Performance Management and Reward System of Employees

Performance Management & Total Reward System of Employees
PART A
Since people are the most critical drivers of value in organisations, effective and ethical
performance management is essential to their success. Employees should know what is
expected of them, and they should be managed engagingly, have the appropriate skills,
productive capacity, and assistance, and are committed to objectives. Employee performance
is monitored, maintained, and improved following an organisation's goals through
performance management. It is a combination of actions rather than a single action that
should be treated holistically (Armstrong, 2022). This essay will examine some of the most
critical factors organisations should consider in determining if their performance management
practices are effective and ethical.
Key factors an organisation should consider in evaluating whether performance
management processes are effective.
Setting personal and team objectives that relate to the organisation's strategic goals,
planning performance to meet the objectives, analysing and evaluating progress, and
growing people’s knowledge, experiences, and talents are all part of performance
management (Armstrong, 2022). One essential feature is that performance management is a
continual process, not a one-time event (Aguinis, 2007). As a result, good performance
management must pull together diverse, integrated operations into a continuous
‘’performance management cycle’’ (Torrington et al. 2008). In the broader sense, PM is
described as applying management approaches and practices to tackle performance criteria
at both the organisational and individual levels. In a limited sense, PM is utilised to set
targets and monitor performance using an appraisal system. It is a method of combining

goal-setting, performance evaluation, and growth into a unified system. The purpose is for
ensuring that employees' performance is aligned with the company's vision and mission and
includes performance improvement, development, and behaviour management (Dessler,
2009)
The following are critical factors for an effective performance management framework:
Long term goal setting -Organisations must properly set goals. They must be long-term,
meaningful, and comprehendible. Employees should understand why these specific goals are
important and how they contribute to organisational objectives (Osabiya, 2015). When
employees know and fully comprehend how their jobs matter, they would engage so much
more about their jobs and be a lot more motivated.
Setting goals ought to be a collaborative effort. Whereas goals used to trickle down from the
top of an organisation, modern corporations are aligning objectives upwards (Olian&Rynes,
1991). As a result, goal-setting should include discussion with the employee and be open
about the organisation's values, strategy, and challenges. Employees can use this data to set
goals that support organisational objectives and make decisions to further these targets.
Moreover, when employees are placed in the heart of the action and given the freedom to
create their targets (before having them authorised by their direct supervisor), they feel a
greater sense of autonomy and responsibility for their tasks. This invariably leads to more
excellent employee performance.
Honest communication and collaboration. According to Armstrong (2022), ‘’ The nature
of performance management involvesa continuing dialogue between managers and the people
they manage’’. Employees expect and appreciate their leaders and managers to be upfront
and honest in all circumstances. They would not want to be pushed in the dark when a
business faces difficulties. They would like to be kept up to date on current events. In
addition to this, they desire real-time communication while building good relationships with

their colleagues and managers. This will entail constructive feedback and open dialogue –
even when such communication is harsh or unpleasant.
Employee recognition and reward. An effective performance management strategy should
prioritise employee recognition and reward (Edirisooriya, 2014). Employees might also feel
valued for their labour and commitment. If employee recognition is not a primary concern, it
will almost certainly adversely influence voluntary institutional turnover.
Honest evaluations and reports on a routine basis. The stronger the individual performance,
the more regular and exact the reviews. Employees seek constant updates on their job, and
the more engaged they are about their performance, the more likely they are to improve and
exceed (Kinicki et al., 2013).
No high employee intends to stay at an organisation for the long term without polishing and
enhancing their skills. Employees value career development, not to forget that companies
benefit when their employees are much more competent.Employee development through
training and career initiatives (Garrow and Hirsh, 2008).
Key factors that organisations should consider when making performance management
processes ethical.
Applying ethical considerations to performance management is vital because organisations
and their actions are expected to be built on the foundation of ethics (Gotsis and Kortezi,
2010; Solomon, 2009). The process of planning, controlling, evaluating, and reviewing
employee performance depends on the principles of impartiality, neutrality, openness, and
good corporate governance. Ethics is a rational thought process that focuses on determining
what ideals to accept and when to accept them, i.e., an individual’s or a group's moral

position or collection of moral principles (Harris, 2011). Ethical behaviour is defined as that
which is founded on a set of moral convictions about what is good and wrong, as well as
professional conduct rules (Banks, 2020). As a result, managerial ethics refers to the norms
and moral ideals that managers employ in their work.
The importance of ethics in performance management (Stainer, Stainer and Gully,1999) is to
improve society since corporate actions affect their social environment. An ethical
performance management system motivates employees to uphold the organisation’s core
values. Since the organisation's ethics are in harmony with its environments, on the other
hand, the company values its employees and provides a pleasant working environment for
them to succeed in life (Harter, Schmidt and Keyes, 2003). This framework is supposed to
operate transparently, with all parties participating in the performance management system
respecting each other's requirements, values, and concerns. Individual, rather than communal,
accountability is emphasised for personal decision-making, behaviour, and action.
Ethical performance management creates or transforms culture such that the organisation’s
vision encompasses its employees, customers, and society. Employees’ decision-making,
behaviour, and actions are then supported by the organisation’s ideals and values when they
are congruent with an ‘ethical’ vision.
Finally, this ethical method to performance management provides a fair and open working
environment for the employees, allowing them to examine the foundations of critical
decisions. The overarching goal of high ethical performance management is to provide an
honest evaluation of performance and work to design a strategy to increase his or her
effectiveness.