HR's Role in Performance Management: Key Components & Effectiveness

This report elucidates the pivotal role of Human Resources (HR) in managing organizational performance through effective employee evaluation. It highlights the essential components of a performance management system, including performance planning, review and appraisal, feedback mechanisms, reward systems, performance improvement plans, and potential appraisal. The report emphasizes the importance of each component in creating a transparent and motivating environment for employees. It underscores the need for accurate data collection, open communication, and mutual agreement between employers and employees in designing performance plans. Furthermore, it discusses how proper recognition and rewards are crucial for employee motivation and retention, while performance improvement plans and potential appraisals contribute to employee development and succession planning. The report concludes that a well-integrated performance management system is vital for achieving organizational goals and fostering a positive work environment. Desklib provides students with access to this document, along with a wealth of study resources, including past papers and solved assignments.

PERFORMANCE
MANAGEMENT FOR HR

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Introduction
In the amount of competition that is prevalent in the current business environment, it has
become essential for the firms to manage the performance of the organisation. This is directly
connected with the performance of the employees. HR plays a crucial role in managing the
performance of the employees (Noe, et al. 2017). Beforehand a more policy driven approach
was followed by the organisation which included a team of officials that monitored
performance of the employees. In an organisation where there was large numbers of people.
It was not easy for them to monitor and document each and every incident of every
employee. Due to this, they started taking help of the technology based system for
performance management. Performance management system has different components and
the effectiveness of this system depends on how well the components have been managed in
the organisation. Any company requires performance management system that is appreciated
by both employers and employee. A highly transparent performance management system
allows a company to make a better relationship with their employees and keeps them
motivated towards doing work in an appropriate manner. It is essential that performance
management systems notice each and every variable of the employees so that they do not get
demotivated.
Body
Performance Management system plays a crucial role in the life of the employees and there
are various components based on which its employees performance is evaluated in that period
of time. First component of performance management system is performance planning which
plays a crucial role in making decisions related to performance evaluation (Kehoe and
Wright, 2013). Both employee and employee sits together to make a plan based on which the
performance evaluation will be done. In the beginning, both the parties set out the targets and
find out major performance areas based on which performance review will be done. Planning
is essential as it sets out the resources and the budget that will be required by the firm so as to
maintain an effective performance management cycle (Gruman and Saks, 2011). Planning
must be done wisely so that the discrepancies in the employee’s performance can be easily
removed. If the company misses any aspect related to performance management, there is a

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chance that employee gets dissatisfied. This might affect the motivation of employees and
also displaces the organisation and individual from obtaining a particular goal. In the
performance planning there must be consultation from maximum possible employees. Their
active participation lets them feel that they are also important and company is thinking about
their future and growth (Anitha, 2014).
Second component of the performance management system that makes it effective is the
performance review and appraisal. Mostly there are two phase in which performance review
is done one is called mid-review which is done in every six months and one is annual review
which is done at the end of the financial year. In this review, first the employee fills the self-
appraisal form where he describes his or her achievements in that given review period (Van
Dooren, Bouckaert and Halligan, 2015). Using different methods of communication, the
appraiser interacts with employees so as to know the challenges he or she is facing in
performing as per the requirements of the organisation. They also measures the achievements
of the employees on the basis of which that particular employee in the organisation will be
appraised. This review is totally done on the basis of the data that an organisation has and
hence it is crucial that each and every thing is documented wisely so that it can be discussed
at the tie of performance review. Documenting can be easily done with the help of
technologies such as database management system.
Third component of performance management system which has a major role in making it
effective is the feedbacks that are given on the performance of the employees. For making the
performance management system effective, it is essential that appraiser provides accurate
feedback to their employees. This is not only necessary for giving personal counselling and
facilitation but it also allows the company to improve the performance of the people in the
right areas (Jiang, et al. 2012). Biasness plays a negative role in giving proper and exact
feedback. Through appropriate feedbacks company will be able to throw light on the
employee’s performance which plays a crucial role in improving the performance. The
effectiveness of the performance management system depends on the fact that how much
openness is in the feedbacks that has been given to the employees. The area where they need
training and development is required is found out in this component. The training and
development program is suggested to the students to improve its productivity. The appraiser
must focus on the areas that can bring new set of competencies within the employees. A good
and open feedback allows a firm to have a better chance of development and hence bringing
effectiveness in the performance management system (Buller and McEvoy, 2012). If the data

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gathered during the performance appraisal period are useful then the chance that proper
feedback can be given also increases.
Another important component of the effective performance management system is rewarding
the quality performance. It is always essential for a firm to give proper rewards to the
employees on the basis of the way they have performed (Walker, Damanpour and Devece,
2010). Proper recognition of the employee’s performance has a direct relation with the
motivation of the employees. Recognising the performance publicly is more useful to the firm
than ever. It is a sensitive stage for any employee as their future performance is directly
associated with the amount of recognition he has received due to its current performance. It is
having a direct influence on the self-esteem of the employees. Reward also motivates
employees to make positive efforts towards their strengths and how much focused they will
be towards their weaknesses. If company fails to notice the contribution of the employees
then there is a sure chance that motivation of the employees moves towards the lower side
which has a negative influence on the commitment that staff has towards the company and
their goals (Sadikoglu and Zehir, 2010). Its more often results in the form of higher employee
turnover. This does not only demotivates a particular individual rather it has impact on the
other employees as well hence having impact on the overall environment of the company.
Another crucial component of the effective performance management system is the
performance improvement plan. In this company has to define certain set of effective goals
for the employees. The goals must be time-specific and workers must be forced to find-out
the ways in which they can achieve these objectives in a given time frame. For this what a
company needs to do is to state the employees in which they will have to make these
improvements and the specific deadline in which they will have to do the improvements
(Markos and Sridevi, 2010). A mutual agreement is required among the staffs and employer
while designing the plan. Effective performance management system always has a plan that is
specific and is according to the development criteria. In designing of the program taking help
of the senior management or the personnel’s that are experienced is important. The overall
effectiveness of performance is based on this component only.
Another important component in the performance management system is the potential
appraisal. This type of appraisal is done for ensuring the lateral and vertical movement of the
employees. Competency mapping and other assessment techniques are used by the firm for
doing this appraisal. This appraisal provides crucial inputs for succession planning as well as

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for job rotation. An organisation always requires developing talents that are future ready and
this must be on the basis of the performance they had in the specific appraisal time
(Buckingham and Goodall, 2015). The type of skills he has or the potential that he has for
improving the performance of the employees plays a crucial role in making the employee
future ready. Company should always be ready to the future employee that takes the
important position replacing the current employees.
Each and every component stated above has a crucial role in making the performance
management system effective. In the performance management system the role of the
employees are equally important in making that system effective (Guest, 2011). This is not
only necessary for supporting the employee’s performance but also helps the company in
making them ready for the future.
Conclusion
From the above based report, it can be concluded that performance management system has
become an integral part of the HRM in any industry. How well the components of the
performance management system have been incorporated by the company in their
performance management system plays an essential role in making the overall system
effective. Proper planning is required so as to ensure that the overall process of the
performance management remains on the positive side. Performance review is done by both
appraiser and appraise. Feedbacks need to be provided to appraise so that they can know the
areas where they have to improve. On the basis of these feedbacks and the requirement of the
firm performance improvement plan is designed by mutual consent of staff and employer. At
last potential appraisal to the employees needs to be provided.

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Van Dooren, W., Bouckaert, G. and Halligan, J., 2015. Performance management in the
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