Changes in Performance Management over the years!

1. Introduction: Performance Management can be linked to many critical subjects such as accounting, operations, economic, project, behavior of organization and human resource management (HRM) etc. In this report we will try to focus on the aspect of Performance Management in HRM and its link with rewards and resourcing. How its practices had changed over the years. Performance Management is not limited to increase the performance of an individual rather it also focuses on a range of crucial Human Resource (HR) activities like training and development process, formal induction, policy formation directly linked to workforce, pay appraisal and its key measurements, eHR etc. Performance Management is generally portrayed as an integrated process in which managers engage with employees to set expectations, measure and review results, agree improvement plans, and sometimes reward performance (Den Hartog et al, 2004).

1.1. Performance Management: It is very important to understand the fact that there is a very deep and constructive relationship between HRM and Performance Management. Many individuals and institutes conducted various studies across the global to understand their connect in past decades i.e. Purcell & Kinnie in 2007, Huselid in 1995, Pfeffer in 1998 and The Chartered Institute of Personnel Development (CIPD) in 2001 which showcase that there is no doubt they are connected and there is a solid linkage between the two. The main principle behind the Performance management is:

• Objective Creation: Through teams & individuals while linking them with the organization’s goals.
• Performance Improvement: Through creation of critical processes and policies i.e. trainings. 
•  Account Employee: Through rewards, career uplifting or with termination.

1.2. Employee Resource: Is that part of human resource management involved with getting and a work-force with the required skills, competences, standards, attitudes and optional attributes. This has a wide range of organizational goals attached to it which could be short or long term. Its key areas are resource planning, selection, recruitment, retention, talent management and various processes which start from the on-boarding of a new employee to their exit. These employees may get different employment contract i.e. Temporary or Permanent, Part time or Full time, Direct Employee or subcontracted but the aim of their resourcing remains the same which is alignment with the strategic goal of the organization.   

1.3. Rewards Management:  Rewards is the concept of providing encouragement in many forms such as Monetary (salary raise, bonus, incentives), Psychological (promotion, awards, certifications, flexibility) etc. so that the employees stays motivated (one of the main objective of rewards), wants to do their best work and stay with the company for long term. It’s also one of the key components of HRM (Performance Management, Resourcing) which showcases employees that how valuable they are for the company and gives them the feeling of pride.

2. Labour Market Over the Years: A place where employees and workers integrate to hire, find jobs and compete for work is known as the Labour Market. It’s a function of demand and supply where demand represents needs of an organization which hire workers and pay them for work they do and supply is the availability of workforce needed to do the job for particular a task. Since the bargaining power is influenced by the changes, the supply and demand of labour also goes up and down from time to time. Over the years the labour market has gone through many changes & below figure showcase specific changes to Labour Market.

3. Employee Performance and Reward with Performance Management: Performance management practices have evolved over the years due to the fact that the labour market is also kept on changing and so as the needs of the organization as well. There is no doubt that these practices remained constant for almost two to three decades but many of the new organizations started this new wave. Below table shows the changes of these practices.

3.1. Changes in Performance Management & It’s Impact: Due to the fact the traditional approach comes with its own limitations such as the discussion between the managers and workers would happen once a year i.e. resulting into delaying feedback, discussing the past events and its achievement holds no relevance in ongoing tasks and future objectives of organization. It is also likely to happen that both manager and worker forget those events or move out of their current role or even from the organization. This leads to high dissatisfaction and low motivation across the organization. Changes in the traditional approach of performance management ensures that the feedback becomes more natural like discussions between the manager and workers happens right after the project milestone is achieved which allows the work force to focus on current challenges and at the same time train themselves better for the future objectives. It is not only about the past performance any more rather driven more towards the strengths and goals.

One of the most critical fact that led to this change was the vivid changes in the business requirements of any company. To compete in the business or to stay ahead in the race, it had become inevitable for them to focus on their performance as a whole and needed to innovate. Another factor was that It is a no hidden fact that keeping a skilled workforce is a challenging task altogether and it’s not only about monetary gains which matter to employees but rather it has become considerably important to build trust and motivation at the same time. In order to achieve such goals they must train their workforce, allow frequent feedback, seamless coordination between the departments through adequate policies, reward programs and build an overall culture.

3.2. Organization’s Relation with Rewards: History of initial forms of rewards can be found in ancient Greece Olympic where winners of Olympic were awarded by various prizes which later turned in official Iconic Medals in 1896 Olympics. In modern work culture Reward is a fundamental part of Performance Management and it is fair to say that it’s an essential part of any successful organization’s culture. An employee feel esthetic when their work is recognized, is highly motivated, aligns to organization’s goal and carries a positive aura around them which further builds a trustworthy culture within the company. Having said that it is a very tough task to implement and integrate these cultural values within the organization. Some of the important linkages to consider before fixing rewards and to make it impactful are:

• It has an emotional & subjective component which clearly impacts the way an employee works.
• Rewards need to be personalized and should be able to meet realistic needs.
• No point of rewarding recognition of the past as it would hold less value compared to the moment the event took place.
• The rewards need to be clear and precise so that it can build the culture within and also let the employee know what is expected out of him.
• Rewards should not influence decision in making any way to ensure fairness and equality in the workforce.
• An attractive reward is a good mix of fixed pay, bonus, paid leaves, pension, insurance and flexibility.  

4. Conclusion: Performance Management plays a fundamental role in organization growth and is directly linked to the labour market. There have been many practices and techniques of the same in the past which got changed according to economic changes, market needs and dynamic environment. It is important to understand what kind of culture employees value the most and spend time on it. But having said that the Performance management is complex system which needs to keep on evolving since:

• Goal settings are hard to apply.
• Feedback can be biased.
• Technology is not cheap and frequently changed.
• Rewards & Recognition are subjective and needs based.
•  Hard to get a reliable and valid rating.