1.1 Describe the purpose of performance management and its purpose of performance management and its relationship to business objectives.
Armstrong and Baron (1998) described performance management as a process to manage teams and individuals in order to achieve good performance as an organisation. (1,2) I believe this is done for two purposes.
Firstly, performance management fosters development. Performance management does this by providing a platform for the individual or team to ask for training and development by highlighting the issues that need improvement. For example, when I was working for B&Q, at my performance review, I realised that I needed training in customer service due to the negative comments I was receiving. This can help to improve the performance of both individuals and teams by providing them with positive and constructive criticism on their performance within an agreed period. By agreeing these development points, they can be individualised to the person/team and therefore they can take ownership of their goals.
Secondly, performance management can be used to determine performance standards. This is because clear results and expectations can be given to the individual or team. They can be then being given a reward that is suitable to and linked to the behaviours that the organisation expects to happen. They will then set out clear expectations to achieve a goal or KPI.
Both of arguments show there is a clear relationship between performance management and business objectives. Business objectives can be seen be used in performance management to set goals specific to the team or individual. They also inform that team or individual how they are performing against the business objectives. They give a clear guidance on how or what goals should be set.
1.2 Explain the components of performance management systems.
There are four components of performance management systems: a reward system, an appraisal, personal development planning and learning/development activities.
A reward system is an opportunity to give out bonus where it is believed that goals and targets have been met. These can be intrinsic, where the reward is cannot be touched or seen. This can be just as simple as a complement for good working behaviours. There are also extrinsic where the reward can be seen and given such as a bonus or a qualification. Rewards are important because they help to motivate employees to the behaviours that employers expect. (7)
Secondly an appraisal is a review of your recent past performance. A meeting which should take place several times a year for employees and their managers to review performance against agreed behaviours and goals. (8) Further development can be then planned for future focus. The reason for doing regular reviews is so that the employee is highly motivated to complete their work.
Learning and development activities are a wide range of different actions that either help you to learn or develop. Learning activities such as gaining a new qualification or an induction into a new role, are usually completed in groups and have a clear start and end dates. Development activities such as having a mentor, will usually be on a one to one basis and may not have clear start and end dates. The reason for completing learning and development activities is so that you are able to develop new skills or use current knowledge better. New skills are needed when you start a new job, or you are being promoted.
1.3 Explain the relationship between motivation and performance management.
Motivation is a desire to behave in a manner to achieve what that person wants or believes they will happen. This can be in the form of reward.
There are many theories about motivation and what motivates people. One of theories is Maslow’s hierarchy of needs. Maslow (1943) wrote that people had five levels of needs that he put in this order: physiological, safety, belonging, esteem and self-actualisation. Maslow theorised that each level of needs had to be fulfilled before they could move to the next level.
Another theory of motivation is called The Hawthorne effect. This effect suggests that motivation can be improved, not by any condition being changed, but by the fact attention is being paid to the worker. In a real-world application this would mean that that a manager should show their employees that they know what they are doing and provide regular feedback for their work.
Both theories show that motivation and performance management are linked. It has been proved that a good performance will motivate people to full fill team/personal or organisational goals.
2.1 Explain the purpose of a reward within a performance management system.
Reward are important in the process of attracting, retaining and engaging employees.
A reward needs to attract potential employees to a job. This is because for some people just earning a certain wage is not enough. This is especially true where there are a shortage of skilled workers and there are completing roles from different companies. These rewards help to also protect a company’s reputation, as they are not “cheap” when hiring new employees. This is because it shows that the company are offering a good package for potential employees.
Also, rewards should also retain an employee. This is because they may lose their motivation or go to a competing company, which could be dangerous as you are taking away their talent from your organisation.
2.2 Identify and explain the components of an effective reward system.
According to CIPD, a total reward system is the concept that all features of working that valued by employees are financial, non-financial and include a benefits package. (9)
Financial rewards are a reward usually given in cash. Cash bonuses, a Christmas or holiday bonus are all rewards that are included. This includes the retailer, John Lewis gives a yearly bonus based on their profits as a variable percentage of their employee’s wages. (10)
Non-financial rewards are rewards that have no cash value. Becoming employee of the month, gaining qualifications and training are included in this category. The purpose of this type of reward is to appeal to intrinsic people who are motivated than just money to do their job well.
Benefits are usually done as part of being in a certain role or being a part of a company for at least a certain period. This can include a parking space for your car, health care insurance and a pension. These are usually on top of the rewards they are already getting, and some may start from the day they start employment.
3.1 Identify and explain the factors that need to be considered when managing performance.
When managing performance there are several factors that must be considered depending on the type of performance that is being managed.
Good performance at first may look easy to manage but in order for employee to stay motivated good performance should be managed properly. Firstly, what reward should be given to them for their good performance? This depends on the target being met and how quickly this target was met. The reward could be personalised towards the person receiving it. In many NHS roles where the role wage is in increments part of good performance is being raised to the next increment. Secondly, what career aspirations does the employee have. If a person has career aspirations it may be that promotion should be in consideration along with development and learning activities. These activities towards promotion could be used towards new goals set for the next appraisal. Equally if the employee has little or no aspirations and is happy in the role they are in will need goals that still stretch them to keep them motivated. Finally, good performance should see new smart targets being set which challenge that person/team without it being too hard and not achieve able. Targets that are easy lose people’s motivation as it will demotivate them. Also targets that are too hard can demotivate people too as it puts people off the target as they know they can not reach it.
Bad performance needs to look at several factors that