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The need for an appropriate Performance Management System (PMS) and the goals of a PMS

Discuss about the Performance Management Systems.

Performance management system can be identified as a systematic process by which the overall performance of the organization can be improved by improving the individual performance of the members of the organizational team (Kerr & Hayward, 2013). Hence, it can be stated that the Star Industries will surely be helpful by implementing PMS. As mentioned by Van Dooren, Bouckaert and Halligan (2015), in the cutthroat world of business, the strategic management of employee preferment by setting expectations, maintaining a dialogue between the supervisor and the employee and measuring the performance outcome gives a substantive level of competitive advantage to the companies.

The organizational needs:

As discussed by Buckingham and Goodall (2015), by implementing the PMS, the companies become able increase the performance level of the employees by improving the organizational communication and clearly set expectations. Moreover, the Star Industries need the PMS to improve its productivity by setting cleat accountabilities and for obtaining cost advantage (Rashidi, 2015).

The managerial needs:

As mentioned by Dewettinck and van Dijk (2013), PMS will save the time and reduce role or directional conflicts. Thus, the management will be able to ensure employee efficiency and consistent performance in Star Industries.

The employee benefit:

With clearly set and communicated expectations the employees will be able to perform better and make self appraisal (Rashidi, 2015). Thus, the star industries will be able to ensure employee satisfaction and high retention rate. 

The objective of PMS:

The Star Industries can opt for setting the following objectives of the performance management system:

  • To facilitate the employees for achieving superior work standards.
  • To assist the employees for identifying the knowledge and skills required for the task efficiently
  • Improving the performance of the employees by providing motivation, empowerment and reward mechanism.
  • Promoting two way communications for clarifying expectations and obtaining accountability, regular feedback and continuous coaching.
  • Developing basis for administrative decisions, strategic and succession planning, promotion and performance based payment.

In the Australian context, the State Service Amendment (Performance) Act 2011 and the Employment Direction 26 have provided the legislative background to the performance management system within the organizations (Blackman et al., 2013). Moreover, as mentioned by the Australian Government, the Employment Direction 26 asks for the maintenance of the guidelines of the Anti-Discrimination Act 1998 and the Fair Work Act 2009 in the organizational setup, while opting for the performance management system (Department of Premier and Cabinet, 2017).

The process of the PMS:

Like all other companies, the process of PMS will follow the following phases:

  • Setting performance expectations:

As discussed by Shi et al. (2015), the best practice of the PMS involves the identification of the individual employee performance in consultation of the employee himself. The managers of the Star Industries can meet the employees establish mutually set expectations, specify the performance appraisal procedure and impart understanding of how the meeting of the expectations will contribute to the achievement of the organization’s mission (Star Industries Intranet, 2017). The expectations need to be aligned with the organization’s objective of being the first preference of the customers. It will be documented and signed by both the manager and the employees, defined as “work plan”.

  • Communication for tracking the performance:

The objectives of PMS

As mentioned by Blume, Rubin and Baldwin (2013), the progress of the expected task detail needs to be measured, reported, discussed and documented. The supervisors are expected to utilize and introduce operational techniques to support to meet their expectations like, employee training, 24 hour telephone counseling or in-service workshops.

  • Performance appraisal and review:

With review mechanisms, the performance of the employees needs to be appraised in relation to the set goals.

  • Reward:

Employees needed to be rewarded for the achievement of the performance expectations and for extra initiatives.

  • Performance improvement plan:

In the process of monitoring and evaluation, the indentified gaps in the work plan needed to be improved in the next plan.

The documentation of the PMS:

As mentioned by Haas and Yorio (2016), establishment of the performance management system needs to be documented to avoid the confusion among the employees and avoid the legal issues.

The documentation of the performance management system in the Star Industries will include the following steps.
  • The introduction about and outline of the PMS and its needs in the Star Industries
  • The mentioning of the Performance management system cycle
  • The evaluation procedure of the performance
  • The specified employee development procedure
  • Reward management for the employees

The documentation of the performance management system needs to include the organizational missions and objectives. Moreover, as mentioned by Decramer, Smolders and Vanderstraeten (2013), the documentation of the performance management system must involve the guidelines of the legal protections that the employee is going to get with the organization’s performance expectations.

As mentioned in the company website, Star hopes to be the first choice of its customers. Hence, it is needed to increase the quality of the service and product. In such a context, the strategic outline of the company largely supports the implementation of the PMS.

On the other hand, the company also has a policy regarding the performance review. The company follows a policy of “regular informal feedback from the employee’s immediate supervisor and a formal performance review conducted annually”. Moreover, it also has a policy on the performance improvement of the employees (Star Industries Intranet, 2017).

Thus, the human resource management system of the company has a base and potential support for the successful implementation of the PMS in Star Industries.

As discussed earlier, the performance management system serves as a reliable strategy in achieving competitive advantage and organizational advancement.

The role of the PMS in relation to the broader HR objectives:

As mentioned by Zavadsky and Hiadlovsky (2014), the broader HR objectives are creating obtaining employee satisfaction and employee commitment. With the help of the PMS, the management can ensure this particular strength.

As discussed by Brunnert et al. (2014), the performance management system provides a clear goal to the employees to achieve and the documented and specified assessment criteria helps them to track their own performance. This assists the organizations in providing professional challenge to the employees which is a great motivating factor in the organizational set up. Moreover, the training and development policy for supporting the employee to achieve the expectation serves in developing the professional faculty of the employees. This helps in increasing the employee satisfaction and motivation. The greater HR objective of companies like Star industries is to create employee with promoting clear communication and direction within the

Legislative requirements to take into account

The star industries can opt for the PMS with the aim of achieving these objectives.

The role of the PMS in relation to the broader Business Objectives:

On the other hand, the long term business objectives can be identified as the potentially of sustainable business, cost reduction and good productivity. As discussed by De Waal (2013), the PMS helps in eliminating the role conflicts and same time in the organizational operation. Thus, the companies make optimum utilization of their resources and the productivity increases. On the other hand, the Star industries can obtain substantial employee retention rate by achieving employee satisfaction with the PMS (Star Industries Intranet, 2017). This will improve the brand image of the company in both the employee and consumer market, which will be helpful in ensuring sustainable business and the Star Industries will be able to attain the goal of being “the first choice for customers, designers and architects building high quality homes and commercial premises.

The process of PMS implementation may follow the bellow stated steps:

The preparation:

It should include communication regarding the PMS and its procedures. The raters needed to be provided trainings and a pilot program can be arranged.

Communication plan:

For successful implementation of the PMS the Star industries needs to opt for an open communication channel. Both the verbal and written communication will be promoted. Moreover, the company needs to focus on creating an informal communication environment so that the employees can easily raise their concern regarding their task.

Appeals process:

Here, the management of the Star industries needs to promote acceptance of the PMS among the employees. Here, the

Training program:

The raters needed to be trained in this step. They are needed to be made aware of the system, job objectives, elimination of rating error and many more.

Pilot testing:

A small scale experiment of the PMS needed to be done on a small team, so that he potential problems can be discovered and steps can be taken (Star Industries Intranet, 2017).

Monitoring and evaluation:

When the system is implemented small scale goals needed to be decided and monitored. Moreover, the reactions to the system and the effectiveness of the system needed to be identified. 

As mentioned by Pulakos et al. (2015), for the successful management of the employee performance to achieve the organizational expectations, the coaches play a crucial role. In the process of the PMS, the coaches and mentors can help in achieving the targets and improve the quality of service by providing follow up. As opined by Zavadsky and Hiadlovsky (2014), in the PMS the managerial coaches can assist the employees in resolving the operational confusions, team conflicts and improve the performance.

The processes and documentation of a PMS and how these will support the goals of the organization

Managers:

As mentioned by Ates et al. (2013), for the successful implementation the performance management system, the managers and supervisors need to be trained. In the context of the star industries, the management needs to be trained regarding the organizational procedures for reviewing and assessing the performance of the employees.

Staff:

On the other hand, the staffs are needed to be understood the process of setting their performance expectations, the job role and how to achieve it. Moreover, the staffs need to be trained regarding the issues those are crucial in improving their productivity and attain the personal job expectancy.

As mentioned by Zavadsky and Hiadlovsky (2014), performance monitoring includes measuring the performance and giving feedback. Monitoring needs to be done when the working procedure is in progress. During this phase the employees and the mangers needs meet some set criteria regularly.

The Star Industries can look for meeting the following performance objectives for monitoring:

  • Assess the level of progress towards meeting the performance expectations.
  • Share feedbacks and communicate the concerns related to the performance and organizational goals (Star Industries Intranet, 2017).
  • Identify the requirement of changes that is needed in the work plan as a result of a shift in the organizational priorities or the change in the responsibilities of the employees.
  • Determine the need of any extra support from the manager or other entities in order to assist the employees in achieving his/her objectives.

Evaluation of the employee performance is one of the major success factors of the performance management system. As mentioned by Zavadsky and Hiadlovsky (2014), preferment evaluation is the process of assessing the employee’s performance in terms of the set organizational goals or performance expectations for a certain period of time. As mentioned by Buckingham and Goodall (2015), there are a number of evaluation mechanism that the modern companies use to evaluate the performance level and the attainment of the organizational goals by the employees.

Figure: 360-degree feedback

(Source: Zavadsky & Hiadlovsky, 2014)

The Star Industries can use the modern performance evaluation mechanism, i.e. 360-degree feedback. As mentioned by Buckingham and Goodall (2015), 360 feedback is an evaluation process in which the employees receive confidential, anonymous feedback from the stakeholders. For reviewing and assessing the performance of the employees the management of the Star Industries can collect feedback from the immediate supervisors, peers or the team mates, sub-ordinates, the rating committee and the employee himself. The management will provide a feedback from to each of the entities, with the criteria set in relation to the performance expectation of the employees and feedbacks or comments will be collected on them. Thus, a 360-degree performance evaluation process will be helpful in collecting an integrated picture of the employees’ performance, and the star industries will be able to opt for a bias free performance evaluation procedure.

Policy statement:

The company is going to review the performance of the employees regularly.  The employees receive regular informal feedback from the supervisors and formal review is conducted annually.

General procedures:

Employees are encouraged to make consultation over their performance with their supervisors, preferably half yearly. Formal reviews are done annually. Performance expectations and the ratings are documented. The employees are provided with performance feedback which is clear, supportive and employee oriented. The employees are provided with “Employee Development” program and progress is regularly monitored.

The company also has a structured policy on the performance counseling.

Policy statement:

The policy statement has said that the company is inclined to fair and reasonable process to identify the unsatisfactory performance and discussed with the employee. The company has also declared that the organization may follow due procedure including dismissal in the performance counseling (Star Industries Intranet, 2017).  

Procedures for counseling and discipline including escalation of issues

The company has made it mandatory that the decrease in performance needs to be addressed immediately. The managers or the supervisors are responsible to make the employees know about their performance expectations and they need be aware of any personal or professional influences upon the unsatisfied performance level of the employees (Star Industries Intranet, 2017). The treatment to the issue is done privately and in the case of any personal issue the employees are referred to “Employee Assistance Program Manager”. The counseling session is done in accompany with a witness. The company follows 1: standard counseling, 2: First and final counseling, and 3: Summary Dismissal. The standard counseling is done with informal interview, formal counseling warning interview and consideration dismissal. This standard counseling is followed by warning and dismissal.

Procedures for dealing with grievances including mediation

The company opts for summery dismissal in the case of reported grievances of “physical assault of another employee or customer, gross insubordination, neglect or refusal of duty, failure to follow lawful and reasonable instructions, and fraudulent conduct”. For addressing the employee grievances, the company suggests to speak to the person causing the problem, speak to the immediate manager or make formal complaints. Only the formal complaints are investigated. An established accusation can be addressed with an “apology; written warning, counseling, transfer, demotion, or dismissal” (Star Industries Intranet, 2017). The employees are also free to appeal with the issue to the “Human Rights and Equal Opportunity Commission or the Anti-Discrimination Board” in case of dissatisfaction with the company provided outcome.

Hence, it can be stated that the performance management and the performance counseling procedure of the company is inclusive. However, inclusion of trained psychologist and job trainers in the panel of counselors will be helpful for the company and the employees (Star Industries Intranet, 2017).

The role of the PMS in relation to the broader HR objectives

In addition to these policies the star industries may opt for two new policies on performance agreement and performance appraisal.

The policy or plan on performance agreement:

Policy title: Performance Agreement

Administered by: The human resource management

Applicable to: All the employees 

Policy statement:

The employees and the company will opt for selecting a performance expectation for each of the employees. Both the parties will be agreed upon the performance goals. By agreeing with the performance goal the employee will be liable to achieve that goal and conduct the mentioned behavioral pattern. The performance agreement plan will include both the key performance indicators and the behavioral determinants.

Policy objectives:

The objective of this policy is to make the employees accountable and responsible for the agreed task expectations.

Procedures:

  • The employees will be met by their immediate supervisor for consulting about the assignment and the KPI will be set after having discussion with the employees.
  • The employees will be provided with the mutually agreed KPIs in written and signed documents.
  • The employees will provide structured report on the progression of the task to the supervisor in every seven days.
  • Any issue faced in the progression of the task is needed to be reported to the supervisor within 24 hours.
  • The failure in attainment of the agreed performance goal may reflect in salary deduction or a negative approach in yearly performance appraisal.
  • The employees need to show proper reason for the performance failure and 360-degree feedback will be collected once in a month.

The employees will be appreciated with both the tangible and intangible rewards for achieving the agreed performance goals. Moreover, the employees will get incentives for taking extra initiatives.

The policy on performance evaluation:

Policy title: Performance evaluation

Administered by: The human resource management

Applicable to: All the employees 

Policy statement:

The company is committed to conduct regular performance evaluation with the aim of rewarding the employees for their effort.

Objectives:

The objective of this policy is to identify the level of achievement on the agreed job and the extra contribution that the employees are making to the organization. The company is committed to provide rewards to the employees according to their contribution.

Procedure:

  • The performance of the employees will be evaluated on the basis of the fixed KPIs.
  • The evaluation of performance will be done twice in a year.
  • The reports will be provided to the employees at the end of the yearly session.
  • The rewards will be provided at the end of the session.
  • Performance will be evaluated with a 360-dgree feedback procedure and rating scales.

The performance and behavior of the employees will be evaluated on the basis of the feedbacks collected from the stakeholders. Rating will also be done with a 360-degree approach.

References and bibliography:

Ates, A., Garengo, P., Cocca, P., & Bititci, U. (2013). The development of SME managerial practice for effective performance management. Journal of Small Business and Enterprise Development, 20(1), 28-54.

Blackman, D. A., Buick, F., O'Donnell, M., O'Flynn, J. L., & West, D. (2013). Strengthening the performance framework: Towards a high performing Australian Public Service.

Blume, B. D., Rubin, R. S., & Baldwin, T. T. (2013). Who is attracted to an organisation using a forced distribution performance management system?. Human Resource Management Journal, 23(4), 360-378.

Brunnert, A., Vögele, C., Danciu, A., Pfaff, M., Mayer, M., & Krcmar, H. (2014). Performance management work. Business & Information Systems Engineering, 6(3), 177.

Buckingham, M., & Goodall, A. (2015). Reinventing performance management. Harvard Business Review, 93(4), 40-50.

De Waal, A. (2013). Strategic Performance Management: A managerial and behavioral approach. Palgrave Macmillan.

Decramer, A., Smolders, C., & Vanderstraeten, A. (2013). Employee performance management culture and system features in higher education: relationship with employee performance management satisfaction. The International Journal of Human Resource Management, 24(2), 352-371.

Department of Premier and Cabinet. (2017). Dpac.tas.gov.au. Retrieved 10 February 2017, from https://www.dpac.tas.gov.au/divisions/ssmo/employment_directions

Dewettinck, K., & van Dijk, H. (2013). Linking Belgian employee performance management system characteristics with performance management system effectiveness: exploring the mediating role of fairness. The International Journal of Human Resource Management, 24(4), 806-825.

Haas, E. J., & Yorio, P. (2016). Exploring the state of health and safety management system performance measurement in mining organizations. Safety science, 83, 48-58.

Kerr, E. A., & Hayward, R. A. (2013). Patient-centered performance management: enhancing value for patients and health care systems. Jama, 310(2), 137-138.

Pulakos, E. D., Hanson, R. M., Arad, S., & Moye, N. (2015). Performance management can be fixed: An on-the-job experiential learning approach for complex behavior change. Industrial and Organizational Psychology, 8(01), 51-76.

Rashidi, R. (2015). A REVIEW OF PERFORMANCE MANAGEMENT SYSTEM. International Journal of Academic Research, 7(1).

Shi, J., Abdelwahed, S., Zhu, W., & Amgai, R. (2015, June). Development of a control-based performance management system for shipboard power systems. In Electric Ship Technologies Symposium (ESTS), 2015 IEEE (pp. 129-134). IEEE.

Star Industries Intranet. (2017). Star Industries Intranet. Retrieved 10 February 2017, from https://www.dlsweb.rmit.edu.au/toolbox/hr/shared/intranet/about.htm

Van Dooren, W., Bouckaert, G., & Halligan, J. (2015). Performance management in the public sector. Routledge.

Zavadsky, J., & Hiadlovsky, V. (2014). The consistency of performance management system based on attributes of the performance indicator: An empirical study. Quality Innovation Prosperity, 18(1), 93-106.

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