Other than the above, employers can ride on the performance appraisal event to provide feedback to the employees regarding his or her past performance and to help them to improve their job performance. This exercise also provides opportunity for employees to express their feelings about the job and to increase interpersonal communication. From this it can stimulate interest in self-development for the purpose of greater personal development. Beside, performance appraisal will produce a databank of information can be used for financial and non-financial rewards.
Performance management approaches are generally described in the context of Managing by Objective (MBO) framework. MBO programs is an knowledge that evaluation must be secured to act like objective setting, communicate expected result, establish time frame and how to accomplish objective (Nankervis, Compton & McCarty, 1999, Pg. 399 – 400). Within the managing by objectives system the performance management process refers to the management of individuals, starting with the assignment of individual objectives through the final, formal assessment process. Employees today would like to climb the corporate hierarchy as quick they can. To stop employees from job-hopping, companies should provide views for individual and professional development. If people can achieve their development objectives with one employer over a long period of time, they will usually continue the same pace. Employees will certainly seek clearer fields if they distinguish the environment is restrictive. Especially when reviews are not fair, accurate and timely, they fail to compensate star workers, fail to provide support and guidance to average workers and fail to give proper feedback to whose work is imperfect.
It is in no doubt that there is convincing plane logic for steps in a performance management system. And, the benefits and purposes cited for such a system are intuitively compelling; there are very few managers who would disagree with any of the functions or results apparently associated with performance management. Keep in mind that while most agree with the concepts, few actually implement them. In today’s global economy, the advantage of growth from employees’ performance is cleared. It is referred as “intangible performance”. Stock returns are closely correlated with “intangible performance”. Take for example how Bill Gates built a multibillion-dollar software empire and how McDonald created its fast food kingdom. Many businesses are going through the same kind of internal dialog about their assets, particularly in the global economy, firms with relative little invested in factories and other tangible assets. To improve business performance, therefore, companies need tools that grow and manage their intangible assets. In this assignment we will discuss a few important issues when deciding and implementing an effective performance management system. As mentioned above, performance management is generally described within the context of MBO. As such the process shall be started with a thorough understanding of an organization’s business strategy. Here we refer to a strategy that is not “let’s make money”. Rather, it’s here “how to make money”.
In the context of strategic corporate planning, Balance Scorecard framework is widely used for goals and objectives setting for the entire organization or department. These goals and objectives are made as team goals. The Balance Scorecard provides a framework to describe and communicate strategy in a consistent and insightful way (Kaplan & Norton. 200, Pg. 10). This works best in departments or entire organization where the people are fairly independent and striving to achieve a singular purpose. A strategic scorecard is a process of establishing multi-faceted measures of an organization or unit they typically includes: (a) finance; (b) customer; (c) internal business process and (d) leaning and growth.
Having, balance scorecard organizational strategic direction is communicated well to the employees who must implement it. Once strategy is clear the process then moves to indemnifying cause-and-effect relationship driving business success.’ Nankervis, Compton & McCarty (1999, Pg 380) stress that performance review must never be taken isolation but, rather, tied directly to the organization’s strategic plan and the strategies that make up that plan. Organizational success is base on the result of adding together all the individual outputs. Using a mathematic equation as an example, if person X and person Y and person Z do their jobs correctly, the organization’s results are X + Y + Z. manage each individual’s result, and organization will succeed.