As client preferences shift, organizations have to adjust their products and services in order to match these preferences. One of the components that are useful in aligning company products with client expectations is ensuring that the workforce has the right expertise and motivation. To ensure that employees have the required drive to deliver, organizations should institute well-designed performance management systems. Well-designed performance management systems enable firms to achieve their goals and facilitate the development of employees. This report evaluates the differences between performance management and performance appraisal, discusses how performance management systems contribute to organizational success, examines the features of well-implemented and poorly designed systems, and explains how to eliminate common errors.
Difference between Performance Management and Performance Appraisal
Performance management and performance appraisal have notable differences. Fundamentally, performance management is a holistic activity that looks at the expertise held by employees and how organizations can improve these skills. Qamar and Asif (2016) argue that the holistic nature of performance management extends to cover the employee and the company. Moreover, performance management strives to advance the productivity and expertise of employees so that the company enjoys the benefits accrued from the development in future. On the other hand, performance appraisal reviews how employees delivered over the recent past. In effect, performance appraisal is a process where enterprises examine the level of employee performance over a certain period, which may be annual. Categorically, performance management may succeed performance appraisal because appraisals can kick-start the process of management. After evaluating the level of employee performance, companies can decide to embark on a process of developing their talents and skills.
Contribution of Performance Management Systems to Organizational Success
Performance management systems motivate, coach, and develop the talents of employees in organizations. Arthur, Herdman, and Yang (2016) assert that out of well-designed performance management systems, companies enjoy a number of benefits regarded as contributions. Improved innovation, productivity, and motivation are some of the benefits that stem from well-instituted systems of managing performance. Remarkably, performance management focuses on the company and the employees. Smart managers understand that when employees have the right expertise, motivation, and the necessary resources, product quality augments (Qamar & Asif, 2016). Moreover, when a company uses the system to motivate its employees, they become more innovative and deliver products that match consumer expectations. Improved innovation, productivity, and motivation are benefits that amplify the market share of organizations and facilitate the development of employee talents and skills.
Features of Well-Designed and Poorly Implemented Systems
Poorly implemented performance management systems have various features that hamper the level of organizational productivity. While well-implemented management systems yield numerous benefits, management systems that follow uninformed implementation procedures demoralize employees and affect the company’s market share (Van, Bouckaert, & Halligan, 2015). Notably, some of the main features that differentiate well-designed management systems from the poorly implemented ones are time and the objectives. Buckingham and Goodall (2015) explain that poorly implemented performance management systems do not initiate regular training and employee motivation strategies.
Consequently, well-designed systems propose regular training, rewards, and encourage organizations to provide the resources that spark and drive workplace innovation. Melnyk, Bititci, Platts, Tobias, and Andersen (2014), as well as Cascio (2018), elucidate that when performance management systems fail to motivate and empower employees, enterprises experience reduced productivity in the workplace. On the other hand, well-implemented systems motivate employees and develop them in the ladder of success. Therefore, the main features that distinguish well-implemented systems from the poorly designed ones comprise the frequency of training employees, the scale of motivation that they yield, and the level of inclusivity that they envision.
Common Errors and Their Elimination
Some of the common errors associated with performance management systems comprise failure to align the system with organizational objectives and provision of inadequate education to the employees. To develop a superb performance management system, companies should ensure that the system is in line with its objectives. Motivation, coaching, and training should empower the workforce so that they deliver products that match the expectations of the company and the marketing environment (Armstrong, Baron, & Chartered Institute of Personnel and Development, 2007). In order to eliminate the error of alignment, firms should examine their objectives and assess whether they match the provisions of the system prior to its implementation.
Another common error that requires elimination is the provision of inadequate education and awareness to the workforce. At times, some companies use a bureaucratic format that limits employee participation. Limited employee participation leads to the development of a negative attitude towards the management. With the poor format of management, firms fail to provide adequate education on the deliverables expected from their workforce. Barak (2016) claims that in the absence of employee participation companies do not get opinions on how particular projects should be undertaken. The implication of inadequate education is reduced motivation and productivity. Utilization of democratic and all-inclusive management styles is useful in eliminating common errors linked to performance management systems.
Performance management systems enable companies to grow and expand their market share. Besides facilitating organizational growth, the systems are also useful in promoting the skills and talents held by employees in particular enterprises. Some of the main pillars of performance management systems include motivation, coaching, and provision of resources, which increase the level of creativity among the workforce. Well-designed performance management systems not only improve the position of a firm in the market but also develop its employees. It is critical to ensure that management systems are in line with the objectives of the company and that the management styles are inclusive so that companies eliminate common errors that affect their overall performance.
Armstrong, M., Baron, A., & Chartered Institute of Personnel and Development. (2007). Managing performance: Performance management in action. London, England: Chartered Institute of Personnel and Development.
Arthur, J., Herdman, A., & Yang, J. (2016). How top management HR beliefs and values affect high‐performance work system adoption and implementation effectiveness. Human Resource Management, 55(3), 413-435.
Barak, M. (2016). Managing diversity: Toward a globally inclusive workplace. California, CA: Sage Publications.
Buckingham, M., & Goodall, A. (2015). Reinventing performance management. Harvard Business Review, 93(4), 40-50.
Cascio, W. (2018). Managing human resources. New York, NY: McGraw-Hill Education.
Melnyk, S., Bititci, U., Platts, K., Tobias, J., & Andersen, B. (2014). Is performance measurement and management fit for the future? Management Accounting Research, 25(2), 173-186.
Qamar, A., & Asif, S. (2016). Performance management: A roadmap for developing implementing and evaluating performance management systems. South Asian Journal of Management, 23(2), 114-150.
Van, W., Bouckaert, G., & Halligan, J. (2015). Performance management in the public sector. London, England: Routledge.