Performance management, performance measurement, organizational effectiveness, and many other titles disguise one crucial notion, essential to public services, pivotal to business organizations. The concept in question is the process that measures one’s efficiency, be that a corporation, a department, a team, an individual, or a process in general. This important notion will be scrutinized in this paper in order to deduce what an effective system of performance management includes and provide recommendations on building it.
Performance management, under its different names, is widely believed to have been on the rise for the past 40 years. However, digging a bit deeper shows that the inclinations to organize existing systems effectively started long before that. For instance, in 1916, the US Congress established the “Bureau of Efficiency” to deal with the problem of waste in the US Government (Talbot 1). After the global economic crisis of 2007-2009, the demand for a system working better at a lower cost has skyrocketed.
There have been different systems of performance management, but they all include a necessary performance cycle. An effective system is believed to consist of five key aspects, those being planning, monitoring, developing capacity, rating, and rewarding (United States Federal Government). Planning articulates performance expectations and goals and helps to direct efforts towards achieving set objectives. Monitoring has to be continuous and consistent and provide ongoing feedback. Developing the capacity to perform is achieved through training and goes hand in hand with rating, which is an evaluation of performance against the plan. Rewarding means recognizing the contributions of the participants of the system and issuing monetary and nonmonetary awards.
An effective system of performance management may bring considerable benefits to an organization practicing it. This system may result in direct financial gain, such as grown sales and reduced expenses. In addition, a better-motivated workforce due to incentive plans, confidence in bonus payments, and professional development will be beneficial to the organization. Another gain is improved management control, resulting in better flexibility and responsiveness of the participants of the system.
Years of experience show that, when implemented incorrectly, a performance system may do more harm than good. An ineffective system can be a considerable drain while being highly demotivating and fostering bullying (Dundo). It can also be counterproductive, discriminatory, and merely wasteful of time and resources, both human and financial. These flaws make the performance organization deficient and depending on the severity of the situation require making significant alterations or dismantling the system altogether.
To avoid the defects mentioned above, we have to be careful when adopting a performance management system, which is feasible only if we follow some vital principles. First of all, a fair system has to be accurate, thus we must use numerous data sources to avoid bias. The system should focus on elevating performance instead of measuring against lower limits. In addition, compensation decisions should not be determined by changes in the cost of living, but purely by the performance and development opportunities have to be continuously provided by the company as part of the coaching system (Zenger). These rules will make the system efficient and will help achieve positive outcomes without damaging people’s self-esteem.
Considering all mentioned above, we must be acutely aware of the possible flaws like wastefulness and counter-productiveness of a performance management system. We have to keep in mind the rules of establishing and maintaining a system that will be fair and effective. For that, we must beware of bias, bullying, and demotivation, while striving for elevating performance and developing the capacity of every participant. The ways for improvement may not be limited to those mentioned above, and we should continue to explore them in order to increase the effectiveness of a performance management system.
Works Cited
Dundo, Chris. “MoD squanders £100m a year on performance management.”The Guardian, 2016. Web.
Talbot, Colins. Theories of Performance: Organizational and Service Improvement in the Public Domain. Oxford University Press, 2010.
United States Federal Government. Performance Management.Office of Personnel Management. Web.
Zenger, Jack. “The 6 Vital Elements of Effective Performance Management Systems.”Forbes, 2017. Web.