Process Framework for Development of Performance Management System.
Examples from industry suggest that a paradigm shift is happening in the way organizations are thinking about Performance Management System (PMS) for knowledge based teams. Instead of asking what rating to be given, managers and team leaders are asked what they would do with the team members in future and how to improve the performance of each member (Buckingham & Goodall, 2015). This reflects an orientation for long term employee growth and development. Further, the reliance on cascading objectives, yearly reviews, retrospective assessments and 360 degree tools were questioned alike by the employees and managers. Organizations have found a way out by separating compensation decisions from performance management and bring in per project or quarterly assessments and routine checkins by managers (Buckingham & Goodall, 2015). This separation of compensation and performance results indicates that the long term development of the employee is more significant for the firm in comparison to the short incentive based motivation.
The purpose of this paper is to propose a new framework for PMS development suited to the context of knowledge based teams. By combining established interventions, a new PMS development framework is proposed. The framework includes a modeled approach for developing strategy, the process of communicative rationality for deriving success factors and developmental orientation to strengthen performance. Considering the unique characteristics and work requirements of knowledge based teams, it is argued that commitment based human resource management (CBHRM) is the appropriate theoretical model for such teams. Human Resource (HR) attribution theory and knowledge based theory of firm are used to provide theoretical support to the proposed framework. This paper makes significant contribution to the body of knowledge by integrating the concepts of CBHRM and PMS to align with the unique context of knowledge based teams.
A PMS is fundamentally a system to convert the task objectives into a set of measures and then asses the organization performance using those measures (Vieira, O'Dwyer & Schneider, 2016). The objective of a PMS is to achieve high performance and not merely to prevent poor performance (West & Blackman, 2015). In doing this, the effectiveness of a PM system depends on multiple environmental factors but mostly rely on the performance indicators and the psychological reaction of employees to the whole system (Deschamps & Mattijs, 2015). Performance measurement is defined as the task of evaluating and rating employees based on an accepted and communicated performance indicators. The event of executing performance measurement is defined as performance appraisal. This may or may not include a formal developmental feedback. But, a PMS encompasses all the activities a firm undertakes to improve employee performance including evaluation, feedback, reward and development (Denisi & Smith, 2014; Sumelius et al., 2014). Thus, a PMS can help in developing a learning organization culture by being an enabler of learning, execution, assessment and development (Amaratunga & Baldry, 2002).
The challenge for any organizational practice is not execution but creation of a positive shift experienced by the employee as a consequence of the practices (Boxall & Macky, 2009). Every organization requires an appropriate performance management system (PMS) to measure and manage performance because what an organization gets is what it can essentially measure (Stivers & Joyce, 2000). Effective management of performance including poor performance thus becomes an important aspect of good management practice (West & Blackman, 2015). In the larger context, human resource management practices as a stable source of competitive advantage is still a concern (Posthuma et al., 2013) and the plausible answer to this concern is a performance management system aligned to the strategic objectives and business goals.
Professionals in knowledge based teams (KBT) are highly inclined to receiving feedback through performance management system and development of knowledge expertise (Kinnie et al., 2005). Such teams are characterized by the constant re-alignment of work teams and the dynamic nature of projects executed. It is highly challenging to conceptualize performance in project management scenarios (Taticchi, Tonelli & Cagnazzo, 2010), in team scenarios (Denisi & Smith 2014) and in inter-group collaborative work (Poocharoen & Wong, 2016). Any PMS for knowledge based teams should assimilate team scenarios and augment collaborative work. But, the scenario of each knowledge based team in terms of project management and team structure will be varying from the other. Hence, a one size fits all PMS might not be the best option and would need an appropriate framework that can help develop customized PMS for knowledge based teams.
Process for developing a PMS has three distinct stages (Flapper, Fortuin & Stoop, 1996; Vieira, O'Dwyer & Schneider, 2016). First stage is to develop PMS strategy aligned with organization strategy. Second is to derive success factors and performance indicators and the final stage is to create a process for intended purpose.
There are several approaches to developing a PMS strategy (Bourne et al., 2003). Firstly, it can be needs led approach with a top down procedure or an audit led approach with bottom up procedure. In addition, there can also be a model led approach with the design rational based on a theoretical model suitable for the context. The needs of KBTs change very frequently and hence a needs led approach is not considered appropriate, whereas a model led approach would ensue that the theoretical model would reflect the broad...
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