Performance and Reward

            PERFORMANCE & REWARD

Today I hope to discuss that how helpful to get beneficial outcomes tremendously through  practicing , managing performance . This article reflects how far these practices make perfect performance of people and organization .

INTRODUCTION

As defined by Aguinis (2005: 2) 'Performance management is a continuous process of identifying, measuring and developing the performance of individuals and teams and aligning performance with the strategic goals of the organization.' Its five elements are agreement, measurement, feedback, positive reinforcement and dialogue.

Today, the term performance management as an overall description of a process of performance planning and review conducted by managers and individuals has largely replaced the term performance appraisal.

The basic of performance management 

Performance management should be based on an understanding of what the word 'performance' means. Those concerned with introducing and operating performance management should be aware of the underpinning theories and the principles evolved by practitioners from their experience.

The meaning of performance

Performance is defined as behavior that accomplishes results. As noted by Brumbach (1988: 387):

Performance means both behaviors and results. Behaviors emanate from the performer and transform performance from abstraction to action. Not just the instruments for results, behaviors are also outcomes in their own right - the product of mental and physical effort applied to tasks - and can be judged apart from results.

Brumbach  observed that because of the significance of behavior there was more to success or failure than whether results were achieved: 'Success is not always positive nor failure always negative' (ibid: 388). This concept of performance leads to the conclusion that when assessing and rewarding the performance of individuals a number of factors have to be considered including both outputs (results) and inputs (behavior).

Any attempt to manage performance should also bear in mind that it is a complicated notion. Campbell (1990) suggested that performance is the outcome of three determinants:

1. Knowledge about facts and things (termed declarative knowledge);
2. Knowledge about how things are done and the skills to do them (termed procedural knowledge and skills);
3. Motivation to act, to expend effort and to persist (termed motivation).

Underpinning theories

The following three theories underpin performance management.

• Goal theory
• Control theory
• Social cognitive theory

Principles of performance management 

The research conducted by Armstrong and Baron (1998, 2004) identified the following 10 principles of performance management as stated practitioners:

1. It's about how we manage people - it's not a system.
2. Performance management is what managers do: a natural process of management.
3. A management tool that helps managers to manage.
4. Driven by corporate purpose and values.
5. To obtain solutions that work.
6. Only interested in things you can do something about and get a visible improvement.
7. Focus on changing behavior rather than paperwork.
8. Based on accepted principle but operates flexibly.
9. Focus on development not pay.
10. Success depends on what the organization is an needs to be in its performance culture.

Aims of performance

Performance management is a means of getting better results by providing the means for individuals to perform well within an agreed framework of planned goals, standards and competency requirements. It involves developing a shared understanding about what is to be achieved and how it is to be achieved. The aim is to develop the capacity of people to meet and exceed expectations and to achieve their full potential to the benefit of themselves and the organization. A further aim is to clarify how individuals are expected to contribute to the achievement of organization goals by aligning individual objectives of the organization.

Shields (2007: 24) explained that a performance management system has a fourfold purpose:

1. Strategic communication - convey to people what doing a good job means and entails.
2. Relationship building - create strong work relationships by bringing managers and those they manage together regularly to review performance achievements.
3. Employee development - provide performance feedback as a basic for the joint analysis of strengths, weaknesses and areas for improvement and an agreement on a personal development plan and learning contract.
4. Employee evaluation - assess the performance of employees(performance appraisal) as a basis for making decisions on job reassignment, promotion or performance-related reward.

Respondents to an e-reward survey in 2005 identified the following performance management objectives:

• Align individual and organizational objectives - 64 per cent.
• Improve organizational performance - 63 per cent.
• Improve individual performance - 46 per cent.
• Provide the basis for personal development - 37 per cent.
• Develop a performance culture - 32per cent.
• Inform contribution / performance pay decisions - 21 per cent.

Note the relatively small emphasis on pay. The following is a statement of objectives from one respondent to the e-reward survey: 'To support culture change by creating a performance culture and reinforcing the values of the organization with an emphasis on the importance of these in getting a balance between "what" is delivered and "how" it is delivered.'

Performance planning 

Performance planning is based on performance agreements. Expectations are defined generally in role profiles that specify key result areas; the knowledge, skills and abilities (KSAs) required and the behavioral competencies needed to perform well. What has to be accomplished in key result areas can be defined in the form of objectives or targets. An important aspect of performance planning is the process of aligning individual goals with the strategic goals of the organization.

The Performance review  

A performance review provides a focal points for the consideration of key performance and development issues . The performance review meeting is the means through which the five primary performance management elements of agreement , measurement , feedback , positive reinforcement and dialogue can be put to good use . It leads to the completion of the performance management cycle by informing performance agreements . 

There are 12 golden rules for conducting performance review meetings :

1. Be prepared 
2. Work to a clear structure 
3. Create the right atmosphere
4. Provide good feedback
5. Use time productively
6. Use praise 
7. Let individuals do most of the talking
8. Invite self - assessment 
9. Discuss performance not personality
10. Encourage analysis of performance
11. Don't deliver unexpected criticisms
12. Agree measurable objectives and a plan of action

The impact of  performance management on performance 

Performance management is expected to improve organizational performance generally by creating a performance culture in which the achievement of high performance is a way of life .More specifically , effective performance management ensures that individual goals  are aligned with organizational goals , so that key performance indicators for employees are linked to those of the organization , and the contribution people can make to organizational performance is therefore defined .

A description of what performance management should contribute was defined by Jones et al (1995 ) as follows :

• communicate a shared vision throughout the organization to help to establish and support appropriate leadership and management styles.
• define individual requirements and expectation of all employees in terms of the inputs and outputs expected from them thus reducing confusion and  ambiguity .
• provide a framework and environment for teams to develop and succeed.
• provide the climate and systems which support reward and communicate how people and the organization can achieve improved performance .
• help people manage ambiguity        

Performance Management as a rewording process

Performance management , if carried out properly can reward people by recognition through feedback , the provision of opportunities to achieve , the scope to develop skills , and guidance on career paths . All these are non - financial rewards that can encourage job and organizational engagement and make a longer - lasting and more powerful impact than financial rewards such as performance - related pay .

Performance management is , of course , also associated with pay by generating the information required to decide on pay increases or bonuses related to performance , competency or contribution . In some organizations this is its main purpose , but performance management is , or should be , much more about developing people and rewarding them in the broadest sense .

WHAT IS REWARD

Reward strategy defines what and organization wants to do about reward in the next few years and how it intends to do it .It leads to the development of a reward system that consists of the interrelated processes and practices that combine to ensure that reward management is carried  out to the benefit of the organization and the people who work there . This is strategic reword , an approach based on the beliefs that reword and business strategy should be integrated and that it is necessary to be forward looking - to plan ahead and make the plans happen . 

The content of Reward Strategy

As Armstrong and MURLIS ( 2007 : 33 ) stated  : ' Reward strategy will be characterized by diversity and conditioned both by the legacy of the past and the realities of the future '. All reward strategies are different , just as all organizations are different . Of course , similar aspects of reward will be covered in the strategies of different organizations but they will be treated differently in accordance with variations between organizations in their contexts, business strategies and cultures . But the reality of reward strategy is that it is not such a clear - cut process as some believe . It evolves , it changes and it has sometimes to be reactive rather than proactive .

Rewards 

• Performance pay
• Variable pay
• Team rewards 
• Recognition
• Reward for customer service / quality
• Single status

Requirements for success

Research by Haines and St- Onge ( 2012 ) established that performance management is more likely to be successful when ,

• There is more performance management training for managers covering performance coaching and constructive feedback.
• employee recognition is emphasized
• the corporate culture values engagement
• performance management is strategically integrated with human resource 
• management and the business plans of the organization
• human capital is valued
• there is a positive employee relations climate   

 CONCLUTION

 The aims of this is to explore the relationship between performance and reward and how in consort they contribute to the achievement of business goals . The role performance management in a reward system is to contribute to improving performance by providing a means of recognition , influencing  job design when reviewing role responsibilities , setting up personal development plans and , when appropriate , informing , contingent pay decision .   

References

Aguinis  , H ( 2005 ) Performance Management , Upper Saddle River NJ . Pearson Education 

Armstrong , M and Baron , A ( 1998 ) Performance Management : The new realities , London , CIPD 

Armstrong , M and Baron , A ( 2004 ) Managing Performance : Performance management in action , London  , CIPD

Brumbach , G B ( 1988 ) Some ideas, issues and predictions about performance management , Public Personnel Management , Winter , pp 387 - 402 

Campbell, J P ( 1990 ) Modelling the performance prediction problem in industrial and organizational psychology , in ( eds ) M D Dunnette and L M Hough , Handbook of industrial and Organizational Psychology , Palo Alto CA , Consulting Psychologists Press , pp 687 - 732

Shields , J ( 2007 ) Managing Empoyee Performance and Reward , Port Melbourne , Cambridge University press