Components of Effective Performance Management System in HRM

This essay delves into the multifaceted realm of performance management within Human Resource Management (HRM). It begins by defining performance management and highlighting its significance in aligning organizational goals with employee performance. The essay explores the key components of an effective performance management system, including performance planning, performance appraisal and reviewing, feedback and counseling, rewarding good performance, performance improvement plans, and potential appraisal. It also examines the benefits of such a system, such as improved employee morale, increased productivity, and better employee retention. Furthermore, the essay discusses various methods used by organizations to evaluate employee performance, with a focus on self-evaluation and 360-degree feedback. The essay provides real-world examples of companies that utilize these methods, such as Tesco and Starwood Hotels. The conclusion reiterates the importance of performance management as a critical practice in HRM, emphasizing its role in fostering employee development and organizational success.

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Topic: Performance management for HR
Performance management includes the wide range of activities that includes
performance appraisal as well as feedback. From many years, the researchers are
conducting the research in the field of HRM and industrial organisation psychology that
majorly focuses on the performance appraisal as a technique of measurement. The
human resource management of the company plays a vital role in the performance
management system. The concept and its benefit are explained considering the
different views as well as opinions. The aim of this paper is to focus on the components
of the effective performance management system that are used by the organisations.
The essay throws the light on different methods as well as levels of measuring the
performance that is supported with the examples of companies.
Thesis statement- Evaluation of components of effective performance management
system with the methods used for evaluating the performance.
Performance management system is the process that the organisation make use in
order to appraise and recognise its employees (Time, 2019). On the other hand, Mone
and London, 2018 says that performance management is the systematic approach that
is used by the organisations in order to measure the employee’s performance. This
process is essential as through this the organisation supports their goals, mission, and
objectives with accessible resources. Human resource plays a vital role in the
performance management system, as they are the one who ensure that the
performance appraisal process is done effectively. Most of the companies in the
dynamic environment deals with the issue of employee’s turnover due to which they

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need to bring some strategies that can help them in order to retain the employees
(Management study guide, 2019). One of the strategies that is adopted by the
organisation is performance management system that contribute in improving the
morale of employees which ultimately leads to increase in productivity and the retain
them. Thus, the rise in competition lead to management of the employee’s performance
that is ultimate need of an organisation.
Performance management system offer different benefits to the companies who apply
this within their organisation. It supports to offer the reliable and accurate data in order
to find the skills as well as the knowledge gaps among the employees so that
improvement can occur among them in the form of training, coaching and mentoring the
systems (Noe, Hollenbeck, Gerhart and Wright, 2017). This data is further used by the
companies while conducting the appraisal of the employees so that they can justify their
activity and can expect more productivity as well as employment in employees. The
management of the performance system motivate the employees in order to take the
new challenges and to bring the innovation in the process of structure. However, the
DeNisi and Murphy, 2017 that was presented by the author on the benefits is that it is
not limited to the organisation as it offer benefit to employees. Performance
management provides the new opportunities to the personnel within the company for
their growth and development in the professional careers. Further, the employees of the
company can give their better results because it leads to the clarity in terms of the
targets that they are required to meet.
Performance management system involves different components that make the work in
the effective manner. The major component of performance management is

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performance planning which is one of the crucial component in which process is formed
based on performance appraisals. It is collectively done by the appraise as well as
reviewee, in which the employees review is done on the basis of their targets as well as
key performance areas that is supported with the mutual agreement among the both
(Shields, et al, 2015). Then comes, the performance appraisal as well as reviewing,
which is normally twice in a year in the form of the mid or the annual reviews. In the
entire process, the employees first fill up the self-appraisal that includes the brief
discussion about their overall achievement as well as learning over quantified terms.
This form is reviewed by the appraiser who measures all the achievements as well as
outcomes in order to appraise the employees with the final rating.
In the entire process of the performance management, one of the major element is
feedback and counselling in which the employees get the knowledge about the areas of
the improvement as well as information related to the fact that the employee is able to
attain the expected level of the performance or not (Noe, Hollenbeck, Gerhart and
Wright, 2017). In the appraisal, the employees get the transparent feedback that helps
them to bring the improvement in their performance for achieving the goals. It becomes
essential for the company to provide the guidance and mentoring. For example; Tesco
Company conduct the performance appraisal and provide the feedback. Further, the
company offers the training as well as some programs in order to improve the
productivity. Another essential component is rewarding the good performance, as an
employee within the company also needs the motivation in order to work effectively.
When the rewarding activity is done by the company then they have direct influence on
the self-esteem as well as the achievement orientation (Bailey, Mankin, Kelliher and

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Garavan, 2018). This component brings the motivation among the employees to work in
the effective manner across the world. For instance, companies like Google, Facebook,
and other provide reward to their employees in order to motivate them so that they can
enhance the productivity.
Performance improvement plans is a component that includes the setting of the fresh
goals for the employees and with the new deadline in order to meet their objectives.
These set goals as well as objectives will be clearly communicated to the employees so
that they can meet the expectation of the employers. The communication of the gaols is
done by the every organisation in the clear manner so that there will be less disputes or
conflicts. Last by not the least, potential appraisal is one of the major components that
form a basis for both the vertical as well as lateral movement of the employees. The
implementation of the competency mapping with the different assessment techniques is
undertaken by the company. It offers the crucial inputs for the job rotation as well as
succession planning. Thus, this section shows the major components of the
performance management that are taken care by the Human resource management.
HR of different companies adopts different methods for reviewing the performance of
the employees. Some of the methods that are adopted by the HR for reviewing the
employee’s performance include self-evaluation, behavioural checklist, management
through objectives, 360-degree feedback, and ratings scale. However, among all the
methods, one method that is preferred by the companies is self-evaluation. In self-
evaluation performance method, the employee of the company requires to judge his or
her own performance based on the predetermined objectives (Altin, Koseoglu, Yu and
Riasi, 2018).

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This is evidence that Woolworth’s human resource management make use of the self-
evaluation performance review. The company has selected the self-evaluation
performance review because the employees of the company need to take time in order
to evaluate themselves as this will help the manager in understanding the fact that the
employees of the company can understand their own performance in effective manner
or not. In addition to this, Woolworths company wants to know the perception of
employee related to the job skills that can assists the managers in order to calibrating
their own responses (Chelladurai and Kerwin, 2018).
On the other, some research shows that 360-Degree feedback method is more
effective. This has been found that Starwood Hotels Company follow the 360-Degree
feedback method in order to evaluate the performance. 360-Degree feedback review
offers the comprehensive look to an employee’s performance by pulling feedback
majorly from the eternal sources (Root, 2019). Thus, this helps the hotel while
evaluating the performance of the company in order to conduct the best for the
employees. Thus, this has been evident that human resource management of the
company make use of the different methods for reviewing the performance.
In the end, this can be concluded that performance management system is one of the
essential practices that are conducted by the human resource management of the
company. Performance management system is conducted by every company based on
mid and full year. In the paper, the reviews of different authors have been clearly stated
about the performance management and their benefits that are available to the
company as well as to the employees. The major component of the performance
management are discussed which are applied by the company in order to complete the

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process of performance management. In addition to this, the different methods have
been used by the companies for evaluating or reviewing the performance of employees.
The performance review is done by the company with the help of self-evaluation
performance and 360-Degree feedback review method that is supported with the case
of real-world organisation.

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References
Altin, M., Koseoglu, M.A., Yu, X. and Riasi, A. (2018) Performance measurement and
management research in the hospitality and tourism industry. International Journal of
Contemporary Hospitality Management, 30(2), pp.1172-1189.
Bailey, C., Mankin, D., Kelliher, C. and Garavan, T. (2018) Strategic human resource
management. Oxford University Press.
Chelladurai, P. and Kerwin, S. (2018) Human resource management in sport and recreation.
Human Kinetics.
DeNisi, A.S. and Murphy, K.R. (2017) Performance appraisal and performance management:
100 years of progress?. Journal of Applied Psychology, 102(3), p.421.
Management study guide (2019) Performance Management as a HR Management Concept
[Online] Available from: https://www.managementstudyguide.com/hr-performance-
management.htm [Accessed on 29th April 2019]
Mone, E.M. and London, M. (2018) Employee engagement through effective performance
management: A practical guide for managers. Routledge.
Noe, R.A., Hollenbeck, J.R., Gerhart, B. and Wright, P.M. (2017) Human resource management:
Gaining a competitive advantage. New York, NY: McGraw-Hill Education.
Root, G.N. (2019) Methods of Performance Evaluation [Online] Available from:
https://smallbusiness.chron.com/methods-performance-evaluation-1869.html [Accessed on 29th
April 2019]

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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.
Time, F. (2019) What Is the PMS Process in HR? [Online] Available from:
https://smallbusiness.chron.com/pms-process-hr-33923.html [Accessed on 29th April 2019]