Employees Performance Management system is a complete process, which is based on the workforce performance and the fulfillment of organizational objectives at all levels. The basic philosophy behind the performance management system is to developing the alignment between the organizational objectives, with the employees’ skills and capabilities, moreover it emphasize on the Development and improvement of the overall system. People mostly misperceive the performance management to the performance appraisal; In actual performance appraisal is judging the past performance while performance management system is an ongoing process to measuring the fulfillment of objectives. Alan Nankervis, (2004) while doing his research in an Australian institute finds that there are very few organizations which shared their organizational objectives with their employees. Most of the organization use the performance appraisal as compared to the performance management in which the focus is made on the comparison between the performance standards being made by the organization and the actual performance of the employees while no one actually compares the performance against the organizational objectives. Performance management is the real theme while we work in the organization for quality control, in Quality based organization the objective of the performance is made on the achievement or fulfillment of the goals rather than established standards.
In every organization, employees play a vital role in determining its survival. In line with that, an employee is perceived as an important or valuable asset to an organization and is the key or prerequisite factor to make sure the operation of the organization or factory runs as planned. Employees become the heart and pulse of the organization and really important to determine the needs and expectancies of the client or customers. This is aligned with the purpose of performance appraisal in the contemporary approach which emphasizes on employee who has full potentials that can be explored and expanded. Employees can be used positively to sustain the quality of service or product of the organization. This is associated with the roles and responsibilities of the employees to perform at the highest level of their work competencies. Performance appraisal become more constructive and therefore the progress of the employees are improved. With the achievement of the organization’s vision and mission, employees can work together collaboratively with the organization itself based on the win-win basis. In this context, performance appraisal can turn out to be a good device to plan a better career path for the employees. The term performance appraisal are sometimes called as performance review, employee appraisal, performance evaluation, employee evaluation, employee rating, merit evaluation, or personnel rating. Performance appraisal is a system that involves a process of measuring, evaluating, and influencing employees’ attributes, behaviour and performance in relation to a pre-set standard or objective. In this information technology era, employee performance can be evaluated using software systems. This will enable information about the performance of employees to be easily evaluated and saved to database for future retrieval. Performance management of employees can be seen as the systematic description of individual job-relevant strengths and weaknesses for the purposes of making a decision about the individual. In another term, performance appraisal is a process of evaluating the behaviour of the employees in the workplace, or can also be referred as a process of giving feedback on employees’ performance. It involves a very complicated process and various factors can influence the process. Therefore, the process of evaluating employee’s behaviour should be looked at as a reciprocal process or using a matrix perspective and not as a straightforward process.
THE PERFORMANCE MANAGEMENT PROCESS
While research and experienced practitioners have identified several characteristics that are prerequisites for effective performance management systems, there are also many decisions that need to be made to design a system ideally suited for a given organization’s needs. One such decision is what purpose(s) the system will serve. For instance, performance management systems can support pay decisions, promotion decisions, employee development and reductions in force. A performance management system that attempts to achieve too many objectives is likely to die of its own lack of focus and weight. There is no one type of system or set of objectives that is best suited for all organizations. The purposes for a given performance management system should be determined by considering business needs, organizational culture and the system’s integration with other human resource management systems. One important caveat to consider is that while performance management for purposes of decision-making and employee development are certainly related, these two objectives are rarely supported equally well by a single system. When a performance management system is used for decision-making, the appraisal information is used as a basis for pay increases, promotions, transfers, assignments, reductions in force or other administrative HR actions. When a performance management system is used for development, the appraisal information is used to guide the training, job experiences, mentoring and other developmental activities that employees will engage in to develop their capabilities. Although it is theoretically possible to have a performance management system that serves both decision-making and development purposes well, this can be difficult to achieve in practice. In addition, research has shown that the purpose of the rating (decision-making versus development) affects the ratings that are observed.1 Ratings used for decision-making tend to be lenient, with most employees receiving ratings on the high end of the scale. Ratings for developmental purposes tend to be more variable, reflecting both employee strengths and development needs. An example will illustrate why it can be difficult to emphasize equally decision-making and development within the same system. Managers in this organization evaluate their employees and then meet to calibrate their ratings and make reward decisions. Managers then conduct review sessions with every employee to discuss the employee’s performance, pay increase and stock option grant. Developmental feedback is supposed to be included in the meeting. However, the range of percentage increases and stock options is large, thereby allowing managers to link performance with rewards effectively. With so much at stake, the majority of the meeting typically focuses on justification by both parties, rather than on how the employee can develop. The climate of the meeting is not conducive to giving and receiving feedback, and employees are reticent to discuss their development needs for fear this will negatively impact their rewards. Even in the strong performance-based culture of this organization, the decision-making aspect of performance is, by default, given more emphasis. Effective performance management systems have a well-articulated process for accomplishing evaluation activities, with defined roles and timelines for both managers and employees. Especially in organizations that use performance management as a basis for pay and other HR decisions, it is important to ensure that all employees are treated in a fair and equitable manner
In the organizational context, performance is usually defined as the extent to which an organizational member contributes to achieving the goals of the organization. Employees are a primary source of competitive advantage in service-oriented organizations (Luthans and Stajkovic, 1999; Pfeffer, 1994). In addition, a commitment performance approach views employees as resources or assets, and values their voice. Employee performance plays an important role for organizational performance. Employee performance is originally what an employee does or does not do. Performance of employees could include: quantity of output, quality of output, timeliness of output, presence at work, cooperativeness (Güngör, 2011). Macky and Johnson pointed that improved individual employee performance could improve organizational performance as well. From Deadrick and Gardner’s (1997) points, employee performance could be defined as the record of outcomes achieved, for each job function, during a specified period of time. If viewed in this way, performance is represented as a distribution of outcomes achieved, and performance could be measured by using a variety of parameters which describe an employee’s paten of performance over time. On the other hand, Darden and Babin (1994) said employee’s performance is a rating system used in many corporations to decide the abilities and output of an employee. Good employee performance has been linked with increased consumer perception of service quality, while poor employee performance has been linked with increased customer complaints and brand switching. To conclude, employee performance could be simply understood as the related activities expected of a worker and how well those activities were executed. Then, many business personnel directors assess the employee performance of each staff member on an annual or quarterly basis in order to help employees identify suggested areas for improvement.
EMPLOYEE PERFORMANCE MEASUREMENT
The concepts of performance are studied through evaluation of overall performance and the management of the performance and the evaluation of performance is the process classifying certain outcomes within a definite timeframe (Coens & Jenkins, 2002). Moreover, the axiom, ‘If you can’t measure it, you can’t manage it,’ underpins the rationale for organization having a completed and comprehensive performance measurement system