Analysis of Factors Influencing Performance Management System Report

This report examines the factors influencing the creation of a performance management system (PMS). It emphasizes the importance of aligning individual employee goals with organizational objectives, monitoring progress, and assessing performance. The report discusses key considerations such as contextual, technological, and organizational factors, including the balanced scorecard for performance evaluation. It highlights the significance of training, management support, organizational culture, and economic factors in shaping effective PMS. The report also explores the use of non-financial performance measures, such as employee satisfaction and customer loyalty, alongside financial metrics like balance sheets and income statements. The conclusion underscores the importance of PMS in achieving organizational goals and highlights how cultural and economic differences can impact global operations.

Performance Management
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Introduction
The performance management system is used to communicate the goals or objectives of
the organization to employees individually, assign individual responsibility towards that goal and
monitoring the progress in the attainment of the goals allotted and assessing their individual
performance. Performance management systems consider the individual performance or the
realization of an employee which assesses and monitors all the employees of the organization.
This report discusses the factors influencing how business performance system should be
created.
Factors that should be considered in creating a performance management system include
contextual factors, technological and organizational factors. The balanced scorecard can also be
used to evaluate the performance appraisal effectiveness. Organizational and balanced score
factors include training, employee engagement, enterprise resource planning, reward
management, culture and behavior (Behery, Jabeen, and Parakandi, 2014, pp. 25). The balanced
scorecard can also help an organization to upgrade performance management systems which
concentrates on some aspects of the organization that is in line with organization strategy to suit
in the rapidly expanding global market. Another multinational performance management system
has come up such as the performance pyramid and the determinants of framework. Balance
scorecard as a performance measurement system provides meaningful and accurate measure
performance that encourages desired employee behavior in the organization. Appropriate
employee behavior enables an organization to meet the global business standards hence
achieving their business goals.

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Another factor that should be considered when creating a performance management
system is training. Training is an important aspect of the organization and according to the
contingency approach; it depends on the organization’s strategic approach. Training enhances
organizational effectiveness when coordinated with other related human resource practice
(Heras‐Saizarbitoria, and Boiral, 2013, pp. 50). When employees in an organization are trained
well on the current approaches in their field of business, they fit in the global market and tackle
the global challenges that may impact the business.
The training may have a direct effect on the team or individual performance. This will, in
turn, improve employee productivity and flexibility. Another factor is management support
where employees are committed to and ready to put all their efforts for the success of the
organization. Developing a performance management system will help an organization to adjust
its management activities and for it to be effective, it must be driven and delivered by the line
managers (Lattal, 2014, pp. 40). Therefore, good top management support in aid with a
performance management system can help SMEs and other companies to maintain acquire global
standards, expand their sales, and cope with the competitive global business.
Organizational culture as a global difference varies from a firm to firm and from country
to country. It reveals its varied characteristics like diversity in the workforce (Mir and
Pinnington, 2014, pp. 203). Organizational culture can create negative and positive effects in the
workplace and on the staff. Since culture determinants the survival of an organization it can also
create barriers to acquisitions and mergers hindering global development of SMEs and other
companies. Therefore, organizations should find effective and appropriate processes and aim at
managing performance based on cultural dimensions.

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Economic factors also affect the performance management since every country has its
own economic system. The less developed or developing economies encourage foreign
investment in order to secure employment for their citizens. Global firms take this advantage by
sourcing cheap labor. Firms can realize high profits in developing nations when there are
currency fluctuation and restriction on transfer earnings (Melnyk, et al., 2014, pp.181). Political
instability can also affect performance management since during the instability, foreign
companies are seized hence limiting weak economies to invest and maintain important
infrastructures such as electricity, roads, schools, and telecommunications. More so, lack of good
in fractures may hinder business activities and performance management by the manager’s
reducing the global performance and operation of firms from affected countries.
Non-financial performance measures are mostly used for performance assessment. Non-
financial performance measure acts as an indicator of the firm’s long-term performance. The
non-financial standards include employee satisfaction, customer loyalty and non-financial areas
that organizations believe they affect profitability (Gerrish, 2016, pp. 62). Financial performance
enables a firm to know how well it can use its asset to generate revenue. Examples of financial
documents that a company can use to measure its performance are the balance sheet, cash flow,
and income statement. This documents the company to make better decisions concerning the
business.
Conclusion
The concept of performance management system has registered importance both in
private and public sectors. Balanced scorecard, training, and top management support are some
of the factors that organizations should consider in creating a PMS. Besides PMS assists

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organizations in achieving their goals, it is affected by factors such as cultural and economic
differences that hinder the effective global operation of industries.

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Bibliography
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Gerrish, E., 2016. The impact of performance management on performance in public
organizations: A meta‐analysis. Public Administration Review, 76(1), pp.48-66.
Heras‐Saizarbitoria, I. and Boiral, O., 2013. ISO 9001 and ISO 14001: towards a research agenda
on management system standards. International Journal of Management Reviews, 15(1), pp.47-
65.
Lattal, K.A., 2014. Performance Management: Changing Behavior That Drives Organizational
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Melnyk, S.A., Bititci, U., Platts, K., Tobias, J. and Andersen, B., 2014. Is performance
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