Performance Management Systems and Employee Outcomes

This assignment examines the impact of performance management systems on organizational success. It delves into various aspects, including linking individual performance to financial rewards, assessing system effectiveness in reducing employee turnover, and exploring the mediating and moderating roles of work motivation in employee outcomes. The analysis draws upon relevant research studies and provides insights into best practices for implementing and managing effective performance management systems.

Managing People
Report
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TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
1. Structuring individual performance targets so as to maximize the firm's performance..........3
2. How a performance management system can be used to improve employee development
and communications....................................................................................................................4
3. The need to integrate performance management systems with other human resource
processes......................................................................................................................................5
4. The effectiveness of linking performance to financial reward................................................6
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8
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INTRODUCTION
In order to succeed in the competitive marketplace it is essential for the management to
focus on managing people within their organization through assessing and measuring their
performance level (Beltrán-Martín, Roca-Puig and Bou-Llusar, 2008). Thus, it is said that
managing people within organization enhances their individual performance that will further
raise the overall performance of the organization. Presently, the report focuses on case scenario
of performance management at Steel Company that mainly hires the male employees for
rendering full time services within the organization. The report will focus also provide an insight
knowledge regarding the performance management system that must be used by the organization
to improve the employee development and communications within the organization.
1. Structuring individual performance targets so as to maximize the firm's performance
In order to maximize the performance of organization it has been advised to Divisional
Director of Steel Company that they must structure the individual performance target so that
skilled and unskilled staff rendering service within the Steel Company must accomplish their set
target (Liu, Combs and Ireland, 2007). Thus, it will enhances their performance with overall
contributing in maximizing the firm's performance in the steel industry. A target is defined as set
criteria or standard that need to be attained by the individual rendering service within the
company so that it may easily enhance their performance. Hence, structuring individual
performance targets is termed as an effectual method for raising individual performance with
attaining the higher organizational performance (Chubb, Reilly and Brown, 2011). Moreover,
structuring or constructing the performance targets for the individual will support in setting the
weekly and monthly targets so that they can easily output the required material and production
that will maximize the performance of Steel Company.
Thus, it is essential for Divisional Director of Steel Company to focus on several key
factors in setting performance targets to individual that is targets must be stated or expressed in
the clear manner so that it may easily attainable by the staff or employees. On the other hand, the
targets that are set must be focused on the process output as compare to enabling individual
performance in order to promote or encourage team activity (Robert, 2002). In addition to this,
while setting the individual performance target it is also essential to focus on aligning the target
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with organizational goals so that it may directly results in maximizing or enhancing the
performance of Steel Company.
2. How a performance management system can be used to improve employee development and
communications
The performance management is termed as an approach that basically focuses on
encouraging and amending the effectiveness among the employees. Performance management
system is also known as an on-going process under which the Divisional Director as well as team
leaders within the Steel company collaboratively perform activities related with planning,
monitoring and reviewing the individual activities and action (Noon, 2008). Thus, it overall
contribute in attaining the organization gaols and objectives.
It is stated that an effective performance management system within the Steel Company
can be used in amending or developing the employees as well as it also improve their
communication process (Hutchinson, 2013). Through assessing the scenario of Steel Company
with the increasing level of competitions and difficult financial performance of the Steel
Company the owner-manager has impose the pay freeze for three consecutive years. Thus, using
performance management system within the company is consider as an effective option for the
development of employees as it focuses on different components such as,
 Performance planning- The key component of performance management system is to
conduct proper planning for performance so that Divisional Director of Company can
easily appraise the employee performance (Vartiainen, Antoni and Thierry, 2008). The
performance planning within the organization is collaboratively done by the appraisee
and reviewer at the starting of performance session.
 Performance appraisals and reviewing- The Divisional Director then appraise the
performance of individual and employees within the Steel Company through providing
them proper grading and rating for their services that they renders within the organization
(Components of Performance management system, 2016). The Director of Steel
Company with the help taking response and feedback easily review the individual
performance so that they may know about the gap Tangen, S., 2004Liu, Y., Combs, J. G.
and Ireland, R. D., 2007Beltrán-Martín, I., Roca-Puig, V. and Bou-Llusar, J. C., 2008and
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loop holes that affect their performance. Thus, appraising and reviewing the individual
performance often used in improving and developing the employees.
 Rewarding employees for good performance- Through performance management system
it may also results in rewarding the employees and staff for their good performance
within the Steel Company. Thus, it can be used to improve the employee development
that will directly contribute in enhancing the organization performance.
3. The need to integrate performance management systems with other human resource processes
It is required to integrate performance management systems (PMS) with the other human
resource processes within the Steel Company so that it may overcome the issues and maximize
the firm performance (Ullsperger, 2003). The need of integrating performance management
systems within the processes outcome in decreasing the employee turnover, better inner talent
mobility, prop er alignment of manpower to the business strategy, improving productivity of the
workforce etc.
Therefore, it is said that there is need to integrate the performance management systems
with the different human resource processes for instance, performance management system
determine the actual performance of employees within the Steel company and focuses on
improving the effectiveness of employees. Thus,s in order to ensure recruitment and selection
process within the cited company they must select the competent and qualified personnel that
have desired skills and capabilities to accomplish the goals and objective of firm (Sheilds,
2007). On the other hand, another need to integrate performance management system with the
human resource processes training and development is that it assist in providing training to
employees so that it may fill up the gap of skills among employees and results in promoting the
effectiveness among the employees.
In addition to this, performance management systems it also linked with the human
resource processes that is motivation as with the help of this approach it outcome in rewarding
the employees for rendering their performance within the company (Wood, 2006). Thus, with
PMS it may motivate their employees and staff through providing them financial and non-
financial rewards for their performance.
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4. The effectiveness of linking performance to financial reward
Traditionally for rewarding the staff and employees of Steel company manager often
focuses on their job description not on how individual perform service within the organization.
Although the financial benefits and incentives were also be provided on the seniority basis
(Tangen, 2004). With the changing in scenario reward system often changes within the
organization. In the present scenario, financial rewards are mainly consider as the major of key
factor that motivate the staff in rendering quality services within the organization that will further
impact their individual performance as well as maximizes the overall performance of
organization within the Steel industry (Liu, Combs and Ireland, 2007). Thus, it is said that
Divisional Director must link the performance to financial reward as it will be considered as an
effective approach that benefit the organization as well as also manages the individual
commitment towards the organization. The effectiveness of linking performance to financial
reward results in- Motivating the employees: The effectiveness of linking performance to financial reward
is that it support in encouraging and motivating employees towards rendering the proper
services within the Steel company, increasing their commitment towards attaining the
goals and aims of the organization etc. with the help of proper motivation it may results
in improving their performance thus, staff will attempt to align their performance so that
they may attain the overall goals and objectives (Kuvaas, 2006). Deceasing attrition rate: Another effectiveness of linking performance with the financial
reward is that it empower the staff to retain within the organization so that they may
easily sustain in the long run. With the lower employee turnover it results in increasing
the retention rate of employees that support the organization in overcoming the
recruitment cost that results in financial stability of the Steel Company.
 Participation management: Linking performance with the financial reward also results
in enhancing the level of participation among the employees and staff that often results in
increasing the autonomy, higher productivity as well as satisfaction among the employees
that further enhances the performance of organization in the Steel industry (Beltrán-
Martín, Roca-Puig and Bou-Llusar, 2008). With the help of participation management
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within the Steel Company it results increasing the confidence level among the employees
that often results in creating creativity in their work and activities.
CONCLUSION
From the above report it can be summarizes that performance management plays pivotal
role within the organization that assess and measure the individual performance in order to know
that it has been aligned with the overall organizational goals or not. Furthermore, the report has
also summarizes that performance management system within the Steel Company is significant
as it assist in decreasing the rate of employee turnover from the organization. Lastly, it has also
assess the effectiveness of linking the individual performance with the financial rewards.
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REFERENCES
Books and Journals
Beltrán-Martín, I., Roca-Puig, V. and Bou-Llusar, J. C., 2008. Human resource flexibility as a
mediating variable between high performance work systems and performance. Journal of
Management. 34(5). pp. 1009-1044.
Hutchinson, S., 2013. Performance Management: Theory and Practice. London. CIPD
Kuvaas, B., 2006. Performance appraisal satisfaction and employee outcomes: mediating and
moderating roles of work motivation. The International Journal of Human Resource
Management. 17(3). pp.504-522.
Liu, Y., Combs, J. G. and Ireland, R. D., 2007. The value of human resource management for
organizational performance. Business horizons. 50(6). pp. 503-511.
Noon, M., 2008. A Dictionary of Human Resource Management. Oxford University Press.
Robert, J., 2002. Macroeconomic Policies of Developed Democracies. Cambridge:
Cambridge University Press.
Sheilds, J., 2007. Managing employee performance and reward. Cambridge University Press.
Tangen, S., 2004. Performance Measurement: From Philosophy to Practice. International
Journal of Productivity and Performance Management. 53(8). pp. 726- 737.
Ullsperger, M., 2003. Error monitoring using external feedback: specific roles of the habenular
complex, the reward system, and the cingulate motor area revealed by functional magnetic
resonance imaging. The Journal of neuroscience. 23(10). pp. 4308-4314.
Vartiainen, M., Antoni, C. and Thierry, H., 2008. Reward Management: Facts and Trends in
Europe. Pabst Science Publishers.
Wood, E. H., 2006. The internal predictors of business performance in small firms: A logistic
regression analysis. Journal of Small Business and Enterprise Development. 13(3). pp.441–
453.
Online
Chubb, C., Reilly, P. and Brown, D., 2011. Performance Management. [Pdf]. Available through:
<http://www.employment-studies.co.uk/system/files/resources/files/mp90.pdf>. [Accessed
on 18th July 2016].
Components of Performance management system, 2016. [Online]. Available through:
<http://www.managementstudyguide.com/need-for-performance-management-system.html
>. [Accessed on 18th July 2016].
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