THE IMPACT OF PERFORMANCE

MANAGEMENT
•Performance management is expected to improve
organizational performance generally by creating a
performance culture in which the achievement of
high performance is a way of life.
•Specifically, the impact is supposed to be made by
improving individual and team performance.
•Individual performance development happens by
defining what good performance looks like,
agreeing performance goals, identifying where
performance needs to improve and deciding on the
steps required to achieve that improvement through
performance improvement plans, personal
development plans and coaching.  
A more detailed description of what performance management
should contribute was defined by Jones et al (1995) as follows:
• Communicate a shared vision throughout the organization to
help establish and support appropriate leadership and
management styles;
• Define individual requirements and expectation of all
employees in terms of the inputs and outputs expected from
them, thus reducing confusion and ambiguity;
• Provide a framework and environment for teams to develop and
succeed;
• Provide the climate and systems which support reward and
communicate how people and the organization can achieve
improved performance;
• Achieve improved performance;
• Help people manage ambiguity.
Jones, T W (1995) Performance management in a changing context, Human Resource
Management, 34 (3) pp 425-42
 Establishing the Impact
• Any theory about the impact of an HRM practice such as
performance management on organizational performance must
be based on three prepositions:
1. that the HR practice can make a direct impact on employee
characteristics such as engagement, commitment, motivation
and skill.
2. If employees have these characteristics it is probable that
organizational performance in terms of productivity, quality and
the delivery of high levels of customer service will improve and
3. If such aspects of organizational performance improve, the
financial results achieved by the organization will improve.
 HOW PERFORMANCE MANAGEMENT
MAKES AN IMPACT

People will respond positively and are more likely to work to

improve their performance and develop their capabilities if
they:

• receive feedback and encouragement from their manager

• share in the processes of defining expectations and

reviewing performance and competency against those
expectations

• are involved in creating and implementing plans for

developing their skills and competencies.
IMPACT OF PERFORMANCE MANAGEMENT
As assessed by respondents to e-reward 2014 survey

Very positive effect

Not known

8%

20%
Negative
effect
8%
51%
Fairly
14% positive
No effect effect
MIXED REULTS OF RESEARCH ON IMPACT OF
PERFORMANCE MANAGEMENT
Positive impact No impact

Gallup (2005) Bernadin et al (1995)

Latham and Locke (1979) IPM (1992)

McDonald and Smith (1991) Guest and Conway (1998)

Rodgers and Hunter (1991) Watson Wyatt (2008)

Sibson and WorldatWork (2007)

West et al (2002)
 Conclusions on impact
• The results of the many impact studies are mixed.
• But it is still possible to believe in the benefits of performance management
to organizations.
• This belief rests on the assumption that people are more likely to respond
positively and are more likely to work to improve their performance and
develop their capabilities if they receive feedback and encouragement from
their manager, share in the processes of defining expectations and reviewing
performance with reference to those expectations, and are involved in
creating and implementing plans for developing their skills and abilities.
• If this happens generally, and if the organization provides the managerial and
systems support necessary, than the presumption that this will contribute to
overall performance improvement is not unreasonable, even if it cannot be
proved.
 Conclusions by CIPD
• These are some of the conclusions reached by the CIPD:
• Objective setting as a driver of performance only works if
employees are helped to monitor their progress and are given
feedback.
• Setting objectives can work well but should be used carefully.
Its impact will vary with the context and it can lead to
distorted incentives as much as improved performance.
• When tasks are complex, ‘do-your-best’ objectives focused on
learning and behaviour are preferable.
• While performance appraisal tends to be effective in
improving performance, in many cases it can decrease it.