they should translate the plan into specific deliverables for each individual in the organizations. Managers should focus on encouraging individuals to involve them in the decision making process and to know their views about the way, how a job’s functions and goals fit into the organizational overall goals.
Once, the top management has agreed on the top-level organizational goals, managers then begin to cascade goals down to individual and teams. The cascading process impacts the performance of the organization in a positive manner and also increases the value across board (Pulakos, 2009). Cascading goals downwards enable the employee to understand overall organizational goals and the way they can contribute in the achievement of those goals.
For effectively cascading goals downward, after completing the strategic plan and budget, managers should develop performance plans and train supervisors to link individual and organizational goals. In addition to this, organizations should use regular reporting system in order to monitor progress towards achievement of goals (Olsen, 2011). Companies set expectations for managers to identify contributions by individuals and to build action plans to remove performance challenges. It is necessary that action plans work effectively towards individuals’ performance targets.
To make an effective performance management system, it is also necessary that there is effective communication with employees throughout the performance period. Mangers should also share status reports with the employees and ensure that employees understand their success and failure points (Pope, 2005). It will be beneficial that there is proper inspiration of accomplishment and clarification about improvement opportunities. In order to evaluate the employees’ performance against organizational goals, firm can use a performance review system.
Performance review is one of the important parts of the total performance management system. It refers to the discussions between the managers and the employees to measure the degree of performance achievement, to identify the training and development needs and draw the action plan for future performance improvement. Rao (2004) defined different steps that an organization can use under performance management system before, during and after performance review. Before the performance review, firms should develop the time schedule and venue for performance review. It is necessary that organizations conduct a performance review meeting during the working hours of working days. It will also be beneficial to understand the employees’ job descriptions to effectively measure the expectations. Firms should also ensure that the review meeting maintains two-way communication channel in order to open-up the employees during the review process.
Additionally, during the review process, managers should guide employees with specific feedback on the performance and also make sure that the employees are able to share their self-evaluation and understand where they are right or wrong. At the same time, after performance review, managers should provide a copy of performance review report to individuals and also keep a record of performance review for future reference (Houldsworth & Jirasinghe, 2006). In the end of the performance management process, it is also necessary to measure employee satisfaction to the process.
Performance management strategies of an organization must lead to employee satisfaction, as employees are one of the important stakeholders of the business. An effective performance management system is one, which equip employees with all skills and support performance with relevant strategies as well as result in employee satisfaction. Organizations should ensure that their performance management process results in employee satisfaction in terms of a good reward strategy, culture strategy, career strategy and leadership development strategy (Krausert, 2009). Measurement of employee satisfaction against the process provides the efficacy status of performance management strategies. Career-based and competencies based performance management are some important tools to measure employee satisfaction against process.
For example, competency based performance management system support employees’ efforts to attain job-related competencies to perform the job in an effective and efficient manner (Locke, 2009). Thus, it can be stated that implementation of performance management system in the organizations help managers to align individual performance with the overall organizational goals. Further, it is beneficial for companies to attain sustainable competitive advantage in the market in terms of highly committed employees with increase organizational productivity and increased customer services.