Performance Management

Performance Management is a force for both vertical and horizontal integration. Performance management should be integrated into the way the performance of the business is managed and it should link with other key processes such as business strategy, employee development, and total quality management.

Vertical integration
Integration is achieved vertically in two ways. First, it facilitates the integration or alignment of business strategic plans and goals with individual and team objectives. The agreed objectives are those that support the achievement of corporate goals. They take the form of interlocking objectives from the corporate level to the functional or business-unit level and down to teams and the individual level. Steps need to be taken to ensure that these goals are in alignment. This can be a cascading process so that objectives flow down from the top and, at each level, team or individual objectives are defined in the light of higher level goals. But it should also be a bottom-up process, individuals and teams being given the opportunity to formulate their own goals within the framework provided by the overall purpose and values of the organization.

Objectives should be agreed, not set, and this agreement should be reached through the open dialogues that should take place between managers and individuals continually. In other words, this needs to be seen as a partnership in which responsibility is shared and mutual expectations are defined.

Secondly, vertical integration takes place between the core values and capabilities of the organization and the values adopted and level of capability achieved by individuals. Some companies approach to integration thus: Setting up appraisal systems in a vacuum adds no value. They are merely a record of a convention that must take place in the context of the business strategy and annual plans. Creating the right context for the conversation is an essential part of successful performance management.HR has to develop and implement a range of strategies across the organization which enable excellent performance from all our employees.

Horizontal integration
Horizontal integration means aligning performance management strategies with other HR strategies concerned with valuing, paying, involving and developing people. It can act as a powerful force in integrating these activities. The impact of performance management on organizational effectiveness is enhanced because, along with the development of competence frameworks, it is the most important means of helping to integrate the various approaches that organizations can adopt to improving effectiveness through their processes for managing, motivating and developing people.

The approach is related to the concept of bundling , which is the development and implementation of several HR practices together so that they are interrelated and therefore complement and reinforce each other. This approach is accepted by many, and appeared in many books, who commented that one thing is clear from all the research: there is no point in investing in specific practices. Performance-related pay, psychometric tests in selection or extensive training will not in themselves bring bottom-line results. The key lies in finding the right bundle of practices .

The process of bundling is sometimes referred to as the use of complementarities or as the adoption of a configurational mode. The concept of bundling was explained as follows:
Implicit in the notion of a bundle is the idea that practices within bundles are interrelated and internally consistent, and that more is better with respect to the impact on performance, because of the overlapping and mutually reinforcing effect of multiple practices. The logic in favour of bundling is straightforward Since employee performance is a function of both ability and motivation, it makes sense to have practices aimed at enhancing both.

Performance management can and should be a holistic process that is concerned with motivation, development and, in its broadest sense, reward.

Performance Management