Analyzing Performance Management Systems and Their Impacts

Performance management is a critical aspect of organizational success, influencing both efficiency and employee satisfaction. This analysis delves into the role of performance appraisal systems and their impact on organizational outcomes. Key areas include evaluating 360-degree feedback methods, understanding the implications of pay-for-performance systems in public sectors, and exploring strategic frameworks for managing performance. The paper also addresses common challenges like rating errors and fairness perceptions. Insights from studies by Aguinis (2013) and others highlight best practices and suggest improvements to current models. Understanding these dynamics is essential for developing effective strategies that align employee goals with organizational objectives, ultimately driving success.

Running head: PERFORMANCE MANAGEMENT
Performance Management
Name of the Student
Name of the University
Author Note

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Table of Contents
1.0 Explanation of performance management and the roles it plays within an organization.....2
2.0 Description of the performance appraisal process and assesses the importance of
performance appraisals in an effective performance management program...................................4
3.0 Whether an organization can obtain long-term success without the existence of a well-
defined program for performance management..............................................................................7
4.0 Reference List..........................................................................................................................10

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1.0 Explanation of performance management and the roles it plays within an
organization.
Van Dooren et al. (2015) stated that the term performance management refers to regular
identification of the goals and the ability of all the employees to meet the destined target. This
process sis also considered to align the strategic objectives and priorities along with the resources
available in the company. De Waal (2013) furthermore depicted that performance management
also illustrates the procedure in which an effective work environment is been created so that the
employees can outperform. Rolstadas (2012) also supported that performance management is a
continuous process and the managing authorities should give constructive feedback whose
performance is evaluated.
There are several benefits and role that performance management plays within the
organization. These are- enhancements in the employee motivation, effective bonding of
managers with their subordinates, increased self-esteem, clarified job details, sound development
in the productivity, fair administrative actions, more understandability of the organizational
goals, minimized employee misconduct and most importantly employee retention (Hvidman &
Andersen, 2013). De Waal (2013) furthermore depicted that evaluating the performance of an
employee after certain interval of time, allow the managers to identify the productive employee
and their potential to perform the challenging job roles and responsibilities. The evaluation
process also allows higher managers to know about their subordinates more and it furthermore
helps in developing an effective interpersonal relation among them. Aguinis (2013) also
highlighted that performance management not only create opportunity for the productive
members but it also identify the whether or not anyone need training so that their performance

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can be enhanced. Another role that performance management plays are that employees get better
image of the organizational goals and objectives as based on the achievement of these objectives,
there performance is evaluated. Aguinis (2013) also stated that setting the criteria for measuring
the performance also results in more transparent organizational policies that boosts employee
satisfaction. This evaluation of performance also comes with reward and the employee, who
outperforms are rewarded with financial and non-financial rewards. Thus, Van Dooren et al.
(2015) portrays that performance management develop the competencies among the employees
and enhance their overall productivity that on the other hand results in more profitability for the
organization. The most important role of the performance management is to facilitate
organizational change. This means that on implementing changes in the existing organizational
system, it is easier to assess employee, who can sustain changes and adapts the changing
regulations and processes. Training are provided to the employees and other staffs but those, who
can perform good and sustain with all the changes, the organization will also give them fair
change to grow.
I have been working in Andalus Retail Outlet for the last one year and their performance
management practices are based on three aspects- customer service orientation, decision-making
ability and analysis and problem-solving approaches. In the customer service orientation, the
organization directly identifies the working system of human resource management. Andalus
Retail Outlet intends to attract more customers and thus, there first priority is to judge how an
employee helps in attracting more customers. I always behave good with customers and help
those, who faces difficulty in finding their desired products and while make payments. I also
help other staffs in their work so that we can collaboratively complete the desired work. The
second measurement of the performance management is ability of decision making. In this

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aspect, I always prefer customer help first prior than my job roles and responsibility. Once an
elderly person was facing problem in taking all the purchased items to his car and I have helped
by asking other staff to manage my desk. My company also praised me and rewarded me a
complementary day off as I valued customer irrespective of their age and the amount they spent
on purchasing our products. The third aspects based on which Andalus Retail Outlet evaluate the
performance is “Analysis and problem-solving”. In this aspect, employee conflicts are the most
common case. However I have taken initiative for resolving the conflict by taking employee’s
perception from both the end and then discuss the matter in presence of all the employees so that
a mutual decision can be taken. As an employee, I have to ensure the effectiveness of the
organizational environment and thus, I always participate in these additional activities. These
dimensions are incorporated in the performance appraisals that are conducted by the concerned
organization every after six month.
2.0 Description of the performance appraisal process and assesses the importance of
performance appraisals in an effective performance management program
Aguinis (2013) stated that performance appraisal is the detailed description of the
strength and weakness of an employee. It is been evaluated whether or not all the employees
have obtained the desired organizational goals and objectives along with the extra initiative that
they have taken to highlighted them among others. This evaluation of the performance also
allows the employee to judger their ability and their achievements and the areas of the
improvement that they can incorporate. The process of the performance appraisal is usually
comprises of four main steps-

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Formulating a separate file for each employee- Bernardin and Wiatrowski (2013) stated that
managers along with human resources department develop a spreadsheet, where they distinguish
some important aspects like goal sheet for highlighting the mandatory objectives of the
organizational performance attributes and evaluation sheets for discussing aspects that is not
related with the work but with the improvement of the organizational environment.
Provide constructive feedback- Dusterhoff et al. (2014) stated that though the appraisals are
conducted every after six month but the managing authorities are evaluating the performance of
an employee monthly wise. Thus, in order to provide encouragement or motivation to the
employee, these managers are liable to give positive and constructive feedback. This will not
only helps in developing an effective interpersonal relationship among the higher designated
people and subordinates but it also enhances the communication system in the organization.
Espinilla et al. (2013) highlighted that a performance management starts with employee planning
and the evaluation of employee progress is the last process. Managers thus listen to discuss the
planning and goals and give them productive feedback.
Management by objectives- In this process, the performance of the employee is judged base on
how an employee define their goals and take appropriate steps to achieve each goal. The
management should track progress or redefine the goal if they think some improvement can be
made.
Conducting appraisals meetings- Aguinis (2013) stated that in this process, the spreadsheet has
been filled up by the employee. They have to rate themselves for each defined goals and
objectives. There is a place where the appraiser also rates them and stated whether or not they
have agreed or disagreed on the things that an employee mentioned in the goals sheets. Rolstadas

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(2012) furthermore highlighted that in this process all the higher managing authority are present
and they listen to the statement claimed by the employee and they give feedback to the
employees so that they can improve in future.
Importance of performance appraisal process
Gupta and Kumar (2012) depicted that the main criteria to conduct a performance
appraisal is to eliminate behavior and work-quality problems along with motivating the
employees to contribute more. Some of the benefits of the performance appraisal process are-
Improved communication- Tuytens and Devos (2012) stated that through performance appraisal
process, problem of lack of communication can be overcome. The primary reason is that all the
leading management people are present in the appraisal meeting and they discuss about the
positive and downturns of the performance of the employee. Employee will also get a chance to
share their concerned directly with the managers and share their plan for their working approach
along with some suggestions through which the productivity can be enhanced.
Detailed career path- The appraisals are conducted mainly to discuss whether or not an
employee is able to fulfill the organizational goals and objectives. Deepa et al. (2014) also stated
that through this meeting, long-term goals are also been discussed. The rating that is given by the
employee as well as the appraiser based on a particular accomplishment of goals and objectives,
the decision making ability of that employee is enhanced. DeNisi and Smith (2014) highlighted
the reason that is an employee then evaluate the required approaches that could be taken for
obtaining the desired goals.

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Enhancing the productivity of the employees- Tuytens and Devos (2012) stated that
performance appraisals are conducted for highlighting the areas that need improvements. This
sometimes ends with effective employee training if they have the potential to develop.
In the appraisal meeting in Andalus Retail Outlet, discussion on my performance during
the high time of customers like in festive season. I also have to tell about my performance under
pressure, work determination and developing others along with the communication skills with
staffs embers and customers. My manager gave me the feedback that my performance is good
but I have to improve myself in taking some initiative that can highlight me in front of managers.
These initiatives can be conducting session to the new joiners so that they can easily understand
the working process or communicate with managers regarding some drawback of the
organizational environment. Thus, I have gained the confidence to share my concern with the
management and their positive feedback allows me to identify my strengths and areas where I
can improve.
3.0 Whether an organization can obtain long-term success without the existence of a
well-defined program for performance management
Aguinis (2013) stated that an organization cannot obtain long-term success without the
existence of a well-defined program for performance management. Mulvaney et al. (2012)
depicted that every employee desire to perform some challenging job roles and responsibility
after spending sometime in the organization. Lunenburg (2012) moreover stated that this also
motivate an employee to retain in the organization. Thus, if there is no well-defined program for
performance management, employees may quit due to the unfair result as it is not possible to
identify the ability of an employee without evaluating their performance. Another disadvantage

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is that without performance appraisals, a manager cannot comment or review the performance
of an employee and this also leads to improper perception regarding an employee. In this way,
employee may lose their self-esteem and their productivity may fall. Aguinis (2013) furthermore
highlighted that if an organization do not have a well-defined program for performance
management, the resources may get wasted as company invests a proportion of amount in
maintaining the requirement of their employee and these employees quit after sometime. This
will hamper the overall productivity of the organization. The organization again has to invest
financial resources in conducting recruitment process along with time. Lunenburg (2012) also
stated that without defined performance management, an employee always remain confused
concerning the organizational goals. This means that they are not aware based on what factors
their performance will be judged. They will also be confused in prioritizing the job roles so that
they can attain the job responsibility more effectively.
One of the examples that is mentioned in the article shows that due to the presence of no
well defined program for performance management, it results in low quality of productivity. The
organization that is considered in the case study is Omega Inc. and for improving the
performance of the sales representatives, the organization conducted a training program for their
sales staffs after conducted a job analysis. The managers are then set franchise-wide mission
statement and performance goals. These goals are not discussed by the employees and their
performance was judged which is followed by employee’s ranking according to the sales quota.
The disadvantage in this process is that the employee does not aware of the conditions and
guidelines of this quota and hence they considered the ranking of their performance as unfair.
The adverse effect is found when in order to enhance their ranking in the organizational process,
staffs started to deliver low quality services. This process though enhances the sales in the first

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couple of months but due to unsatisfied customers, the overall productivity gets lowered. Thus, it
can be stated that not only an organization should have a well establish performance
management regulations but regular communication with the employees regarding the
performance measures should also be obtained.
4.0 Reference List
Aguinis, H. (2013). Performance management (3rd ed.). Upper Saddle River, NJ: Prentice Hall.
Bernardin, H. J., & Wiatrowski, M. (2013). Performance appraisal. Psychology and Policing,
257.
De Waal, A. (2013). Strategic Performance Management: A managerial and behavioral
approach. Palgrave Macmillan.
Deepa, E., Palaniswamy, R., & Kuppusamy, S. (2014). Effect of performance appraisal system in
organizational commitment, job satisfaction and productivity. Journal of Contemporary
Management Research, 8(1), 72.
DeNisi, A., & Smith, C. E. (2014). Performance appraisal, performance management, and firm-
level performance: a review, a proposed model, and new directions for future research.
Academy of Management Annals, 8(1), 127-179.
Dusterhoff, C., Cunningham, J. B., & MacGregor, J. N. (2014). The effects of performance
rating, leader–member exchange, perceived utility, and organizational justice on
performance appraisal satisfaction: Applying a moral judgment perspective. Journal of
Business Ethics, 119(2), 265-273.
Espinilla, M., de Andrés, R., Martínez, F. J., & Martínez, L. (2013). A 360-degree performance
appraisal model dealing with heterogeneous information and dependent criteria.
Information Sciences, 222, 459-471.

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Gupta, V., & Kumar, S. (2012). Impact of performance appraisal justice on employee
engagement: a study of Indian professionals. Employee Relations, 35(1), 61-78.
Hvidman, U., & Andersen, S. C. (2013). Impact of performance management in public and
private organizations. Journal of Public Administration Research and Theory, 24(1), 35-
58.
Lunenburg, F. C. (2012). Performance appraisal: Methods and rating errors. International journal
of scholarly academic intellectual diversity, 14(1), 1-9.
Mulvaney, M. A., McKinney, W. R., & Grodsky, R. (2012). The development of a pay-for-
performance appraisal system for municipal agencies: A case study. Public Personnel
Management, 41(3), 505-533.
Rolstadås, A. (Ed.). (2012). Performance management: A business process benchmarking
approach. Springer Science & Business Media.
Tuytens, M., & Devos, G. (2012). Importance of system and leadership in performance appraisal.
Personnel Review, 41(6), 756-776.
Van Dooren, W., Bouckaert, G., & Halligan, J. (2015). Performance management in the public
sector. Routledge.