Comprehensive Report on Performance Management Issues and Concerns

This report provides a comprehensive analysis of performance management, focusing on the issues and concerns associated with employee performance evaluation and rating systems. It explores the complexities of performance management within a business context, considering both internal and external factors that influence employee performance. The report examines the impact of rating systems on employee motivation and organizational conflict, highlighting the need for transparency and mutual trust between management and employees. It also delves into relevant theories like goal setting, social cognitive theory, and stakeholder theory, offering insights into how these can be applied to improve performance management practices. The report provides an overview of strategic human resource management, emphasizing the importance of aligning employee motivation and relationship management with evaluation processes. Finally, it suggests practical recommendations for overcoming the challenges identified and improving the overall effectiveness of performance management within organizations.

Running head: PERFORMANCE MANAGEMENT
Performance Management
Name of the student
Name of the university
Author Note:

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Table of Contents
Issues and concerns with Performance Evaluation (ratings).......................................................2
Introduction:....................................................................................................................................2
Explanation of performance management issues ratings:...............................................................2
Analysis of PM issues in a business and PM context:.....................................................................4
Influence of the context & assumptions:.........................................................................................5
Identifying and applying appropriate theories, principles and practices:........................................5
The concept of performance management:..................................................................................6
Strategic human resource management:......................................................................................6
Stakeholders’ theory:...................................................................................................................7
Conclusion and implications:..........................................................................................................7
References:......................................................................................................................................8

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Issues and concerns with Performance Evaluation (ratings)
Introduction:
Performance evaluation and rating the performance of the employees are two of the most
significant yet challenging areas of human resource management in business organizations.
Bianchi and Loeffler (2017) mention that business organisations have to rate the performance of
their employees in order to measure their performance quantitatively. Bititci, Cocca and Ates
(2016) define the term performance management as, ‘the iterative closed-loop process in which
performance measures are used to manage and improve organisational performance through
continuous adaptation to the changing operating environment’. Will and Mueller (2019) argues
that since the business organisations and the operations of their employees come under the
macroeconomic factors like technological changes, the performance evaluation is impacted by
these factors. The system of performance evaluation has become extremely complex owing to
involvement of myriads of factors both internal factors (like financial resources) and external
factors (like market trends). These increasing complexities have resulted in issues and concerns
before the management bodies of the companies. The aim of the literature review would be
analysing the issues and concerns pertaining to performance evaluation in terms of ratings.
Explanation of performance management issues ratings:
Performance management issues are extremely complex issues as the process of
performance management heavily comes under the influence of internal factors of the companies
as well as external factors. Similarly, the system takes into account both quantitative and
qualitative aspects. DeNisi and Murphy (2017) point out that business organsiations have to rate

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the performance of their employees in order to appraise them. It has become extremely
challenging for the management bodies to assess the performance of the employees accurately
and rate them. Ishizaka and Pereira (2016) point out the need of performance management by
pointing out that the management bodies business organisations need to measure the
performance of the employees in order to ensure that they perform highly. This is because the
performance of the employees ultimately transforms to the performance of the organisations as a
whole. In fact, higher levels of performance achievements motivate the employees, thus
encouraging them to perform even better. Smith and Bititci (2017) argue that performance
measure has negative impacts on the employees giving rise to insecurities, fear and feeling of
being dominated by the management, ultimately leading them to get less engaged in the
operations. Dello Russo, Miraglia and Borgogni (2017) bring out that complexity in the process
of performance evaluation in terms of rating by pointing out that some employees may not agree
with the rating provided to them. This often results in resentment among them. Thus, one can
point out from this analysis that the rating system is an important aspect of performance
management of employees in business organisations. However, the rating system may lead to
resentment among employees owing to lack of trust between the management and employees.
This would further lead to organisational conflict, which would hamper future productivity. The
performance management is made even more complex owing to the impact of external factors on
the performance of the employees. For example, the level of achievement of the sales targets are
not dependent on the performances and skills of the employees alone. If a strong competitor
introduces a more innovative product, the customers are attracted to the latter. Thus, the
company under question suffers fall in achievement of sales targets. The company in this case
cannot attribute the achievement of lower sales targets to the employees. Hence, if the managers

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provided low rating to the employees on the basis of the sales targets achieved, it would be
unjustified. Again, the management bodies cannot rule out the fact that some employees do
actually achieve lower targets owing their lack of skills and knowledge in entirety while
measuring their performance. This, complex situation makes accurate performance management
extremely challenging and complex. Thus, it transpires from the analysis that management of the
companies would be required to form a system of rating which enables accurate analysis of the
performance of the employees. The system should also take into account that external market
influences like changes in the preferences of the customers over which employees have control.
The rating system should be based on transparency and mutual trust between the management
and the employees.
Analysis of PM issues in a business and PM context:
Performance management in the present corporate scenarios is becoming significantly
challenging. This is more due to the fact that the various organizations are having to face
complex situations in regard to their productivity requirements. Performance evaluation ratings
are an integral part of current performance management systems employed across various
organizations. An example can be given of the performance evaluation rating and PM system of
PepsiCo. Inc. The PM system of the organization is based on objective setting, mid-year review,
performance and development review and people planning. The performance rating system
concerns the usage of multiple criteria rating scale (Tomaževič, Tekavčič and Peljhan 2017).
Employees of various departments are marked with slightly different scales in accordance of
their job functions. The rest of the scaling elements remain more or less similar. This is an
effective rating system. However, there is lack of mental and emotional quality measurement.
The emphasis is given much on productivity. The situations where productivity was given are

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not given much importance. This results in the lack of proper measurement of the personal
qualities of the employees.
Influence of the context & assumptions:
The contextual factors have always governed the usage of performance rating systems
across organizations. In this case the major problems have been concerning in the effectiveness
of the performance rating systems. It is important to note that these systems are utilized to
understand the performance values of the employees. However, as mentioned earlier, the systems
do not strongly consider the market factors that affect the industry at the given time. Another
major issue is the lack of information about the skills and knowledge of the employees. The
contextual factors that are considered for the rating systems consider the lower ratings to be due
to the fault of the employees. However, the lower performances can be due to the lack of support
received from the organization in providing better opportunities to gain knowledge and skills.
Hence, the assumptions that are taken for the rating systems are flawed many times. This calls
for better development of more accurate rating systems. These can consider the complex factors
that determine employee performances. They can be based on authentic skill based performance
measurement factors.
Identifying and applying appropriate theories, principles and practices:
The goal setting theory of performance management can be used to develop better values
considering the performance rating systems. In accordance with this theory specific goal setting
can provide better results that general goal setting that are dependent on performance
improvements. The goal setting theory can be utilized to create specific, attainable and reliable
goals that can be measured through the rating systems. Another important theory that can be used

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is the social cognitive theory. According to this theory performance is guided by three crucial
factors. These are work environment, thinking of the performances and the work done by the
performer. The social cognitive theory is another important theory that can be utilized for
gaining better performance management development. These theories can be utilized effectively
to develop better rating systems. It is important to consider the fact that performance
management need to be based more on the development of the performance abilities of the
employees rather than a competitive framework for employee evaluation that can have negative
implications. Performance rating systems need to essentially consider the realistic and achievable
goals and the settings that’s are in place for the achievement of these goals.
The concept of performance management:
Performance management is concerned with the continuous process for the identification,
measurement and development of the performances provided by the workforces. The
performance of each individual employee need to be connected to the larger missions and visions
of the organization. It is important to note that performance management depends on various
factors. These factors concern the organization, the business environment and the employees.
Rating systems have enabled organizations to quantify the performance values of their
employees (Tomaževič, Tekavčič and Peljhan 2017). However, the complexities associated with
organizational behaviour have negatively affected the performance measurement of most
employees. It is important to note that performances are affected by various intrinsic and
extrinsic motivational factors. These tend to make performance management harder. Hence,
there is a need to develop rating systems that would provide much importance towards
measuring the more complex intrinsic and extrinsic concepts that are associated with
performance management.

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Strategic human resource management:
There are issues with strategic HR management that need to be overcome. One such issue
is related to the motivational aspects that govern employee performances. In large organizations
such as PepsiCo, there are larger number of employees that need to be managed. In this case the
major issues arise in regards to the measurement of performances of the large employee base. It
becomes important in this case that better performance development attitudes are in place. A
centralized system of performance evaluation rating might not work effectively. Hence, there is a
need for implementing departmental performance evaluation ratings. Moreover, other HR
management factors such as employee motivation and employee relationship management need
to be aligned effectively with the evaluation processes.
Stakeholders’ theory:
The stakeholder theory can be effectively utilized to both identify and solve the issues
that are related to performance management. The stakeholder theory postulates that an
organization consists of both internal and external stakeholders. The theory integrates resource
based, market based and socio-political factor based aspects to determine the nature of
stakeholders that organizations need to manage (Jones, Harrison and Felps 2018). In accordance
with the theory, it can be said that the employees of a company are important internal
stakeholders that need to be considered much importantly. The consideration of employees as
essential stakeholders can define the performance management effectiveness of organizations
like PepsiCo.

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Overcoming the issues
Overcoming the issues that were analysed above requires the judicious implementation of
the rating systems. Performances are affected by various intrinsic and extrinsic motivational
factors. These tend to make performance management harder. There is a need to develop rating
systems that would provide much importance towards measuring the more complex intrinsic and
extrinsic concepts that are associated with performance management. Firstly, the employee
evaluation rating systems need to be managed through the smart framework. Hence, Specific,
Measurable, Attainable, Relevant and Time-bound parameters need to be set. Secondly, rating
systems need to rate the motivational aspects that govern performances. It needs to consider the
things that help people perform better. Thirdly, more importance need to be given towards
feedback processes. Employees need to be given proper feedbacks and the results of these need
to be included in the rating process.
Conclusion and implications:
In conclusion, it can be said that performance management is an integral part of all
organizations. However, performance rating systems have been greatly ineffective due to the
lack of specific criteria that affect employee performances. Hence, it is important that better
rating systems are developed through which the all-round productive effectiveness of the
employees can be improved.

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References:
Bianchi, C., Bovaird, T. and Loeffler, E., 2017. Applying a dynamic performance management
framework to wicked issues: how coproduction helps to transform young people’s services in
Surrey County Council, UK. International Journal of Public Administration, 40(10), pp.833-846.
Bititci, U., Cocca, P. and Ates, A., 2016. Impact of visual performance management systems on
the performance management practices of organisations. International Journal of Production
Research, 54(6), pp.1571-1593.
Dello Russo, S., Miraglia, M. and Borgogni, L., 2017. Reducing organizational politics in
performance appraisal: The role of coaching leaders for age‐diverse employees. Human
Resource Management, 56(5), pp.769-783.
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.
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.
Jones, T.M., Harrison, J.S. and Felps, W., 2018. How applying instrumental stakeholder theory
can provide sustainable competitive advantage. Academy of Management Review, 43(3), pp.371-
391.
Locke, E.A. and Latham, G.P., 2019. The development of goal setting theory: A half century
retrospective. Motivation Science, 5(2), p.93.

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Ng, T.W. and Lucianetti, L., 2016. Within-individual increases in innovative behavior and
creative, persuasion, and change self-efficacy over time: A social–cognitive theory
perspective. Journal of Applied Psychology, 101(1), p.14.
Smith, M. and Bititci, U.S., 2017. Interplay between performance measurement and
management, employee engagement and performance. International Journal of Operations &
Production Management.
Tomaževič, N., Tekavčič, M. and Peljhan, D., 2017. Towards excellence in public
administration: organisation theory-based performance management model. Total Quality
Management & Business Excellence, 28(5-6), pp.578-599.
Will, M. and Mueller, J., 2019. Change Management: The Organization as a Micro–Macro
System. içinde Management for Scientists, R. Mellor, Dü., Emerald Publishing Limited, pp.99-
111.