Performance management & Best practices

 Performance management

 

According to Armstrong, (2009) performance management is a systematic process for improving organizational performance by developing the performance of individuals and teams. It is a means of getting better results by understanding and managing performance within an agreed framework of planned goals, standards and competency requirements. Processes exist for establishing shared understanding about what is to be achieved, and for managing and developing people in a way that increases the probability that it will be achieved in the short and longer term. It is owned and driven by line management.

 

Importance of performance management

Performance management arrived in the later 1980s partly as a reaction to the negative aspects of merit rating and management by objectives referred to earlier. Its strength is that it is essentially an integrated approach to managing performance on a continuous basis. The appeal of performance management in its fully realized form is that it is holistic – it pervades every aspect of running the business and helps to give purpose and meaning to those involved in achieving organizational success (Armstrong, 2009)

 

Organizational performance

Organizational performance refers to results of an organization, including operating results (productivity, quality, effi - ciency, etc.), market results (sales, market share, customer satisfaction, etc.) and financial results (costs, revenues, profits, etc.). Organizational competitiveness refers to an organization’s ability to gain and maintain market share in its industry and satisfy the needs of important stakeholders, especially stockholders – who want a return on investment, customers – who demand a quality product or service, and employees – who desire interesting work and reasonable compensation for work done In this context, there is considerable evidence that organizational performance and competitiveness are determined by employee performance (Noe et al., 2008, p. 4).

 

Best practice

The burgeoning HPWS literature is playing two valuable roles in terms of the development of contemporary HRM. First, it is helping us to identify the market and/or technological situations in which a company’s HR systems for operating or front-line service workers would benefit from moving to a high involvement model. The broad outlines of this HR model are becoming clearer and have been summarised in this article system. Companies that see value in this model, however, need to customize practices to their specific situation. Second, aside from the contours of this particular kind of HR system, the literature in the HPWS area is making a valuable contribution in highlighting the role of intervening management and employee variables in any kind of HR system. Thus, the literature reinforces the value to any company concerned about its performance of looking internally at the chain of links that runs from management intentions through management practices and employee responses to organisational outcomes. The clear implication is that data-gathering through such practices as regular employee attitude surveys and focus groups is important when management wants to improve organisational performance through HRM. Better information on employee perceptions of, and responses to, espoused and actual HR practices is a prerequisite to improving HRM’s contribution to organisational effectiveness. (K, 2007)

 

Strategic Human Resource management researchers are relying heavily on firm’s database to analyze the impact of Human Resource practices on company’s performance (Wright et al, 2001). However, theoretical research on long term management of human resource has recommended that Human Resource practices procedures can increase performance of the firm and can become a mean of unique edge because the practices are mostly matchless, causally unclear, and difficult to copy (Lado & Wilson, 1994). However Wright et al., 2001 was of view that Human Resource practices can become a mean for sustainable unique edge when they are concerned towards resources or competencies that create value for the organization. Thus, Wright et al., 2001 and other researchers have discussed that SHRM research must discover resources that are crucial for firm’s competitive edge.

 

 

Performance appraisal

Insurance firms stress the importance of effective performance appraisal management based on the belief that everything people do at work at any level contributes to achieving the overall purpose of the organization. It is therefore concerned with what employees do, how they behave, how they perform their work, and what they have achieved. The combined impact of performance appraisal practices will be expected to achieve more to improve firm performance (L.H, 2013)

 

Human Resource Management practices

A number of studies have tested the linkage between Human Resource Management practices and performance of organization with generally helpful results. In fact, existing researches in this area has changed its focus from testing the linkage between several Human Resource Management practices and the performance of organizations to find out the means from which Human Resource Management practices affects the performance of the organization. Boselie et al., (2005) is also of the same view.

Collins and Smith, (2006) also tested the above relationship. Similarly Hailey et al., (2005) studies also revealed the same results. However, current researches on the association between HRM practices and performance of the organization are confused about the methods of these studies (Wall & Wood, 2005). These studies recommend that it is early to assume a clear positive relationship between Human Resource Management practices and performance of the organization and argue that further research could be done though using more thorough research designs. If social exchange perspective is viewed, employees respond to the organization’s actions by their continuous participation in the organization. There is empirical research which shows that HR practices enhance employee retention. For example, Paré and Tremblay, 2007 examined four of the five Human Resource practices were significantly negatively related to turnover ratio.

So many studies have analyzed that Human Resource practices have positive relationship with employee performance and also performance of organization. The main focus of the above studies was towards developed countries. But only few researches have been done to check the Human Resource performance link in developing countries like Pakistan. According to Aycan et al., 2000 Pakistan is far behind in research in the field of Human Resource Management practices. According to Heneman III & Milanowski (2007) the relation between HR practices and organizational performance has been appreciated by research in the private sector, suggesting that the HR system has great strategic potential to bring organization to new heights.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Armstrong, M., 2009. ARMSTRONG’S HAND BOOK of perfomance management. In: ARMSTRONG’S HAND BOOK of perfomance management. 4th ed. London and Philadelphia(London): Kogan Page Limited, p. 9.

Boselie, P., Dietz, G. and Boon, C. (2005), “Commonalities and contradictions in HRM and performance research”, Human Resource Management Journal, Vol. 15 No. 3, pp. 67-94

Collins, C.J. and Smith, K.G. (2006), “Knowledge exchange and combination: role of human resource practices in the performance of high-technology firms”, Academy of Management Journal , Vol. 49 No. 3, pp. 544-60.

Hailey, V.H., Farndale, E. and Truss, C. (2005), “The HR department’s role in organizational performance”, Human Resource Management Journal, Vol. 15 No. 3, pp. 49-66.

K, M., 2007. High-performance work systems and organisational performance:. Macky K, 30 10.p. 268.

Lado, A. A., & Wilson, M. C. 1994. Human resource systems and sustained competitive advantage: A competency-based perspective. Academy of Management Review, 19: 699–727

L.H, B. S. &. L., 2013. HUMAN RESOURCE MANAGEMENT BEST PRACTICES AND FIRM PERFORMANCE. Serbian Journal, November .p. 161.

Noe, R. A. et al. (2008). Human Resource Management: Gaining a Competitive Advantage. New York: McGraw-Hill/Irwin

Šikýř, M., 2013. BEST PRACTICES IN HUMAN RESOURCE MANAGEMENT: THE SOURCE OF EXCELLENT PERFORMANCE AND SUSTAINED COMPETITIVENESS, s.l.: CENTRAL EUROPEAN BUSINESS REVIEW.

Wright, P. M., Dunford, B. B., & Snell, S. A. 2001. Human resources and the resource-based view of the firm. Journal of Management, 27: 701–721.

Ying Wang, Sunghoon Kim, Alannah Rafferty & Karin Sanders, 2019. Employee perceptions of HR practices. Ying Wang, Sunghoon Kim, Alannah Rafferty & Karin Sanders, 26 November .pp. 143-144.