Performance Management System Assignment
Elements of an Effective Performance Management System
HR’s role in organizations has changed dramatically over the last decade, and in this newly evolved role, HR develops strategy to help drive organizational performance – at both an executive level and at a very pragmatic level. Through performance management systems implementation, organizations have been able to achieve tremendous success, even in challenging economic times and globally competitive environments. Knowing and understanding these systems is pivotal to an HR practitioner’s effectiveness in helping organizations achieve their strategic goals and ultimate success.
To complete this Assignment, review the Learning Resources for this week, and other resources you have found in the Walden Library or online, and respond to the following bullets in a 2- to 3-page paper:
Define different types of performance management systems and discuss how they differ.
Identify 3 key elements of an effective performance management system.
Explain how the 3 elements you identified interact with one another. Then, discuss how their interaction supports the effectiveness of a performance management system.
Effective Performance Management System
Define Different Types of Performance Management Systems
Ranking-based Performance Management System
Ranking-based performance management systems focus on ranking employees according to the performance levels. It aims at evaluating employee performance by comparing them to other employees. An employee can be ranked as first or last in the organization. The system also ranks employees in terms of percentiles, whereby an example of a percentile of 60 shows that an employee is better than 60 percent of employees in the organization. General Electric CEO Jack Welch widely embraced the ranking performance system in the 1980s before the company stopped using the system in 2015 (Leon & Murphy, 2016). The CEO enforced the system whereby employees were ranked every year, with the bottom ten percent getting fired. Welch had attributed GE growth to the ranking system (Leon & Murphy, 2016). However, in 2015, the company eliminated the forced ranking system and adopted a rating-based system that could offer real time and dynamic feedback to employees. The new system helped to facilitate improved short-term and long-term goals for employees. The system differs from other performance management systems in that it uses comparison as the measure of performance.
Goal-based Performance System
When this system is used, employees are evaluated based on the project or task goals. This process separates employees from other performance evaluations. Aguinis, Joo, & Gottfredson (2011) argue that with a goal-based performance system, the employee and the supervisor agree to target goals that an employee should achieve. The goals are usually results and behaviors. While results are outcomes that an employee delivers, behaviors are courses of actions employed in achieving the outcomes. The goal-based performance management system is more improved than a ranking-based system because it takes it consideration personal development plans as well as the appropriate behavior to improve performance (Leon & Murphy, 2016). By achieving personal development plans goals, an employee is kept aware of the changes in the profession, including their strengths and areas of weaknesses that need improvement.
Competency-based Performance System
This system is based on the competencies of the employee, including how they are effective in attaining goals to acquire skills needed to improve their performance. The system usually evaluates levels of understanding, knowledge requirement, and content effectiveness. Feedback and coaching are developmental activities that help employees to become more competent (Aguinis, Joo, & Gottfredson, 2011). The competency-based performance system and goal-based performance system are similar in that they both focus on improving the performance of the employee.
3 Key Elements of an Effective Performance Management System.
According to Aguinis, Joo, & Gottfredson (2011), an ideal performance management system has specific characteristics, including being strategically congruent, thorough, and practically feasible. The congruent features involve aligning individual goals with organizational or departmental goals. Congruent element is also used to illustrate that an effective system can be aligned with the culture of the organization as well as that of the country or region of operation (Aguinis, Joo, & Gottfredson, 2011). Regarding aligning individual goals to organizational goals, an effective system set goals such as project goals, behavioral goals, and job description goals (SHRM, 2018). Regarding the region culture, various countries measure employee performance based on different performance aspects. For example, Japan emphasizes both behavior and results, unlike the United States, which puts more emphasis on results than behavior (Aguinis, Joo, & Gottfredson, 2011).
An effective management system should be thorough, meaning that all employees should be evaluated, including the key job responsibilities. The evaluations should ensure that a thorough element is achieved by providing feedback for both positive and negative performance (Aguinis, 2019). Finally, the performance management system should be practically feasible, meaning that information gained from the performance evaluation should be more beneficial than the resources utilized to develop the evaluations.
Explain how the three elements you identified interact with one another. Then, discuss how their interaction supports the effectiveness of a performance management system.
When the three elements interact, they lead to the creation of an ideal performance management system. The congruent feature ensures that the goals of an individual are aligned to that of the department or organization. The thorough feature ensures that all employee’s achieved goals are evaluated, and the practically feasible element ensures that the evaluations are beneficial.
The interaction of the three elements supports the effectiveness of the performance management system in that they contribute to an employee’s goal setting, performance evaluation, and performance improvement plans. With the strategically congruent feature, the performance criteria are set upon which an employee can be evaluated. The thorough element introduces the performance review aspect whereby all employees, including managers and major responsibilities, can be evaluated (Aguinis, Joo, & Gottfredson, 2011). It ensures employee’s progress toward goals is evaluated. It is this feature that reveals the strengths and the weakness of the employee and feedback issues so that informed and appropriate decisions about employee performance improvement plans can be made (SHRM, 2018). The improvement of performance plans and evaluations should be practically feasible to benefit both the organization and the employee.
Aguinis, H., Joo, H., & Gottfredson, R. K. (2011). Why we hate performance management–—And why we should love it. Human Performance, 54, 503-507. doi:10.1016/j.bushor.2011.06.001
Aguinis, H. (2019). Performance management (4th ed.). Upper Saddle River, NJ: Prentice-Hall.
Leon, A., & Murphy, T. (2016). For Companies Doing A or Companies Doing Away with P y with Performance Management System and Having No Ratings over the Recent Years: What Has Been Learned? Cornell University. Retrieved from http://digitalcommons.ilr.cornell.edu/student/121
SHRM. (2018). Managing Employee Performance. Retrieved from https://www.shrm.org/resourcesandtools/tools-and-samples/toolkits/pages/managingemployeeperformance.aspx