Background: The Value and Challenge of Performance Management

* Background: The value and challenge of performance management

"Performance management is the process of linking the overall business objectives of the organization with departmental objectives, team objectives, and individual objectives. " (Performance management, 2008). It involves setting targets, on-going reviewing development towards those targets, and taking remedial action where there are training, development shortfalls. Performance management has become more popular during the last decade, not least because it provides a method of achieving better strategic integration. The value of performance management can not be overstated in regard to a successful business. Performance management and appraisal are required to measure achievement of practice and also to enhance the employee's ability in today's complex business environment. However, it is challenging to conduct performance management in a real workplace. Performance management has long been regarded as one of the most critical yet troubling areas of Human resource development as well as Human resource Management. (Bernardin, Kane, Ross, Spina, & Johnson, 1996, pp. 462-493) As for Human resource management practitioners, the challenge is to establish an effective performance management system that is hard to apply. Still, performance management is important not just for the short term but also for a strong support. The purpose of this briefing paper is to present key elements of performance management, implications and suggestions for achieving successful business outcomes.

* Issue 1: Key elements for effective performance management system

Research by the Australian Human Resources Institute (AHRI) found that approximately four out of five (79.21%) employee respondents think that the skill levels for conducting performance appraisals are average or poor. Also more than a third of respondents believe that performance management processes in their organizations are ineffective (34.21%) and nearly half think they are only somewhat effective (44.61%). (AHRI, 2009, pp. 8-9). This result shows that in the real world it is difficult to build a successful performance management process. In order to establish an effective performance management system, it is essential that be clearly classified by performance measures, giving rewards for individual employees and development opportunities through fair and accurate performance evaluation, and they also are provided with acceptable feedback. These are four key elements of a performance management system.

1) Creation of a shared goal

The company should encourage employees to understand their goals. Misunderstanding of the company's goal causes poor performance. What is the core value that the organization wants to offer? What is the department's role? These kinds of question have to be shared among the department and include the entire workforce. For both the long term and the short term, sharing the company's goal with employees is a significant aim for the human resource department.

2) Establishment of performance objectives

This can be the strategy for business goals. Establishing performance is considered to be a critical part the performance management system. (Arvey & Murphy, 1998). There are three key elements: goals, measures, and assessment. Goal setting has a proven track record of success in improving performance in a variety of settings and cultures. Also the organisation has to be able to measure the extent to which goals have been accomplished. For example, if the human resource department has the objective of enhancing satisfaction about the appraisal system of employees, a measure could be the increasing percentage of satisfied answers in the survey. The third necessity in defining performance is assessment. Regular assessment of progress toward goals focuses the attention and efforts of employees or teams. Assessment has to be considered in the context of resources of the company, objectives, and backgrounds.

3) Reviewing process

The reviewing process involves investigating performance. Performance appraisal is another name of this stage. Objectives at this stage are: discriminating on the basis of performance, rewarding performance, developing employees, and giving feedback to employees. Also there are different types of methods. To choose the right method, managers should consider the strategic company's objectives, as well as required performance evaluation purpose. Ranking, grading, graphic scales, critical incidents, and essay description are major types of performance appraisal.

4) Evaluation, development and reward

In this performance management process the company provides orientation, direction, and feedback for workers. To encourage performance, especially repeated good performance, it is important to do three things well. First, provide a sufficient number of proper rewards the employees' value, second, conducted regularly and third, seen to be fair. It has provided proof of employee's positive performance. In effect, providing people with feedback about their performance will have positive effects on their future performance. (Taylor & Pierce, 1999). Ensuring the opportunity for every employee to participate is very significant so that employees believe in belief their performance evaluation system.

* Issue 2: Role as core in human resource management

The aim of performance management is to improve organizational, functional, unit and individual performance by linking the objectives of each; it is part of each of the functions of human resource management: recruitment and selection, training and development, career planning, compensation and reward. Performance management is an integral part of each of these functions, providing basic standards and strategies to improve performance in each section.

1) Recruitment and selection

To recruit skilled and able employees are the first key to the successful business. Companies should have a standard of workers they need. Defining the recruitment for a position is the