Performance Management System for Steel Co.

This assignment requires an analysis of the performance management system used by Steel Co., identifying its problems and proposing solutions to enhance employee satisfaction and productivity. The task involves considering suggestions from a business advisor specialized in performance management systems and outlining strategies to improve the company's overall performance.

MANAGING PEOPLE

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
Outlining advice for Divisional Director regarding various issues faced by Steel Co................1
Structuring individual performance targets so-as-to maximise firm’s performance...................2
Using performance management system to improve employee development and
communications...........................................................................................................................3
Need to integrate performance management systems with other Human Resource (HR)
processes......................................................................................................................................5
Effectiveness of linking performance to financial reward...........................................................5
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................7

LIST OF FIGURES
Figure 1 Stages of performance management system.....................................................................4

INTRODUCTION
Managing employee performance within an organization plays a most crucial role in
attaining higher competitive advantage. With the help of effective and efficient performance,
staff members can give their best and try to develop quality products. By providing excellent
services to customers, company can easily maintain the loyalty base of customers (Bol, Kramer
and Maas, 2016).
For the same, present study is based on the case study of performance management of the
organization named Steel Co. This is a small manufacturing company which is facing huge
difficulties at the time of managing their employees. This company is run by an owner-manager
with 65 people around them as manpower. Most of their workers are having mixed performance
due to long term relationship. Company is serving its business operations from last thirty years
by majorly having its two sections i.e. sales team as well as manufacturing operations. According
to the given case scenario, manager of Steel Co. uses autocratic approach through which they
usually keep command over all their workers. Within these recent years of facing tough
competition, it is becoming more difficult for them to maintain their financial performance as
well as trading conditions. In order to secure their poor position, owner manager has imposed a
pay freeze for last three years with certain terms and conditions. There are several employee
conditions which are quite poor and have no occupational sick pay scheme as well. Due to the
use of autocratic approach, employees feel dissatisfied and are not able to perform their tasks
appropriately. On the very next hand, divisional director uses participative approach and try to
understand worker’s needs. The most common problem faced by divisional director is related to
the working of group of employees. Majority of their workers are highly associated with good
earning but they lack commitment. After identifying all such problems, divisional director of
firm explained business advisor to make several effective changes regarding culture etc. by the
way of using performance management as a tool. Further, this study gives significant
information about the various ways through which performance of individuals can be improved.
Outlining advice for Divisional Director regarding various issues faced by Steel Co
This study brief out the different ways through which divisional director can overcome
with the existing issues within their organization. Here, they have already implemented three
different ways to manage the performance of individuals as well as firm (Domínguez-Falcón,
Martín-Santanaand De Saá-Pérez, 2016). But after monitoring the changes, divisional director
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has undertaken the review of performance and find out that neither performance nor quality has
been improved and employee’s commitment is still too low. Business advisor suggested different
ideas to divisional director of Steel Co. and these ideas are as follows:
Structuring individual performance targets so-as-to maximise firm’s performance
Firstly, Steel Co. is a small manufacturing company and is employing small number of
employees. It is regarded as their major advantage through which can easily keep in touch with
every employee. All those organizations having strong workers base or large number of
employees found it more difficult to cope with the performance of every single individual.
However, business advisor suggested that it is highly essential to motivate all the workers by
structuring individual performance targets (Elorzaand and et.al., 2016). By setting these targets,
company can easily go through the performance of every single employee.
All the workers of Steel Co lack commitment and not effectively fulfil their
commitments. By setting targets for individual performance as per their working hours and
shifts, it is easier to find out their working status. Within the same, different team roles are
required to assign to each and every team member (Sharma, Sharma and Agarwal, 2016). In this
regard, team leader is responsible for managing the whole performance and appropriate
monitoring for the same regarding achievement of target. While structuring the performance
targets, it is highly essential for divisional director of Steel Co. to cope up with these different
factors:
It is highly essential to set and establish a clear focus on all the actions and decisions. All
the decisions are required to be set and expressed in an effective manner (Esen,
Hatipoğluand and Boyacı, 2016).
At the time of monitoring performance, it is essential to process the output according to
the urgency of work.
Purpose should be achieved and clearly defined rather than activities (How to Ensure
Strong Employee Performance, 2016).
With the help of following all the above processes, individual performance can be monitored
as per the target of individuals.
They have already developed different teams and provided different tasks to them. But,
rather than fulfilling all those activities, they are not so committed towards their work (Mononen
and Leviäkangas, 2016). Within this concern, KPIs can be incorporated in order to identify
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individual performance within the team. With the help of Key Performance Indicators (KPIs),
divisional director can easily provide appropriate justifications that set targets have been
achieved or not (Haas and Yorio, 2016). It also evaluates various activities that are critical for
their roles and performance. It provides them several justifications regarding effective
achievement of targets. However, team leaders can give frequent, timely and consistent
feedbacks to all the team members.
From the above discussion, it has been founded that by the way of setting individual
target and monitoring those with the help of KPIs, Steel Co can maximize their workers
performance as well as the level of commitment.
Using performance management system to improve employee development and communications
Another major problem found out by the divisional director is related to the employee
development as well as communication. For the same, business advisor has given various
suggestions such as implementing appropriate performance management systems.
Communication is regarded as one of the most essential parts for managing various business
activities and operations.
There are different phases of performance management systems such as development and
planning phase, planning and implementation phase and the last is monitoring phase. By
effectively implementing this system, Steel Co. is able to improve employee’s development as
well as leads to better communication (Hikmat, Primianaand and Wibisono, 2016).
Here, on the basis of this system, company can provide different compensatory benefits
to their workers. However, they have already provided at the time of gathering different
responses of employees about the bonus scheme, it has been founded that such type of bonus had
not changed their lives. As per their standard of living, bonus amount is too low and not so
effective. From the staff forum, dissatisfaction among workers has been found (Hosain, 2016).
The business advisor is already having its specialization in performance management system and
he determines that owner manager needs to change their working and leadership style. He is not
required to keep command over their workers. It is better to cooperate with them and involve
them within the decision making process. It is a great way to motivate and tell them that they are
the important part of their working organizations (Bol, Kramer and Maas, 2016). Business
advisor suggested various steps for effective performance management system which are shown
as below:
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Figure 1 Stages of performance management system
(Source: Armstrong and Baron, 2000)
For effective coordination and communication, democratic leadership is one of the most
effective leadership styles. At the time of implementing performance management system, there
are several factors which need to be taken into consideration such as:
 Communication
 Accountability
 Skill development for all
 Alignment
 Clear measurement
By rewarding workers performance and providing them sufficient bonus, they are able to
keep them happy and satisfied. Through this, they can effectively maintain their performance and
easily generalize the form of business processing (Mononen and Leviäkangas, 2016).
Need to integrate performance management systems with other Human Resource (HR) processes
Steel Co is having several existing HR policies to motivate their workers but that is not
sufficient enough to improve the quality of workers. For the same, better processing can be made
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up by effective set up of appraisals as well as proper monitoring of workers. Appraisal should be
done on the basis of several points such as yearly performance, target to be met, attitude of a
person and contribution towards the success of company (Domínguez-Falcón, Martín-Santana
and De Saá-Pérez, 2016).
All these points can be measured as per the past records of workers performance. In
addition to this, team motivation and rewards system can be incorporated by them where they
can boost up the team and go through the internal team reward systems on the basis of best
performance. Appropriate training for all the workers should be organized on weekly basis so
that they can clarify their doubts and develop effective contribution towards company. Further, it
can be stated that performance of every individual can be enhanced with the help of effective
performance appraisals, transferring as well as trainings.
Effectiveness of linking performance to financial reward
Steel Co. can also link up individual’s performance through financial rewards system.
These rewards should be of huge amount that at least fulfils the basic necessity of individuals.
However, Divisional Director of company has come up with a new scheme by which team
performance against production targets is linked to the payment of bonus to team members.
Workers do not found it so effective and not at all satisfied with this. In this concern, company
can effectively link up the performance of workers on the basis of financial rewards and easily
boost up the confidence level of all the workers. Performance based financial rewards depends
upon the performance of individuals as well as their job performance ability (Bol, Kramer and
Maas, 2016).
Here, workers get financial payment from employers in the form of their salary and it is
expected as a result of performance or work for which individual was hired (Hikmat, Primiana
and Wibisono, 2016). It is being given to them when an employee helps in the achievement of
organizational goals. It leads to motivate workers of Steel Co. to enhance their working
capabilities through effectively performing all their business operations (Employee Performance
Appraisals, 2016).
CONCLUSION
With the help of taking various suggestions through business advisor who is specialized
in performance management system, Steel Co can easily overcome with the problems faced by
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their firm. Through this, they are able to maximize the performance of workers by maintaining
their satisfaction level as well.
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REFERENCES
Books and Journals
Bol, J. C., Kramer, S. and Maas, V. S., 2016. How control system design affects performance
evaluation compression: The role of information accuracy and outcome transparency.
Accounting, Organizations and Society.
Domínguez-Falcón, C., Martín-Santana, J. D. and De Saá-Pérez, P., 2016. Human resources
management and performance in the hotel industry: the role of the commitment and
satisfaction of managers versus supervisors. International Journal of Contemporary
Hospitality Management.
Elorza, U. and et.al., 2016. The effect of management and employee perspectives of high-
performance work systems on employees’ discretionary behaviour. Personnel Review.
45(1).
Esen, H., Hatipoğlu, T. and Boyacı, A. İ., 2016.A Fuzzy Approach for Performance Appraisal:
The Evaluation of a Purchasing Specialist. Springer International Publishing.
Haas, E. J. and Yorio, P., 2016. Exploring the state of health and safety management system
performance measurement in mining organizations. Safety Science. 83. pp.48-58.
Hikmat, M. T., Primiana, I. and Wibisono, D., 2016. Analyzing Mainstreams In Current
Performance Management Studies And Its Relationship With HR And Other Practices: A
Literature Review. SainsHumanika. 8(1-2).
Hosain, M. S., 2016. Impact of Best HRM Practices on Retaining the Best Employees: A Study
on Selected Bangladeshi Firms. Asian Journal of Social Sciences and Management
Studies.3(2). pp.108-114.
Mononen, P. and Leviäkangas, P., 2016. Transport safety agency's success indicators–How well
does a performance management system perform?. Transport Policy. 45. pp.230-239.
Sharma, N. P., Sharma, T. and Agarwal, M. N., 2016.Measuring employee perception of
performance management system effectiveness: conceptualization and scale development.
Employee Relations: The International Journal. 38(2).
Online
Employee Performance Appraisals. 2016. [Online]. Available through:
<http://www.litmos.com/training-platform/define-what-is-employee-performance>
[Accessed on 1st March, 2016].
How to Ensure Strong Employee Performance. 2016. [Online]. Available through:
<Managementhttp://managementhelp.org/employeeperformance/> [Accessed on 1st March,
2016].
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What is Employee Performance Management. 2013. [Online]. Available through:
<http://www.peoplestreme.com/what-is-performance-management.shtml> [Accessed on 1st
March, 2016].
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