THE IMPACT OF PERFORMANCE MANAGEMENT

Learning outcomes of the session

 How performance management is
expected to improve performance
 Establishing the impact
 Conclusions on impact
 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 Results 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)
 How performance management is expected to
improve performance
• 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.

• The impact is supposed to be made by improving individual performance.

• This is meant to happen when people understand what they are expected to do,
receive feedback on how well they are doing it and agree and implement
development plans which build on strengths and help to overcome weaknesses.

• It may be assumed that improvements in organizational results will be guaranteed

when managers and their team members work together throughout the year in
using performance management processes such as goal setting, feedback,
performance analysis and coaching.

• The need is to provide evidence that this belief is justified.

 Establishing the impact

• Any explanation of the impact of performance management

on organizational performance is likely to be based on three
propositions:
• that performance management practices can make a direct
impact on employee characteristics such as engagement,
commitment, motivation and skill;
• 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
• if such aspects of organizational performance improve, the
financial results achieved by the organization will improve.
 This can be described as the performance
management value chain.

• But there are problems, namely:

• establishing causality
• multi- causation
• reverse causation
 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 (admittedly often a big if), 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.