Discuss the main issues and challenges for
organisations in implementing
performance management systems? What
are the specific skills that managers and
human resource (HR) practitioners need
in order to address these issues
For Integrated development on any Company, planning, budgeting as well as performance management need to be used as powerful tools whichcan assist any Company so as to develop an integrated perspective on how to proceed on development in their respective industry. Performance management in particularcan help inenablingthem forfocusing onindividualas well asorganisationalpriorities present in increasingly complex as well as totally different set of rules of the market. It can help in their enablementto direct resource allocation as well as use institutional systems for fulfilling a new set of development objectives.
Performance management can bevery much critical so as to ensure that organisationalplans are being implemented, so that they can have themuch desired focus as well as developmental impact on the company results as well as can help in Human resources being used efficiently as well as efficiently. This can helpto establish as well as maintain in an organisation, aservice-orientated culture for operation in the Company. When we look at performance management as well as integrated developmentplanning for organisation, there are presently actually two faces of the same coin.The Integrated Development Plan (IDP) can help to discuss what any Company’swants to achieve like what the work force can expect from their resources as well as the Performance ManagementSystem (PMS) can deliver in terms of managing, measurement& evaluation about the extent of achievement which can assist companyto measure what it expected out of development which is being done (Hough., Keyes, &Dunnette, 1983).
Individual development, has always beenconsidered the “Achilles heel” of human resources management processespresent in aCompany. Theysuffer from various flaws present in many organizations, with individuals as well as their managers regularly talking abouttheir ineffectiveness. Very Lessresources of workforce agree that presently their organization’s performance management system (PMS) helps in improving theirindividual performance. Individuals also saythat their Companypresent systems have established clearperformance related goals, generated perfect and honest feedback or used information technology to work on streamlining theprocess (Institute of Management Accountants 1995). While these results, it has been a suggestion that there exists poorly designed performancemanagement systems present in many companies, which are ably supported by obsolete in-house toolsas well as processes whichhave caused difficulties with performance management of the workforce. There are several difficultieswhich regularly rise in these cases because, presently in its core, all of performance management systems are very much highly individualas well as sensitive process for both managers as well as their subordinateindividuals (Shank, John &Govindarajan 1993).
The critical success factors & pitfalls in any implementation strategy for a performance management systemwhich can smooth the effort & ensure success or hinder it is listed in the below table.
Critical Success factors Pitfalls Recruitment of senior management to ensure top
level acknowledgment & sponsorship Don’t start the project without top level commitment & sponsorship Throwing out of old Performance management
measures which are not very much essential to complete functioning of organisation
Don’t include any old parameters which offer little to no value Including Key performance indicators(KPI) as a part of
new evaluation as well as compensation side of performance management systems
Don’t continue evaluation based on old parameters which include obsolete performance goals.
Allow front line individuals to help for defining their individual Key performance indicators (KPI)& encourage them to use their Key performance indicators as a measurement as well as self-education procedure so that they can eradicate all issues at the time of KPI evaluation & appraisal.
Don’t use Key performance indicators as a weapon for any person’s appraisal.
Development of concise, intuitive as well as obvious Key Performance Indicators focusing on the company strategic goals.
Don’t design multiple Complex or complicated Key performance indicators(KPI) as this might confuse them
Keep the big picture in mind while defining Key performance indicators so that they can help Company in achieving its strategic goals
Don’t work to define Key performance indicators from a very narrow
perspective, keep space for sub segments to be optimized for every one as an individual
Ensure that these key performance indicators can be influenced by all people whose performance will be measured.
Don’t design Key performance
indicators which aren’t controllable by everyone as an individual
Attention needs to be paid for the cultural change which is coming due to the new system.
Communication will be kept open &individuals need to be trained as well as educated so that they can make the best use of the system.
Don’t work for implementing any performance management system (PMS) without working on to
addressing cultural management issues present in the organisation.
All the essential message which areembedded and present in the “Pit Falls” list which are preset in the Integrated-Performance Management System. This will reflect a solid as well as effective management control related strategy which needs to bedefined as well as supported by management. Performance related measures needs to be worked upon, designed as well as support actions, help in identificationof issues, highlighting of new opportunities, as well as communication of performance against all of customer expectations of companies (Wexley 1986).
Performance Measures which don’t add value as well as that work on confusing users are very much similar than having no measures at all in the organisation. Any bad measureswhich is present in Integrated Performance Management is the one which is very much uncontrollable at the basic level as well ascan be held responsible for the achievement of desired levels. When organisationalresources are very much held accountable for incidentswhich they cannot control, they then become very much demotivated, as well asoften reject the whole performance measurement process (PMS) as they work towardsrationalizingall of their ongoing performance managementrelated problems. If any company decides for implementing a new or improved Integrated Performance Management System, it requires active attention for changing management issues, as well as including to work so as to provideimmediate attention to the present risks as well asremove the resistance towards the change it represents (Hough, Keyes, &Dunnette 1983).
Many a times, Managers are very much hesitant for providing candid feedback as well as work on having a honest discussions with individuals just for the fear of reprisal as well as damaging relationships with those very individuals which they daily count on to get all of their work done. Individuals on the other hand also feel that their managers are not very much skilled about discussing their individual performances as well as deem them ineffective to coach them about how to develop their specific individual skills. Some of them also complain that performance management systems (PMS) are very much cumber-some, bureaucratic as well as too much time consuming when compared about the value added by there presence. This leads both managers as well as individuals to treat performance management systems (PMS) as a deemed evil in their work life so that it should be regularized rather than as a deemed important process which helps to achieve key individual as well as organizational outcomes(Hillgren& Cheatham, 2000).
A very important factor in all of this is the strategy related role, in particular, the responsibilities present in each organizational unit. Once all of the responsibilities of these individual units can be determined, then only performance measures can be developed. Performance needs to be measured for every individual, a division, or the entire company present. Compensation as well as reward systems in an organisation should not at all exist in a vacuum but they should be very much related to the reaching company’s strategy in all short term, medium term as well as long term goals of the company.(Atkinson 1997).
The “Critical Success factors” of implementing an Integrated Performance Management System are various. Linking performance evaluation & rewards to the Key Performance Indicators are one of the fastest as well as very much reliable in its ways so as to work on ensuring the Integrated Performance Management System is worked upon and implemented so that it can beproperly used. If we can align individual resource goals, incentives, as well as rewards with
Key Performance Indicators (KPI)which the individuals can control, it can become very much critical. Finally, when thinking about the design of the Integrated Performance Management System as well as the measures ofIntegrated Performance Management System must help to foster as well as reflect continuous improvement. Learning should be the ultimate goal (Forsan 1997).
While researchers as well as experienced academicians have identified multiple things which are required for appropriate Integrated Performance Management System (PMS), there exists also multiple decisions which needed to be made to design specific system which is ideally required for a given company’s requirements. One effective decision is what purpose(s) the Integrated Performance Management System will serve. For instance, Integrated Performance Management System can support pay related decisions, promotion decisions, individual development as well as reductions in force. An Integrated Performance Management Systems (PMS) that attempts to found out too many objectives is most likely to end due to its own lack of focus as well as weight. Also, there is never one type of system as well as linkage of objectives which is best suited for all Performance Management organizations. The purposes for any given Integrated performance management system should most likely be found out by considering organizational related needs, organizational inherent culture as well as the systemic integration with other human resource management (HRM) related systems (Cawley, Keeping & Levy 1998).
The implementation of an Integrated Performance Management System requires thehuge commitment as well as sponsorship of top level management along with support & involvement of individual personnel fromall verticals of the organization, including financial accounting,sales, marketing, product as well as process related development,material procurement, operation planning, product distribution,sales, service, as well aslastly information systems. Themanagement accountant should play an activerole in the design as well as implementation of Integrated Performance Management System. Specific ways in which the management consultingcan be involved in the implementation as well asdownstream level maintenance of the Integrated Performance Management System include:
• Identification for the need present for an integrated performancemanagement system (PMS)as well as educatingall of the others about their need;
• working all with the Integrated Performance Management System champion or team so as toassessing the performance of the currentperformance measurement system (PMS) which is very much against the company’scritical success factors;
• assisting the needed in development of the performance indicativearchitecture; review as well as assessmentof current financialmeasures as well as reports for consistency
&compatibility with overall Integrated Performance Management System’s design, structure,as well asoverall objectives;
• to analyze the potential behavior related impact ofthe key performance indicators (KPI); • developing several methods which can be used so as to ensure the integrityof the data
which can be used by the system;
• supporting the overall implementation of Integrated Performance Management System by developingtraining as well as education programs;
• participation in planning as well as completion of theconversion to the new Integrated Performance management system;
• participating in reevaluationof the performanceevaluation as well as the reward system; & • Identificationas well as implementation of methods toensure that there is a continuous
improvement of performance& the Integrated Performance Management System that tracks it (Bruns& William 1992).
As a part of the management team of company, managementconsultants should work on bringing their unique talents along withexperience as well as perspective against the challengingtask of implementation of a novel performance managementapproach.Although it is attractive & as powerful as such a specific linkage is, it nevertheless carries huge risks. These are important questions that the Integrated Performance management system team should ask the senior management and employees so that the Integrated Performance management system can address all the shortcomings of the older Performance management system (J.H. Waterhouse & Wells 1997).
Compensation as well as reward systems in an organisation should notat all exist in a vacuum but they should be very much related to thereaching company’s strategy in all shortterm, mediumtermas well as longterm goals of the company.A very important factor in all of this is the strategy related role, in particular,the responsibilities present in each organizationalunit in particular. Once all of the responsibilities of these individual units can bedetermined, then only performance measures can be developed.Performance needs to be measured for every individual,a division, or the entire company present.(Atkinson 1997).
Performance measurement as well as its proper managementdefines the current as well as future success of anyorganization. Performance Measurement can only be done well as well as integratedwith all processes and units so that they can work on to supportthe focus on strategyas well as operation relatedgoals. Performance Measurement if done not in proper manner, in multiple fragmentedways, can easily work on regarding destroy the momentum as well asorganisational culture ofanycompany.Reflecting the strategic goals (which are deiced
top-down) as well as operationalrealities (which come up from bottom-up), of an Integrated
based excellence present at allpresent levels of the organization. Any effective Integrated Performance Management System (PMS) can serve as a proper communication channel present betweenmultiple individuals, teams, processes, management levels,as well ascompany’s units, so as to ensure that they together can deliver a coordinated as well asfocused range of products & services which canmeet or exceed customer requirements.Any companywhen it takes on new as well as competitive challengesin the global marketplace can work to create evermore responsibleas well as flexi products/services relatedbundles as well as delivery mechanisms using which the importanceof well-designed performance measurements systemscanincrease always. A living level as well as dynamic perspective of company’sprogresscan be shown invery much effective Integrated Performance Management System. It should provideinformation regarding the management of today’s activities and how to work onplanning tomorrow’s opportunities as well as growthstrategies.
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