1 PERFORMANCE MANAGEMENT IN PUBLIC SECTOR ORGANISATION Author: Pratiwi Ngasaratun (Bradford University) Introduction The emergent of Strategic Human Resources Management has brought a new insight that people are considered as the critical investment in the whole system of the organisation, and that they give the biggest contribution in the organisational achievement (Analoui, 2007). Thus, the way in which the employees are managed at their work has a significant influence in improving organisations performance, and therefore, employee’s performance management should be carefully planned, implemented, and regularly evaluated (Mondy, 1996, cited in Analoui and Fell, 2002 , Armstrong, 2006). Moreover, the focus on performance management also has increased as the result ofglobalisation and rapid growth in the international market that require organisation to create and sustain its competitive advantage and increase its productivity so that it will survive and win the competitions. Every organisation whether profit or non profit are facing several challenges to improve its productivity and to meet their strategic objectives (Analoui, 2007). For example, in the public sector, the government now are facing pressures to improve service quality, reduce cost as well as become more accountable, transparent, and responsive to the needs of the society. Since performance management is considered as a critical success factor in the organisation, hence the challenge is how to ensure the use of PM effectively with regard to the context of the organisation. This essay will attempt to examine the value of performance management in organisations. In the next section, it will review the concept of SHRM by emphasizing on performance management as the key functions in HRM. The third section will consider the performance appraisal method and its impact in the organisational performance. It will analyse the linking between performance management and reward system and organisational commitment. Examples will be provided from the public sector organisations. Finally, the conclusion will provide some concluding remarks that show the importance of performance management in the organisation. Human Resources Management (HRM) The successful achievement of an organisation relies on the utilisation of its human resources (HR) (Analoui, 2007). Employees now are considered as the most crucial factor in
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7/30/2019 PERFORMANCE MANAGEMENT IN PUBLIC SECTOR ORGANISATION
the organisation, and a source of competitive advantage within it (Armstrong and Baron,
2005). However, these views have not always been the case. During the classical
management era, organisation was viewed as a ‘machine’ that operating based on scientific
law and general principles (Analoui, 1998). Employees were regarded as one of the
components of the machine, and motivated by money and financial incentives. Therefore,
there was no one within organisation was employed as a personnel specialists (Analoui,
1998). These views were widely criticized as it ignores the social aspects and complex needs
of employees as human being in the organisation. However, it has put an essential
background in the management theory and remains influential until today.
In the next development of the managerial perspective, which is the human relations,
awareness arose that people, along with tasks, should be considered as an element within
an organisation that needed to be managed. It believed that despite financial incentives,employees were motivated by the community within organisation and psychological factors
(Analoui, 1998). Personnel Managers were created as the specialists who were charged with
several tasks such as to look after employees’ welfare at work, to maintain and develop
employees’ loyalty to the owner, and to ensure that the employer’s policies suited the
employees’ culture and expectation (Analoui, 2007). According to this perspective, such
approaches would increase employees’ job satisfaction and productivity. However, rarely
did the employer involve Personnel Managers while determining the organisation objectives.
Obviously, this has caused a separation between human resources policies and practices
and the organisation business. As a result, the roles of Personnel Managers are all about
administration and procedures (Analoui, 1998).
This perspective was challenged by the contingency system that views organisations as an
organic structure and therefore, concerns with the task performance, the relation with the
environment, and the internal activities that related with organisation strategy and
operation system (Analoui, 2007). It has forwarded Human Resources Management (HRM)
that considers employees as a part of the complex system who have abilities to learn and
develop as well as to manage themselves. Therefore, it creates the HR manager who deals
not only with the need of the HR as an individual but also those as the whole entities of the
organisation (Analoui, 1998). One important aspect in this approach is the emphasizing on
the environment, which means that organisations needs to strategically adapt to the
external and uncertain factor by changing the structures and processes including its policies
and procedures of its internal components while determining objectives (Analoui, 1998;
Analoui, 2007).
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However, there was a view that HRM is only a new fashion of Personnel Management so
that both of them were actually the same thing (Cowan, 1988; Klatt, 1989, cited in Analoui,
1998). Thus, a debate in this subject is unnecessary since HRM might be a complement to
Personnel Management (Cowan, 1988, cited in Analoui, 1998). But, as Analoui (2007) argues
that Personnel Management is emphasizing on compliance of the employee while HRM
concerns with employee’s commitment to the organisation.
Moreover, according to Analoui (2007), HRM has several activities within organisations
which are: planning, recruitment and selection, HR development, reward system,
performance appraisal (PA), and retirement. All these functions are interconnected in a
sense that one function is integrated with others so that organisations will perform
effectively. Fombrun, Tichy and Devana (1984, in Torrington and Hall, 1998) present a
simple HRM model as shown in figure 1. It is implied that all functions in HRM are linkedeach other. For instance, PA should be conducted to ensure that employees’ performance is
in line with organisation goals, proper training and development are carried out to provide
employees with knowledge, skills and capacities to do the job, and that successful
performance is rewarded and reinforced.
Figure 1 The Human Resources Cycle
Source: Fombrun, Tichy, and Devana, 1984, cited in Torrington and Hall, 1998 p. 36
However, this model fails to consider the stakeholders interest, the situational factors and
the recognition of strategic choice. For example, the strength, the weakness and the
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2. Individual objectives are drawn from the first step. They had to be in line with the group
as well as organisation strategic goals. These objectives are emphasized on the output
of the performance.
3. A detailed individual development plan which consist the objectives and specific
activities is set up by manager in order to support and to coach the employees in
achieving the stated objectives.
4. Assessment of objectives achievement is the last stage. The ongoing appraisal is created
to motivate the employee and review the developmental problems that arise during the
process. An annual review usually takes place to devise the manager with information
regarding to the payment policies. However, many organisations face difficulties to
design a performance-related pay system.
This system gives a strong emphasis in the result of performance rather than the task bywhich the output achieved (Torrington and Hall, 1998). However, Armstrong and Baron
(2005) argue that if organisation is about to implement comprehensive PM, then the tasks
performed by the employees should be taken into account. Hence, it means that effective
PA should consider the process as well as the results achieved.
Performance Appraisal (PA)
As previously mentioned, PA is the centre of the PM process. However, a lot of questions
such as what appraisal is and how it should be carried out and managed need to beaddressed (Khoury and Analoui, 2004). To appraise means to give worth and value, to
determine quality and usefulness (Analoui and Fell, 2002). In this context, appraisal can be
described as a way to measure the employees’ contribution towards organisation’s
achievement. Analoui (2007:201) defines PA as:
“a process where an individual employee’s past and current performance is evaluated,
usually by their immediate line manager, normally against certain predetermined criteria
such as minimum standards expected and/or skills required for a particular position”.
However, these specific criteria required have to be determined and agreed by both of thesupervisor and the subordinates (Torrington and Hall, 1998). Also, regarding to the changing
of external environment, they need to be reviewed regularly in order to adapt and adopt
those changing. Moreover, they argue that there is a conflict in the role of the manager. On
the one hand, she has to act as the appraiser who obliged to judge her subordinates’
performance, and on the other hand, she is a helper who has to develop the employees. It
is, therefore, important to involve several sources in measuring performance such as the
supervisor, the supervisor’s supervisor, the peers, and the appraisee itself rather than rely
on one person (Torrington and Hall, 1998).
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Ahmad and Ali (2004) reported that several problems occurred due to the implementation
of PA in the Public Service Department of The Government of Malaysia. During 1992-2002,
the Government had established a new PA system (Ahmad and Ali, 2004). The system
consist several steps:
1. Defining institutional objectives based on central government policy, planning,
budget and facilities.
2. Determining the civil servants’ target by the assessors/raters.
3. The mid-year performance review conducted in June to see the staff’s performance
against the determined target.
4. Performance revision, if necessary planning and/or targets could be changed due to
the problems and constraints that influence the performance.
5. PA report by a Performance Appraisal Committee (PAC). The civil servant shouldcomplete self assessment evaluation form, and then the first assessor (immediate
supervisor) would assess her based on the evaluation form. Next, the second
assessor will evaluate overall departmental evaluation. The PAC will convert the
result into the mark.
6. Linking the appraisal result with salary movement by the Board of Salary Movement
(BSM).
The study exposed that about 90% civil servants expressed their dissatisfaction regarding to
the PA process that had been take place for 10 years since 1992 (BERNAMA, 2002, cited in
Ahmad and Ali, 2004). According to them, the appraisers tend to be subjective, bias and
unfair. Moreover, they also criticize that the appraisers seemed to be unskilled and ignorant
(Ahmad and Ali, 2004).
Moreover, Khoury and Analoui’s (2004) conducted a research in five Palestinian Public
Universities which employed a traditional PA approach in evaluating their faculty members
(Khoury and Analoui, 2004). The finding revealed that, according to the faculty members,
unclear performance standards, emphasis on students’ assessments, poor feedback, thelack of appraisers’ competency, failure to apply appraisal results to administrative decisions
and poor top management support were mentioned as the main factors of dissatisfaction
expressed due to the appraisal process in these universities. Obviously, although the
employees did not want to leave their current job, this dissatisfaction might affect their
motivation at work, and in turn, it will result on poor performance and low productivity
(Khoury and Analoui, 2004). Thus, effective PA is needed in order to get the most out from
the process.
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There are diverse methods of assessing performance by which organisation need to choose
the most suitable one with regards to its system, character and objectives. For example,
written or essay appraisal is a method by which appraiser measures employees strengths,
weakness, and past performance through written statement (Analoui, 2007). This method is
widely criticized. First, it is difficult to compare individual within organisation by using
written statement, and secondly, there is no standardized method in writing the appraisal
result since every appraiser has her own style so that it will vary in content and length
(Analoui, 2007). However, this qualitative method is viewed to be useful while combined
with other appraisal methods.
Another example is behaviour-based appraisal, such as behaviourally anchored rating scale
(BARS). The scales describe important job behaviour ‘anchored’ alongside a rating scale
(Bratton and Gold, 2007). Derived from the explanation given by people who know the job,the scales cover several clusters of effective and ineffective behaviour of the job. Then, it is
used to assess employees by determining their level of performance based on whether or
not they present specific behaviour required to perform their job (Analoui, 2007). Bratton
and Gold (2007) point out that BARS can lead into a relevant measurement of performance
since it is derived from employees’ specific behaviour. However, an evaluation by the job
expert as the source of job ‘anchor’ is likely to be subjective and a single behaviour required
to do the job tends to be bias (Bratton and Gold, 2007).
Other PA method is Management by Objectives (MBOs). It is based on objectives that have
to be achieved between limited period and agreement between subordinates and
supervisor is (Analoui, 2007). MBOs involve several stages: goal setting, action planning, self
appraisal, and periodic review by breaking the task to monitor the progress done by the
employees. MBOs is dynamic, and it has potential to increase motivation and productivity if
delivered successfully. However, Bratton and Gold (2007) challenge this perspective by
stating that MBOs is a self-defeating approach because it emphasizes on the people
regardless to the real choice of objectives. Moreover, they argue that this method tends to
fail when managers are not concerned about the process by which the objectives are set up.
Recent trend in the PA method is the emergent of ’360 degree feedback’ which is believed
as a supplement or even replacement towards the traditional appraisal system (Armstrong
and Baron, 2005; Redmann and Wilkinson, 2009). The 360 degree feedback is a multi-rater
system using various perspectives and all-encompassing direction of feedback such as peers,
subordinates, supervisors as well as internal and external customers (Redmann and
Wilkinson, 2009). Several advantages are mentioned as a result of the successful
establishment of this method, for instance, broader perspective on what employees
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However, Armstrong (2000) argues that PRP may not be the best way of motivating
employees to perform better. CIPD survey on 2003 also demonstrates that PM is not
inevitably associated with pay, though it is often assumed to be the case. It revealed that
only 42 percent of respondents to the survey had contingent pay (Armstrong and Baron,
2005). Another impact of the successful PM is the improvement of the employees’
commitment to the organisation by integrating employees and organisations objectives in
the beginning of PM process (Armstrong and Baron, 2005). The rising of individual
awareness about the organisation’s goal will ensure that all behaviour within the
organisation is performed in order to achieve its objectives.
Moreover, as Khoury and Analoui (2004) illustrate that information gained from the PA has
two purposes:
1. Administrative function, such as for organisational and HR planning and evaluation
as well as research purposes in order to set better future objectives.
2. Development function, for example to improve employees’ current performance and
productivity, to reward them, to employees’ potential identification, and to improve
job satisfaction at the workplace.
Therefore, the information can be used as the basis of employees career development in
the future (Bratton and Gold, 2007), which will increase their motivation at the workplace,
perform better and in turn will improve organisation productivity.
Conclusion
In conclusion, the practice of HRM in the organisation has improved concern towards the
importance of people as the source of competitive advantage and the biggest contributor in
the organisation achievement. PM is one of the key functions in the HRM, with appraisal
method as its tool in measuring employees’ performance. Several advantages can be
obtained from the successful PM. It will improve employees’ commitment to theorganisation by integrating individual goals to the organisation’s objectives. Moreover,
employees will be motivated to achieve high performance by linking PM with reward
system, assessing their potential and recognising their skills and abilities as well as providing
them with opportunity to develop their career.
However, even though PM had been perfectly designed, it might be fail if the
implementation is separated with other function of HRM. It is also important to realise that
PM is dynamic, therefore, organisation need to be aware with changes in the environment.
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