Performance Management Systems (PMS) are those systems that assist the achievement of individual and business goals. These systems assist in tracking and monitoring the performances of every employee, departments and the whole organization as well. Steel Co. is a medium sized manufacturing company that has been in operations for around 30 years. The company has experienced mixed performance throughout its existence, but in the recent years, their financial performance has gone down, and they have generated a microscopic amount of revenue. To manage the performance in one of their major section “Works”, performance management processes were included and implemented in the organization. At Steel Co., most of the employees have been employed for long periods, delivering mixed performance over the years. Employees had worked in difficult situations, with the pay freeze and no occupational sick pay scheme, making them more discontent. Only the owner-manager was there to manage the whole firm’s operations. The management did not include the employees in setting organizational goals for overall development and clarity. No teamwork was also evident at both the employee and management level. Thus, it was imperative that steps were taken to implement performance management strategies in Steel Co.
Steel Co. required being closely and carefully managed to make sure the new decisions and expansions gain success. To keep track of the business progress, owner-manager must put performance management systems in place as an important step. At Steel Co. four teams were formed, each with a team leader and new job roles included and segregated. To overcome the dissatisfaction created by the prevailing issues in the organization, such as pay freeze implemented for the poor revenue generation, a scheme was implemented to enhance team performance by allocating production targets that are linked to bonus payments for the team members. However, no effective contribution was detected out of this. Steel Co. had been facing tough competition in the market, losing out on market share to rival companies and operating in difficult trading conditions. The poor condition due to the competition made the financial performance of the firm poor and little revenue to be generated. As the employees did not have the benefit of occupational sick pay scheme, the new scheme was launched targeting that gap point. The losing of market share resulted in the loss of capital and increase in costs too. The employees were not aware of what exactly was expected out of them, as there was no clarity in the organizational goals. The targets set for the employees were huge, and they had very few resources and low budgets to achieve them. However, goal setting does not always work the way it is supposed to work. At Steel Co., with the implementation of the productivity targets, the employee attitudes have not changed as per the expectation, even after most of them earned bonus maximum number of times. When asked about their low commitment attitude towards their responsibilities even after getting bonuses, the employees shared their concern about the insufficiency of the amount and how less their bonuses influenced their standard of living.
The setting of business targets is a good way to provide all the employees in the company with a clear sense of what they are expected to do. It can be difficult to communicate the strategic visions to the employees, but if the top-level objectives and goals were broken down into smaller but concrete targets, the process of delivering them would become easier. The main concern also lies with the bonus scheme, which requires improvement for improving the performance of the employees. When the operations were in the hands of the owner-manager, the situation was worse and out of control. His autocratic approach made the employees seem like a liability to the business, and very little was invested for their betterment. The new divisional director’s approach was more participative, viewing employees as the company’s asset.
Addressing the gaps and alignment of the organization’s goals with the collective employee performance within the organization is an important first step. The focus should be on the final outputs and outcomes. For Steel Co. the performance management system must be able to identify the competencies and attributes that are required for each department, with separate rewards and incentive systems for them. The performance management system must also support monitoring and evaluation of both employee and organizational performance. Performance appraisal should also be a part of the system to help the management categorise employees into performers and non-performers and value them accordingly. A proper MBO (Management by objective) form of appraisal helps both managers and employees decide on attainable goals with a fixed deadline.
Steel Co. needs to understand that reward and bonus schemes are a crucial part of performance management, involving employee management, keeping in mind that the employee performances have a major effect on the organizational performance too. To extract the proper standard of performance from employees reward and bonus schemes must be supportive of the organizational goals. Staffs receiving benefits that are more generous tend to achieve certain skills and achieve their targets. Employee motivation plays a huge role in deciding the overall organizational performance. Rewarding good performance of employees is equally important like managing, monitoring and motivating. Meaningful rewards and recognitions influence employee attitude and behaviour positively. It is the responsibility of the management to take care of this aspect of managing organizational performance.
Maslow’s hierarchy of needs relates employee wants and needs to reward schemes, suggesting that higher monetary rewards motivates employees to meet their physiological needs, also making them feel more important for the organization (Lester 2013). Herzberg, on the other hand, observed that the reward motivations wanes after sometime, needing a recharge with another increase. According to him, other intrinsic factors in the job, like achievement, recognition and responsibility, motivates employees to contribute more to the overall organizational performance. It has been found that allocating more responsibility to employees, in fact, increases their motivation (Miner 2015). Steel Co. needs to understand that while setting targets for their employees there should be some consideration while deciding reward schemes. A very effective way to decide on targets is following of Fitzgerald and Moon’s building blocks model. The model suggests the setting of targets should be based on fairness, accepted and agreed upon, and achievable to keep on the employee motivation (Eisenberg 2016).
Performance objectives allow employees to plan and systematize their organizational goals according to the achievement of previous outcomes. Deciding upon performance objectives assist employees to develop work information and aptitudes that help them flourish in their work, thought on extra obligations, or seek after their profession desires. It also assists in supporting or propelling the association’s vision, mission, values, standards, systems, and objectives, and collaborating with their associates with more noteworthy straightforwardness and shared comprehension. Positive performance indicators and targets are required to be explicitly expressed so that they are easy to understand and addressed. Evaluation the performance objectives can be also carried out by identifying performance measures. It is important that performance goals are aligned with productivity measurement. Monitoring performance and providing feedback is also a part of solving performance issues.
At Steel Co., two main sections are there: the sales team, referred to as “Sales” and the manufacturing section referred as “Works”. Other than that the rest were into administration and quality assurance roles. Under the owner-manager’s supervision, the firm’s employees lacked commitment to the firm and were only focused on working out their shifts and earning their fixed pay, avoiding any contribution that was more than the bare minimum possible. The issue most of the time is that employees do not recognize what is expected of them, what are the employer’s visions or what should be the initiatives. It is difficult for them to understand what needs to be achieved and why. It is important for the employees to understand the big picture – the behaviors and actions expected of them so that the desired business results can be achieved. It is very much imperative that employees know why they have to achieve certain goals. That would make them care enough to contribute significantly to the cause. As Steel Co. has employees who do not care, it can be seen that their employees are disengaged. It affected the overall organizational culture, further demotivating the employees.
Steel Co. employees do not have an idea about the organization’s importance; they are exhausted with the mediocrity meted out to them, not kept promises and ignored feedbacks or requests. With the appointment of the new divisional manager, the employees were given performance targets against their production, with bonus payments linked to them. However, there is a severe lack of a creative environment that can encourage employees to go the extra mile. The employees are not even well trained to handle responsibilities. Increased failure and decreased revenue generation broke the moral, making them care less. Even after reward schemes were added, no alterations in the employee attitude happened, as the amount was not satisfactory enough for the receivers. Moreover, the employees were resisting change by not cooperating with the modifications brought into the organization.
For the team leaders, it was difficult to follow the responsibility given to them of handling the teams. They were assigned targets for the team, but they lacked the training to make them effectively implemented. There exists an uncertainty among the employees of Steel Co. regarding how to operate. They are even faced with resentment regarding their selection criteria being management discretion instead of talent and experience, as it should be. They were of little help to the organizational development in terms of contribution. The newly implemented policies lacked to achieve the required performance improvement. The previous conception of employees being the company’s human liability existed.
Employee remuneration is frequently one of the greatest costs that independent ventures confront, yet propelled; profitable representatives can be the contrast amongst achievement and disappointment. A few businesses offer additional money related prizes to representatives, for example, rewards and commissions, to persuade laborers to be more beneficial. In spite of the possibility to expand efficiency, execution based impetuses can negatively affect organizations.
Setting objectives or point-by-point arrangements is fundamental for Steel Co. to flourish. This could be a decent motivation for representatives. Nevertheless, other than being a motivational viewpoint it could likewise end up being dangerous to one or them. With their objectives set, for the most part, put every one of their endeavors on that one undertaking. Specific objectives made by them can make them more engaged toward their goal. However, this propensity can additionally make them unmindful toward different destinations for which they have not done this sort of extreme arranging. This will make them miss a considerable measure of chances while they are working towards their objectives, and will likewise influence the execution on errands that are not identified with their objectives. The weight of accomplishing their objective is real to the point that it focuses on their body and their brain. Some level of push or weight is required so one can flourish and give a valiant effort, yet that does not work out for everybody. Thus, every bit of it gets to be distinctly upsetting. Thus, they can begin losing their advantage and furthermore become distinctly scared to the set objectives. Strategic development considers goals and objectives to be important as they have the capacity to turn the mission and vision of an organization into specific targets and reality.
Locke’s goal-setting theory states that objective setting is connected to undertaking execution. It expresses that particular and testing objectives alongside fitting input add to higher and better undertaking execution (Locke and Latham 2013). However, its main disadvantages are that now and again; the hierarchical objectives are in strife with the administrative objectives. Objective clash detrimentally affects the execution on the off chance that it inspires inconsistent activity float. Exceptionally troublesome and complex objectives animate conduct that is more dangerous. In the event that the representative needs abilities and capabilities to perform activities basic for objective, then the objective setting can fall flat and prompt to undermining of execution. There is no confirmation to demonstrate that objective setting enhances work fulfilment. Kotter and Schlesinger’s model on resistance to change is another way to handle the resistance to change happening at Steel Co. They found four main reasons why people struggle with change and six approaches that can be used managers to help deal with it.
Objectives are profitable in light of the fact that they center exertion in a reliable heading, enhance the odds for achievement, and enhance inspiration and fulfillment. One clarification for the commitment of objectives is that they make a disparity between what people have and what they seek to accomplish. Self-disappointment with this disparity fills in as a motivating force to accomplish. Objectives additionally make a condition of excitement that prepares individuals for achievement. Accomplishing objectives and remaining spurred requires self-control. A model introduced here for creating self-control comprises of eight parts: (1) figure a statement of purpose, (2) create good examples, (3) create objectives for each undertaking, (4) create activity arranges, (5) utilize visual and tactile incitement, (6) look for joy inside the assignment, (7) compartmentalize circles of life, and (8) limit pardon making. Steel Co. ought not to think little of the power natural in employee acknowledgment. It can be an intense weapon in their motivation arsenal if it is utilized as a part of the control and at the perfect time. Recognition is inestimable, and status is a great deal more than cash. It expands worker reliability, upgrades execution and creates an achievement that is more prominent.
References
Eisenberg, P., 2016. The Balanced Scorecard and Beyond–Applying Theories of Performance Measurement, Employment and Rewards in Management Accounting Education.
Lester, D., 2013. Measuring Maslow’s hierarchy of needs. Psychological Reports, 113(1), pp.15-17.
Locke, E.A. and Latham, G.P. eds., 2013. New developments in goal setting and task performance. Routledge.
Miner, J. B. (2015). Organizational behavior 1: Essential theories of motivation and leadership. Routledge.
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