The Future of Performance Management

Organisations all over the world are changing rapidly (Meister & Willyard, 2010). The nature of work and the work-place itself, the traditional employment contract, and the composition of the workforce are all dramatically changing (Luthans, 2008). These changes are in terms of structure, workforce composition, reward systems, service contracts, technology and information, and are the results of technological, economic and political developments (Chabault et al., 2012; Luthans, 2008; Meister & Willyard, 2010). Competition is increasing and the global economy brings new international competition (Schreuder & Coetzee, 2007; 2010). At an organisational level advanced information technology, globalisation, diversity, and trying to solve ethical problems and dilemmas come to the fore. These are unquestionably major issues facing contemporary organisations. However, according to Luthans (2008) the basic premise and assumption is that managing employees have been, are, and will continue to be, the major challenge and critical competitive advantage.

Meister and Willyard (2010) contended that the workplace will increasingly focus on the performance of people as a core company asset. Models of flexible working conditions will continue to evolve in response to the changing needs of Baby Boomers and the preferences of Generation X and Generation Y in the workplace

89 (Meister & Willyard, 2010). As a result, greater attention will be given to measuring and improving the performance of people – as opposed to the traditional one- dimensional focus on finance and physical assets.

In terms of talent, Pandey (2012) explained that problem solving and creativity skills will become increasingly important. Furthermore, the performance of highly promising individuals should be integrated with the objectives and overall performance of the organisation (Chabault, et al., 2012; Pandey, 2012; Shank, 1989). Innovative organisations driven by the 21st century’s knowledge-economy need individuals with original and varied competencies to bring creative flair. In this context, talent management (and performance management in particular) becomes a matter of strategic and critical importance (Chabault, et al., 2012; Meister & Willyard, 2010; Parry & Tyson, 2011).

Research by Meister and Willyard (2010) showed that successful companies are revamping their performance management processes. They found that these organisations deliberately set career expectations in increasingly flattened organisational structures. Meister and Willyard (2010) explained that the presence of Millennials in the workplace has added a layer of complexity to an already complex work environment. To overcome this challenge one answer could be to encourage an open career and performance dialogue between a Millennial and his or her manager. For example, younger employees may have unreasonable but strongly held career expectations. Having a dialogue forces the manager to explain the gap and start a conversation with the employee to explain the performance necessary for the employee to reach the next level. These programmes have been successful because everyone walks away knowing where they stand (Meister & Willyard, 2010).

Furthermore, organisations should be in a position to offer a workplace environment that encourages individual performance (i.e. best working tools made available along with access to expert colleagues in the field) (Meister & Willyard, 2010; Parry & Tyson, 2011). What is required here is the creation of a stimulating and dynamic environment for the employee on an intellectual and emotional level, as well as

90 exciting challenges and opportunities (Chabault, et al., 2012; Schläfke et al., 2013). Organisations should recognise that in the Web community, status is built upon making meaningful contributions (Meister & Willyard, 2010), so companies should ensure the inclusion of ratings by peers (Meister & Willyard, 2010; Parry & Tyson, 2011). Organisations should examine how they can integrate employee expectations for social media usage in the company's performance management practices so the quality of the organisation's online contributions is part of the overall performance management system (Meister & Willyard, 2010). Research found that the utilisation e-HRM is positively related to perceptions of general HRM effectiveness in line managers and employees alike. It was also found that reactions to an online performance management system were more positive than those to a paper-based version of the same system (Parry & Tyson, 2011).

The rise of business intelligence software products over the last ten years has had a profound impact on how companies manage their operational performance (Brudan, 2010; Galinsky & Matos, 2011). Enterprise resource planning software, combined with business intelligence software enabled companies to reach new levels of data integration, by making the data gathering and reporting process more streamlined (Brudan, 2010). In addition, Mass Career Customization (MCC) processes have created a structured performance appraisal process for every employee and manager that considers the career aspirations of men and women of all ages in the context of their work, personal, and family responsibilities (Brudan, 2010; Galinsky & Matos, 2011). Making this or similar processes universal, not just aimed at employees of specific ages or backgrounds, it has the potential to become the ‘‘new normal’’ way of doing business and managing performance (Galinsky & Matos, 2011). As a part of every employee’s performance appraisal, the MCC process guides employees and their managers to make choices around four major dimensions of career progression — role, pace, location/schedule and workload - calibrating each based on their current aspirations and life circumstances. Since the system is modular, with the ability to personalise each arrangement at any point in time, the MCC is uniquely suited to a workplace where both men and women are looking to manage work and family (Galinsky & Matos, 2011).

91 Increased business competition requires even more rapid and sophisticated information and data analysis (Gratton, 2011; Meister & Willyard, 2010; Zsolnai, Junghagen, & Tencati, 2012). These requirements challenge performance management systems to effectively support the decision making process (Brudan, 2010; Cascio & Aguinis, 2011; Chabault et al., 2012). Business analytics is an emerging field that can potentially extend the domain of performance management to provide an improved understanding of business dynamics and lead to better decision making (Meister & Willyard, 2010; Schreuder, & Coetzee, 2010). The increasing relevance of performance analytics is undoubtedly due to the fast-growing hyper-competition effect in today’s world of work (Meister & Willyard, 2010). According to this effect, companies more rapidly and increasingly compete to provide lower costs and better quality with better know-how to create competitive advantages (Schläfke et al., 2013) – this will not be possible without strategically informed employees who consistently perform in accordance with the company’s ever changing objectives (Cascio & Aguinis, 2011; Meister & Willyard, 2010; Schläfke et al., 2013).

2.6.7 The Role of Industrial Psychologists in Managing Employee