The Significance of Performance Management System

The provided report concludes that a performance management system plays a significant role within a firm to improve employee performance. It directly impacts business success and is essential for motivating employees to work hard for the company. Hiring skilled and experienced employees can enhance productivity, and providing rewards based on performance can boost morale and loyalty.

Talent management
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Table of Contents
Introduction......................................................................................................................................2
1. Maximise the firm performance..............................................................................................2
2. Improve employee’s development and communication with the use of performance
management system....................................................................................................................3
3. The way Steel co. can integrate performance management system with other human
resources processes.....................................................................................................................4
4. The effectiveness of linking performance to financial reward................................................5
Conclusion.......................................................................................................................................6
Reference.........................................................................................................................................7
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Introduction
The fundamental goal of performance management is to promote and improve employee
effectiveness. It is a continuous process in which employees and manager work together to plan,
monitor and review performance of employees and their overall contribution to the firm. The
present report is based on case study of Steel co. which is falling down because of its poor
performance. It earns less profit due to which it enables to survive in a competitive market. The
employer was forced to freeze all employees’ salary and it also removes incentive and bonus
scheme which was not a perfect step to gain profit. The present report will cover the way firm
can maximize its performance with the use of performance management system. Along with this,
the way Steel co. can integrate performance management system with other human resources
processes will be explained. Apart from this, the effectiveness of linking performance to
financial reward will be evaluated.
1. Maximise the firm performance.
Performance management is known as the achievement of the performance that can be a target
through the effective management of people and the environment in which business is carried
out. Performance management process can directly impact the business its depend on the way
company work to manage its employee's performance (Cascio, 2018. ). As per the case study of
Steel co. performance of the firm is failing employees are demotivated. Therefore, the process of
Steel co. need to be started immediately vertical integration and it needs to proposed new
business strategies for improving employees skills, teamwork etc. Further, it is essential to set
business vision and mission and communicate it with employees at all levels (Shields, Brown
and Plimmer, 2015). One of the main goal of Steel co. is to gain competitive advantage through
cost reduction and innovation. Therefore, the company needs to increase employees engagement
and set SMART objectives to accomplish the goal on time. Team and an individual need to
influence the firm annual corporate and they need to become responsible for the work. Along
with this work performance of employees should be monitored and vision should be explained
and understood by everyone within the business. Along with this individual performance can be
determined by the following factors that are
Motivation, the need of doing job
Ability of doing job
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Organisational positive working environment and information of doing the job.
The energy of performing the job is basically linked with the motivation and expectancy. It
is essential to motivate employees so that they can work hard for the firm. At last, it is essential
to implement a specific strategy which permits goal to be integrated through performance
management in each and every employee (Podgórski, 2015). If HR department hires skilled and
experienced employees then it can easily make innovative products and services for customers.
There is some responsibility of leader that it should allow duty to employees according to their
skills and knowledge.
Performance management process can directly impact the business its depend on the way
company work to manage its employee's performance (Ishizaka, and Pereira, 2016). It is
essential to motivate employees so that they can work hard for the firm. If HR department hire
skilled and experienced employees then it can easily make innovative products and services for
customers
2. Improve employee’s development and communication with the use of performance
management system.
As per the given scenario, poor performance, inappropriate strategy and lack of innovation
lead to negatively impact Steel co. The company started suffering from loss and employee freeze
the salary of its employees for last three years. This was one of the inappropriate steps of the
employer that led firm down. Instead of doing this, the owner should learn different ways of
implementing a performance management system within the firm (Certo, 2015). With the help of
performance, management process firm can easily evaluate the performance of the individual
and optimize productivity. In this company can align a set of objectives for its employees who
can provide visibility and clarity to performance expectation. This approach can help in
documenting the performance of an individual and increase growth. One of the main concerns
was to looks employees problem. This all approach was missed by Steel co. In addition to this
leadership style which was adopted by the company was autocratic in which employees are only
directed toward the work and not involved in decision making process. Due to this reason Steel
co. do not get innovative ideas and opinions of employees that can help in gaining competitive
advantage. As per the view of the owner, employees are not many valuable assets and they are
only cost to business and due to this reason, he invested less on them (Buckingham and Goodall,
2015).
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According to the given case study, there is less communication between employees and leader.
This lead to reduce job skills of the workers and affect their way of working. In performance
management communication play a significant role because it is essential to clearly communicate
goals and objectives in front of employees so that they work toward accomplishing it
(Sutheewasinnon, Hoque and Nyamori, 2016). There are most of the employees who want to
become a part of compelling future. For success, the productivity matters and productivity can be
enhanced with the help of employee’s skills and knowledge. Hence sharing information at all the
level is also effective enough for influencing managing and the job skill. Employees are to be
informed of all the important information for managing all the business activity effectively.
Practices which are included in the performance management system are as follows:
Clear communication between employees and leader
To link performance of employees with a reward system.
To provide rewards and payment scheme to employees in right manner.
One of the main reason for adopting performance management system within the firm is that it in
help in linking between the business goals and daily activities (Cascio, 2018.). Along with this
organisation, the atmosphere should be effective so that employees can feel like a part of an
organization. If employees are provided benefits and welfare than they work hard for the firm.
Performance management also provides option for the use of advanced technology in the best
manner and send information among employees effectively (Shields, Brown and Plimmer, 2015).
The divisional director Steel co. the company had do not focus on innovation and encouragement
for the workers. Hence encouragement is one of the primary factors in increasing productivity
and utilising the entire job processing from the workers.
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3. The way Steel co. can integrate performance management system with other human resources
processes
From the case study, it is analysed that there was a communication gap between employees and
leader. Due to these reason employees, performance gets hamper and with the help of
performance management this problem can be solved (Podgórski, 2015). In order to
modify an organisation real-time analysis of the performance, the integrated management
system was critical. With the use of work performance different areas of Steel Co can be
improved such as marketing, products, sales etc. There are two sections in the Steel co. that
are production and sales department. Hence, the integrated management system is the
central aspect of managing the ethical value, external report, customer probability for
accomplishing technical advancement. Human resources development plays a significant
role within the firm and for development in performance management. It can foster the
culture of continuous improvement. In the firm employees, development is considered as a
one of the key mechanism through which firm performance can be improved. Though,
promoting a reward system within the firm help in improving the entire business activities
(Certo, 2015.). Furthermore, human resources department can focus on keeping training
and development session for its employees so that they can easily enhance their skills and
knowledge and work hard for the firm. For employees to perform different types of the
task is not easy. This training and development program will help them in enhancing their
skills and motivate them to work hard for the firm.
4. The effectiveness of linking performance to financial reward.
Reward system plays a significant role within the firm in order to improve employees
performance and accomplishing the goals and objectives on time. If employees are motivated
toward the goal they can easily accomplish success. Therefore to motivate employees company
can keep reward system which encourages each and every employee within the firm to work
hard for getting those rewards (Ishizaka, and Pereira, 2016). According to the given scenario
Steel co. does not motivate its employees for working hard. Along with this, any kind of reward
or bonus scheme is not provided to employees which lead to impact entire performance of the
firm. Employees are an important part of an organisation which HR department should
understand and because of their inappropriate strategy and steps company suffer from the loss.
However the bonus scheme and staff forum do not bring any type of change in the performance
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management system. It is because when the question asked of employees related to the bonus
scheme they state that it does not bring any changes in their standard of living. Therefore the best
way of linking reward system to performance is that to increase employees engagement and
commitment at Steel co. Performance-based reward culture is one of the effective tools in order
to accomplish success and it also assists motivating employees toward the work. If company
implement the appropriate reward system then it can easily motivate employees to perform in an
effective manner ( Buckingham and Goodall, 2015). Along with this it also leads to reduce the
employees turnover rate and enhance productivity that can help it survive in a competitive
market. In the organisation when employees efforts are appreciated and rewarded then they
focused on their job. Hence it is one of the effective ways of performance management system.
Through regular performance appraisal and recognizing, employee’s efforts also lead to support
them for their further development. Along with this it also builds a strong relationship between
employees and management. A well-structured organisation leads to contact all necessary
information for rewarding employees for exceptional performance. They also track the
performance of employees as per the set goals and objectives and provide them reward
accordingly. In order to save money and unimportant activities performance based reward
culture is effective and leads to have a direct impact on the organisation success
(Sutheewasinnon, Hoque and Nyamori, 2016.). If the company can retain more employees then it
means that it can easily reduce the expenditure in advertising and recruitment process for filling
back the vacant position. New employees also need to train that cost high and impact the profit
of the firm.
Conclusion
From the above report it is concluded that performance management system play significant
role within the firm in order to improve the employees performance. Performance management
process can directly impact the business it’s depend on the way company work to manage its
employees performance. Employees are important part of the organisation and they should be
valued so that success can be achieved. It is essential to motivate employees so that they can
work hard for the firm. Further it is concluded that if HR department hire skilled and experience
employees then it can easily make innovative products and services for customers. For success
the productivity matters and productivity can be enhanced with the help of employee’s skills and
knowledge. Employee’s performance can be improved if company provide them reward on the
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basis of their performance. Along with this it also build a strong relationship between employees
and management.
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Reference
Sutheewasinnon, P., Hoque, Z. and Nyamori, R.O., 2016. Development of a performance
management system in the Thailand public sector: Isomorphism and the role and strategies of
institutional entrepreneurs. Critical Perspectives on Accounting, 40, pp.26-44.
Ishizaka, A. and Pereira, V.E., 2016. Portraying an employee performance management system
based on multi-criteria decision analysis and visual techniques. International Journal of
Manpower, 37(4), pp.628-659.
Podgórski, D., 2015. Measuring operational performance of OSH management system–A
demonstration of AHP-based selection of leading key performance indicators. Safety science, 73,
pp.146-166.
Shields, J., Brown, M., Kaine, S., Dolle-Samuel, C., North-Samardzic, A., McLean, P., Johns,
R., O'Leary, P., Robinson, J. and Plimmer, G., 2015. Managing Employee Performance &
Reward: Concepts, Practices, Strategies. Cambridge University Press.
Cascio, W., 2018. Managing human resources. McGraw-Hill Education.
Certo, S., 2015. Supervision: Concepts and skill-building. McGraw-Hill Higher Education.
Buckingham, M. and Goodall, A., 2015. Reinventing performance management. Harvard
Business Review, 93(4), pp.40-50.
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