Theories of Performance Management System.

1. Theories of
Performance
Management System
PREPARED BY FIZA MURGHOOB
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2. A process for establishing a shared
understanding about what is to be
achieved, and how it is to be achieved,
and an approach to managing people
that increases the probability of
achieving success
(Weiss and Hartle, 1997)
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3.  Traditionally, performance management is viewed to be the responsibility
of immediate supervisor.
 Today, modern employee now expect to be more involved in determining
the performance management that affects them.
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4. Motivational theories
 Hierarchy of Needs Theory by Maslow,
 Theory X and Theory Y by Mcgregor, and
 Two-factor theory of Herzberg.
 Expectancy Theory (Guest, 1997),
 Justice Theory (Latham et.al, 2005),
 Self-Determination Theory (Ryan and Deci, 2000).
 Donovan (2001) Identified Equity Theory, Expectancy Theory, Cognitive
Evaluation Theory, Goal Setting Theory, Control Theory, and Social
Cognitive Theory
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5. Best known Early theories of motivation
 Hierarch of Needs Theory by Maslow.
 Theory X and Theory Y by Mcgregor
 Two-factor theory of Herzberg
motivation is a means of inspiring people to
intensify their desire and willingness to discharge
their duties efficiently and to co-operate for the
achievement of common objectives.
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6. Maslow’s hierarchy of
needs
 Individuals cannot move to the next
higher level until all needs at the current
(lower) level are satisfied.
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9. Goal setting theory
Five basic principles that allow goal setting to perform better.
 Clarity refers to a clear and measurable goal that can be achieved within a specific timeline and
within goal setting.
 Challenge refers to the goals being able to achieve a decent level of difficulty, motivating the
individual and organization to strive for positive goal achievements.
 Commitment makes individuals or organizations put on deliberate efforts in meeting goals.
Furthermore, it also helps goals to become more achievable.
 Feedback provides information on the progress towards achieving goals. Individuals and
organizations can adjust goal setting according to the feedbacks.
 Task complexity makes the achieving of goals easier by laying down process and steps. Goal
setting can be achieved by applying all the principle stringently and ensuring that all goals
account for the principles.
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10. Limitation of goal setting theory and its
validity in a business
 Time-consuming and expensive in an application.
 Selections of right people with skills and knowledge.
 Making training for career development and organizational productivity a
necessity.
 Involving time and incurring expenses.
 Internal competition risk
 Favoritism by leaders of those individuals who perform better
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11. Control theory
 Actions of all systems should be in sync with the overall goals and
objectives of an organization (Barrows & Neely, 2012)
 Forms of control which an organization can use in order to get the desired
results such as:
✓ organizational structure,
✓ behavioral controls like norms and policies of an organization or
✓ performance measurement mechanisms.
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12. Strength and weakness of control
theory
 An employee hopes to meet their basic needs by working in an
organization. Once their needs align with the organization’s standards and
demands, the desired behavior will be achieved.
 On the other hand, control theory assumes that employees look at their
feedback. This feedback controls the quality of the output. However, it
can also have a negative impact, as it could result in decreased
motivation and productivity level of the employee.
 In control theory employee performance is also controlled by the rewards
and recognition which an employee achieves once his performance
meets the standards of an organization.
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13. Expectancy theory
 Individuals behave in a specific
manner because they get motivated
by the desirable outcome of such
behavior.
 Expectancy is determined by
individual belief that performance of
a specific type of behavior will
certainly help the individual in
attaining desired performance goals
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14. Application of expectancy theory
 Determines the motivators that influence people to join
an organization based on needs, goals and past
experiences.
 Interprets the specific behavior that the employees
exhibit based on their individual expectancy
calculations.
 Postulates that different people want different things
from their organization. This range from good salary to
job security to scopes for professional enrichment.
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15. Advantages of expectancy theory
 Employees can achieve maximum job satisfaction if the right motivator is provided
to them.
 Helps in interpreting individual psychologies.
 Helps in recognizing the individual motivators that influence people to make
choices based on their specific expectations.
 Helps in making individual employees aware about organizational behavior and
consequent expectations from the organization.
 Organizations are able to identify actual performance of their employees using this
theory
 Helps them in retaining employees who can add value to their firm by recognizing
their respective intrinsic and extrinsic motivators
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16. Limitation of expectancy theory
 Variables are quite difficult to measure.
 Involvement of a number of variables makes the theory
complicated in nature
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17. Justice theory
✓ The extent in assessing the perceptions of the employees
regarding organization’s performance management system.
✓ The better the employee perception of an organization, the
higher the satisfaction level of that employee
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18. Properties of justice theory
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19. Advantages of justice theory
 Commitment.
 Helps in building the strong connection between the employees and the organization.
 Fostering job performance.
 Enhances the overall performance of the organization.
 Reduced absenteeism.
 Indicates that employees are being provided with adequate training and support which
ensures that employers are dealing with their employees appropriately and
professionally.
 Improved health.
 Outcomes and well-being is an important focus of organizational psychology and
management research.
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20. Limitations of justice theory
 Justice theory sometimes viewed as time-consuming and
controversial, especially when it comes to increment of
pay structure of the employees which leads to
dissatisfaction among them.
 Employees may sometimes perceive that they are
performing at an outstanding level while the supervisor
sees such performance as average.
 Employers may make errors in their judgment or permit
biases during the process of evaluation. This might occur
because they focus on the negative aspects and not
balancing it with the positive aspects
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21. Application of justice theory
It promotes better planning for the institution,
which results in achieving the employee goals to
organizational goals.
It promotes communication and participation to
both parties resulting in increased trust.
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