Key Factors in Performance Management

KEY FACTORS IN PERFORMANCE MANAGEMENT
Employee point of view
Bachelors thesis
Degree Programme in Supply chain management (B-Eng)
Forssa, 30.11.2013
Muhammad Saeed Mustafa
ABSTRACT
Forssa
Supply chain management (B-Eng)
Author
Muhammad Saeed Mustafa
2013
Subject of Bachelors thesis
Key factors in performance management
ABSTRACT
In the thesis, the author reviews measure the key factors in performance
management. Furthermore, the main focus of this research will base on literature and as well as across the different in organizations. The thesis confines, its research to the Key factors in Performance Management according to an employee point of view in any organization.
The fundamentals of how employees and organizations need to relate each
other to achieve high employee performance management and organizational goals.
Most important insight is gained, to promote the desired employees based
on their outcomes in relation to real life performance management practices. This research concluded to a point of ponders that a role of employee
performance could not complete without the construction of an organizational culture inside an organization.
Performance management of an organization is directly connected with
performance of employees. Achievement of high level employees performance is a big need to achieve organizations goals all the time. A high
level organization management could not be without high level of employees performance management in this age of competition.
My goal is to choose only those practices that have the greatest benefit
impact from both an organizational and an employee point of view. This
means in level of organization, selecting practices that maximize employee attraction, retention, development, motivation, skills and knowledge.
For employee, it means practices that increase job satisfaction, development, reward system and decision making.
Highly effective and modern era measurements data have been obtained
by the conclusion that further research and more references work need to
be done to complete research.
Keywords
Performance, Employee, Organizational management.
Pages
39
CONTENTS
1 INTRODUCTION ....................................................................................................... 1
1.1 Research Questions ............................................................................................. 2
1.2 Management process ........................................................................................... 3
1.3 Performance management ................................................................................... 4
1.3.1 Importance of performance management ................................................ 4
1.4 Benefit of effective employee performance management................................... 4
1.5 Global approach on employee performance management .................................. 6
1.6 Objective of my study ......................................................................................... 6
1.7 Research and performance management history ................................................. 7
1.8 Management by objectives .................................................................................. 8
1.9 Performance appraisal ......................................................................................... 9
2 THE THEORY ON EMPLOYEE PERFORMANCE MANAGEMENT................. 10
2.1 Employee treatment........................................................................................... 10
2.1.1 Present treatment criteria ....................................................................... 10
2.1.2 Past treatment criteria ............................................................................ 11
2.2 Employee performance management objectives ............................................... 11
2.3 Employee objectives ......................................................................................... 11
2.4 Progress objectives ............................................................................................ 11
2.4.1 Employee management benefits ............................................................ 12
2.4.2 Employee benefits ................................................................................. 12
2.4.3 Employee performance and Organizational benefits ............................ 13
3 EMPLOYEE AND ORGANIZATIONAL COMMITMENT RELATIONSHIP ..... 14
3.1 Employee commitment to the organization ...................................................... 14
3.1.1 What determines commitment of employee .......................................... 14
3.2 Employee engagement to the organization ....................................................... 14
3.2.1 What determines engagement of the employee ..................................... 15
3.2.2 Commitment, motivation and engagement ............................................ 15
3.3 Employee loyalty to the organization................................................................ 15
3.3.1 Employee loyalty at work for organizations performance ................... 15
3.4 Employee motivation ........................................................................................ 15
3.4.1 What determines motivation.................................................................. 16
3.4.2 Managing employee motivation ............................................................ 16
3.4.3 Intrinsic and extrinsic motivation .......................................................... 17
3.5 Employee performance ..................................................................................... 17
3.5.1 The causes of performance .................................................................... 17
3.5.2 Good employee ship .............................................................................. 17
3.6 Employee satisfaction with organization .......................................................... 18
3.6.1 Good dissatisfaction ............................................................................. 18
4 INTERVIEW ............................................................................................................. 19
ACCORDING TO SARA EDER (INTERVIEW 10.06.2012.) ..................................... 19
4.1 Ricardo Cambraia .............................................................................................. 25
4.2 HarriAlatalo ....................................................................................................... 26
4.3 Interview conclusion ......................................................................................... 28
5 KEY RESEARCH CONCLUSIONS ........................................................................ 29

5.1
5.2
5.3
5.4
Employee management skills ............................................................................ 29

Meaning and empowerment .............................................................................. 29
Enhancing employee performance .................................................................... 30
Providing feedback ............................................................................................ 31
5.4.1 Feedback system in Multinational Companies ...................................... 31
5.5 The different practices according to job category ............................................. 32
5.6 Reward system .................................................................................................. 33
6 CONCLUSION ......................................................................................................... 34
7 RECOMMENDATIONS .......................................................................................... 36
7.1 Defining results ................................................................................................. 37
SOURCES ...................................................................................................................... 38
HR Variables, (Last Access 23.8.2013.) ................................................................... 39
INTRODUCTION
A performance management is a strategic and integrated approach to deliver sustained success to organisations by improving the performance of
the people who work in organizations. This can be done by developing the
capabilities of teams and individual contributions.
Organizations can achieve their goals and objectives only through the
combined efforts of their employees and it is the task of management to
get work done. Employee performance management is fundamental to the
effective operation of organizations. Performance management is an integral part of the employees and organizations relationship. It is essentially
an integrating activity that permeates every fact of the operations of an organization (Laurir J. Mullines, Management and Organizational behaviour
2007, 410.)
It is true that successful organization knows, how to win today's competitive world they must attract, develop and retain talented and productive
employees. Big organization's get their competitive edge from performance management system that helps them to hire talented people. On the
other side, the organizations have to Place employees in the right position,
along with their individual performance with the organization's vision, objectives and develop their abilities and reward with contributions to the
organization's success.
Organizations need to be efficient in doing right things, in the optimum
use of their resources and in the ratio of out puts to inputs. But organizations must also be effective in doing the right things and in their out puts
related to some specific purpose, objectives. Performance should be related to such factors as increasing profitability, improved the results in important areas of organizational activities. Innovation as the key to long
term success and what leaders of best practice organizations do that is different. They
ensure they have vision, mission and organizational strategy that
are known and understood;
oversee the setting of demanding but realistic targets;
set examples in the generating an open, communicative management style;
champion a culture conductive to learning and continuous improvement;
distribute leadership responsibilities with the necessary authority,
training and resources;
(Laurir J. Mullines, Management and Organizational behaviour
2007, 756.)
The importance of context which means the real structure, process and
people because it can be argued that managing the context will make more
impact on organizational success, than any narrowly focused system of
performance management.

The importance of competence is always achieved from performance by
developing a core team of employees via individual levels of competence
among the employees.
A key factor in organizational high performance management effectiveness is the successful management of change and innovation. Increasing
international and domestic competitiveness and the need for the organizations to respond rapidly to constant change in their environment have
drawn renewed attention in recent years to the concept of the learning organization. A theme of the learning organization is that learning is an essential ingredient of organizational performance. It is therefore often associated with organization development (Laurir J. Mullines, Management
and Organizational behaviour 2007, 759.)
1.1
Research Questions
1) What is performance and management and how both of them share
a mutual connection to employees in an organization?
2) What are the relations between employees and organization
commitment?
3) What makes effective to enhance employee motivation and performance in regard to achieve organizational goals?
4) What are the solutions and recommendations to avoid employee
performance management problems in an Organization?
Performance
Performance is what an organization hires one to do, and to do well
(Campbell, Gasser & Oswald, 1996, 258.)
Performance states that if you cannot define performance you cannot
measure or manage it.
It distinguishes an organization from its competitors; it provides an organization with positive economic benefits; and it is something that is not
readily duplicated by other organization (Pfeffer, J. 1995, 55.)
It is true that an employees performance is more function of things like

training, communication and best kind of supervision than of his or her
own motivation. Performance appraisals tend to be focused more on problems like - whats the employee doing wrong?
Being consistent with this philosophy of performance management, putting the focus on continuous collegial feedback and on changing things
like training, incentives and procedures.
Management
Management is an active part not just theoretical. It is about changing behaviour and making things happen. It is about developing people, working
with them, reaching objectives and achieving results (Laurie J. Mullines,
Management and Organizational behaviour 2007, 411.)
Management is about human beings. Its task is to make people capable of
joint performance, to make their best strength more effectiveness and their
weaknesses more irrelevant in organizations. This is what organizations
are all about. It is also the reason that management is the critical, determining factor of any organization. Employees depend on management for
their livelihoods and their ability to contribute and achieve (Peter F.
Drucker, Harvard Business School.2006, 194.)
Management in all business and organizational activities is the act coordinating the efforts of people to accomplish desire goals and objectives using available resources. Management play a vital role in an organizational
overhaul performance.
1.2
Management process
This is up to four basic functions planning, organizing, leading and controlling, but these four are connected to each other:
Planning. Planning is setting goals and deciding on courses of action, developing rules and procedures, developing plans (both for
the organization and for the employees who work for it), and forecasting.
Organizing. Organizing is identifying jobs to be done, hiring employees to do them, establishing departments, delegating or pushing authorities down to subordinates, establishing a chain of command in other words, channel of authority and communication and
coordinating the work of subordinates.
Leading. Leading means influencing other people to get the job
done, maintain morale, molding organization culture, and managing conflicts and communications.
Controlling. Controlling is setting organizational quality standards, comparing actual performance with these standards, and then
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taking corrective action as required and when required (Dessler,
Gary2001, management: leading people and organizations in the
21st century, 3.)
1.3
Performance management
Performance management is a strategic and integrated process that delivers sustained success to organization by improving the performance of
people who work in them and developing the capabilities of individual
contributors and teams (Armstrong, 1994).
Performance management is a ubiquitous term in todays business environment, being embedded in the body of knowledge of various disciplines
and being used it at all organizational levels (Brudan, 2010).
Performance management is a system by which an organization evaluates
and develops its employees skills, behaviour and individual employee
performance in order to improve organizational performance in this competitive World.
Performance management is the system through which organization set
work goals, determine performance standards, assign and evaluate employees work, provide performance feedback to employees, determine
training and development needs and distribute rewards to employees
(Briscoe & Claus, 2008.)
1.3.1 Importance of performance management

Performance management is very important to both employers and employees. From the employers prospective, it is vital to understand how
your employees contribute to the objectives of the organization. A good
performance management system enables the organization to understand
how its employees are currently performing. It allows organizations to undertake a thorough assessment of the training needs of its employees, set
development plans and gives them the option of using the result of the performance management process to influence an individual remuneration.
From the employees prospective, the performance management process
provides transparency over performance at workplace and can be used to
assess future career development requirements
(http://www2.accaglobal.com/documents/employers_perform_mgt.pdf access date 30.9.2013).
1.4
Benefit of effective employee performance management

Improved productivity - Improvement in both the way employee work and
outcome they produce.

Improved employee morale - Resulting from one time performance appraisals and reward commensurate with employee contribution. The employee morale has direct effect on organizational productivity. To recognise the value of employee is key to success of any organization. A few
words of sincere admiration for a job well done will help increase moral
among employees.
Retention of top performers - Employees who feel accomplished in their
work becomes loyal employees.
Increased profitability - Loyal employees deliver higher levels of service
that result in customer loyalty. It is very important to create an effective
team of people which help to increased profitability.
Recruitment of talented people all the time, proper training plan for them
according to their jobs. Proper system of motivation, Monitor and measure
their productivity and performance. Giving employees the support they
need and reward your employees when they deserve.
Right job for right person - The right job for right person in organization
effect lot on organizational productivity, the employee who was a real
pleasure to be around but who was terrible at his job -Such as really
friendly third stringer on the foot ball team who cracks great jokes but
cant catch a ball to save his life? Have you ever felt stuck with an employee -as if you or your predecessor made the wrong hiring decision and
now you have to live with the person, pulling out your hairs because to attempts to improve your performance always end up falling flat. Sometimes no matter how like able or hard working an employee is or how
much effort you together invest in improving his or her performance even
reality dictates him or her never will be good at his or her current job. He
or she will never good with job not because he or she is not motivated for
this job or he or she do not have a right tool for this job that he or she need
to do his or her job but because he or she does not have the talent or fit for
the job.
The talent and fit factor refers to that intangible area of performance that
pegs to a persons natural ability and preference. It refers to a person gifts
and passions and to whether those gifts and passions are suited to the key
responsibilities, skills and competencies required for a given job. Interestingly although talent and fit factor can be measured and assessed and cannot be changed in this way talent and fit factor is very unique in the performance factor which belong to any employee of any department (Sabbag
2009, 5-7.)
Performance management is a communication between a manager and an
employee arrive together at an understanding of what work is to be accomplished, how it will be accomplished, how work is progressing toward
desired results.

1.5
Global approach on employee performance management

Global approach on employee performance management varies country to
country and culture to culture. Employees and management can have different views of fair and just pay and rewards on performance. There are
cultural influences on the employees and the management's understanding
of good performance. These cultural influences can differ from country to
country and complicate the standardization of the performance management policies in multinational companies.
Many multinational companies have come to the conclusion that they
should strive for a globally consistent approach to performance management but the path to successful implementation is far from straightforward.
This new globalization age of competition in all kind of organization's is a
big challenge for all level of employees, While this globalization has created new markets and growth opportunities for many existing organization's but on other hand it also created new challenges for organization's to
build high performance management standards for all level of management and employees to achieve the globalization market standards.
It is all about international management which is the performance of the
management functions of planning, organizing, leading and controlling
across national border. Going globally, presents the organization with new
and often perplexing problems. Organization must be adept at dealing with
a wide range of economic, legal, political, sociocultural and technological
factors which has effect on employee performance management(Dessler,
Gary2001, management: leading people and organizations in the 21st century, 47.)
1.6
Objective of my study
Align the activities and behaviours of an employee performance with organization's objectives and values.
Assess the performance of an employee comprehensively and fairly.
Systematically develop the capabilities of employees.
Most important object of the whole study and research done is to evaluate
and highlight the highly effective factors in the management of performance of an employee in an organization.
Employee performance management proved to be very effective on the
employee motivation to work for an organization with best effort and dedication, to achieve the objectives of study it is focused some secondary objectives also.

1.7
Research and performance management history

The traditional level at which performance management is used in the organizations is an individual employee level. Individual performance management is perhaps the level with longest history, as it mirrors the organizational level of maturity. The precise origin of performance appraisal is
not known but the practice dates back to the third century when the emperors of the Wei Dynasty (221-265AD) rated the performance of the official family members (Banners & Cooke, 1984, Coens & Jenkins, 2000).
The origin of performance management can be traced back to the 1940s.
Primarily the process was developed by managers to justify whether the
salary that was being paid to individual was justified. Since then, performance management processes have become much more sophisticated and
have evolved to encompass variations on the line manager, employee appraisal to encompass areas such as competences, 360 degree feedback, and
development
planning
(http://www2.accaglobal.com/documents/employers_perform_mgt.pdf access 30.9.2013.)
A research history proved that treating employee right is a fundamental
key to creating organizational effectiveness, successful and the way to
achieve high performance.
The first formal monitoring systems rating for officers in the US armed
services was introduced in the 1920s, Performance management and its research began 60 years ago as a source of income justification and was
used to determine an employee's waged base performance. Organizations
used performance management to derive behaviours from the employees
to get specific outcomes. In real it worked well for certain employees who
were solely driven by financial rewards. But one thing is true where employees were driven by learning and development of their skills it failed
miserably. The gap between justification of pay and the development of
skills and knowledge became a huge problem in the use of performance
management. This became the evident in late 1980s: The result which taken after this evident that a more comprehensive approach to manage and
reward performance was needed. This approach of managing performance
was developed in United Kingdom and the United states much earlier than
Australia.
Years ago process of managing people has become more formalized and
specialized. Many of the old performance appraisal method have been absorbed into the concept of performance management which aims to be a
more comprehensive and more extensive process of management. Some of
the developments that have the shaped performance management in recent
years are the differentiation of employees or talent management.
The introduction of human resource management is a strategic driver and
plays an integrated approach to the management and development of employees. The second factor in the understanding of the process of performance management is something completed by line managers throughout

the years, because it cannot be a once off annual event, coordinated by the
personnel department.
But today a number of compelling factors are coalescing into a new reality, to be effective and achievement of organizational better performance,
organizations must excel in organizing and managing their employees.
Today in the new age of competition, treating employee in better way is
not an option; it is necessity (Edward, E. 2003, 3.)
Employee need to be respected and treated as a company most important
asset, more essential to an organization's effectiveness than its financial
capital. It is very true employees can now be the primary source of an organization's competitive performance (Edward, E. 2003.)
1.8
Management by objectives
The objectives were defined by John Humble, 1972. As: A dynamic system, which seeks to integrate the company's need to clarify, achieves its
profit and growth goals with the manager's need to contribute and develop
him. It is a demanding and rewarding style of managing a business. Reviewing critically, and restating the company's strategic and tactical plans.
Clarifying with each employee the key results and performance standards
he must achieve, gaining his contribution and commitment to these, individually and as team member which can enhance organizational performance and work progress.
Agreeing with each manager a job improvement plan which makes a
measurable and realistic contribution to the unit and company plans for
better performance.
Providing conditions in which it is possible to achieve the key results and
improvement plan of organizational performance within employees interest.
Using systemic employees performance review to measure and discuss
progress towards results on regular basis.
Developing training plans to build on strengths, to help managers, employees to overcome their weaknesses and to get them to accept responsibility for self development.
Strengthening the motivation of employees by effective selection, salary
and succession plans, it helps to achieve organizational goals.

1.9
Performance appraisal
Performance appraisal is the ongoing process of evaluating the employee

performance. Performance appraisals are reviews of employee performance over time, so appraisal is just one piece of performance management.
Performance appraisal is regularly record an assessment of an employee's
performance, potential and development needs. The appraisal is an opportunity to take an overall view of work content, loads and volumes, to look
back at what has been achieved during the reporting period and agree objectives for the next.
Many organizations and personnel specialists believed that formal appraisals were desirable, appraisals can help to improve employees job
performance by identifying strengths and weaknesses and determining
how their strengths may be best utilized within the organization and
weaknesses overcome.
THE THEORY ON EMPLOYEE PERFORMANCE MANAGEMENT

Its proved by decades of research and theory have established and excellent foundation of knowledge which covers employee performance and
organizational effectiveness.
There is cleared by experimentation and innovation that some organizations engaged in during the past have produced a number of best practices
that can be applied to enhance organizational performance and employee
individual well being in many other organizations.
An effective employee performance management system aligns individual
performance with the organization's mission, vision and objectives (American compensation association, 1996.)
Performance management is a process for establishing shared understanding about what is to be achieved and an approach to managing and developing people in way which increases the probability that it will be
achieved in the short and longer term (Armstrong. M, 1994.)
Employee performance management is an ongoing communication process, undertaken in partnership, between an employee and his or her immediate supervisor that involves establishing clear expectations and understanding.
Performance management process and tools are essential for employee
motivation for high performance. The most important issue with any performance management system is how seriously it is taken and used by
managers and employees (Pulakos 2009, 103.)
Employee motivation and treatment is very important for high performance.
2.1
Employee treatment
This is a new era of the relationship between organizations and their employees. The world of work is sharply changing the century old understandings between employers and employees.
2.1.1 Present treatment criteria

Now a days what is important employees need to be respected and treated
as precious asset of an organization. It is very clear employees can be the
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primary source of an organizations competitive advantage in most businesses.
Today is completely different and the reality is: to be effective, organizations must excel in organizing and managing their employee because today employer knows the value of good employee.
2.1.2 Past treatment criteria
It was not so important in past decades, importance of how employees are
treated have largely fallen on deaf ears in the executives offices and boardrooms of most organizations.
Focus on the personal characteristics of an employee; it could be loyalty,
creativity and communication skills of an employee. These are concerned
with specific behaviours that lead to job success. The focus is on what person is and not on what he or she does or accomplish on the job.
2.2
Employee performance management objectives

This is twenty-first century and business world today is vastly different
from what it was in past decades. There is no doubt that the world is
changing more rapidly and has become more demanding and competitive
than ever before.
The employee performance management systems are a key element in the
use and development of an organization's most vital resource, its employee. Performance management systems are used for a wide range of administrative purposes, such as making decisions about pay and promotion.
2.3
Employee objectives
Employees have found that they simply dont have the skills needed to
compete in the market place, having no their personal competitive advantage and their value as human capital. Todays employees are finding
that although they still have jobs, they are falling behind the business, scientific and technical skills that organizations have.
2.4
Progress objectives
These objectives surround employee skills and motivation for future performance. Employee performance feedback is an initial developmental
need because all employees want to know how their seniors feel about
their performance and how they are effective.
Managing by objectives is a systematic series in which managers and subordinate sit down at the beginning of every performance period and agrees
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upon individual job goals that subsequently serve as a basis for personal
performance assessment.
The employee performance management process to the management of
the individuals begins with the assignment of individuals objectives,
through to the final formal assessment process.
2.4.1 Employee management benefits
There could be a chance that employee performance management cannot
solve every problem, it has the potential to address many common management concerns. If it is properly used with invested time on it and cooperative relationship, employee performance management can reduce the
need to be involved in everything that goes on.
Employee performance management can save time by helping employees
make decisions on their own by ensuring they have the necessary
knowledge and power of decision to make decisions properly.
Employee performance management can reduce time consuming misunderstanding among staff about who is responsible for what.
Employee performance management can identify individual training and
development needs. It builds closer working relationship based on mutual
trust and respect. It also provides better feedback to individuals about their
performance and progress based on mutual understanding of needs.
Employee performance management is an investment up front so that
managers can just let employees do their jobs. They will know what they
are expected to do, what decisions they can make on their own and how
well they have to do their jobs.
2.4.2 Employee benefits
Employee management provide scheduled forums for discussion of work
progress, so employees receive the feedback they need to help assess their
accomplishment and to know where they stand. That regular communication ensures there are no surprises at the end of the year. Performance
helps employees understand what they should be doing and why, it gives
them degree of empowerment ability to make day to day decisions.
It helps in figure out how to improve employee performance even there
are no current performance problems. It provides an opportunity to help
employees develop new skills.
Employees benefit from better understanding their jobs and their responsibilities. If they know their limits they can act more freely within those parameters.
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2.4.3 Employee performance and Organizational benefits
It is a big important factor when employees in the organization understand
how their work contributes to the success of the company, morale and
productivity usually improve. It provides them higher motivation and self
esteem, how they are important for organization and how they are playing
important role in organizational goals success. A company can have all of
its parts aimed at the same bulls eye. Employees performance management is the key to making these links clear to everyone. These links between employee and organization provide very clear competitive edge on
other organizations. Employees always make organization more and more
effective with their high performance.
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EMPLOYEE
AND
RELATIONSHIP
ORGANIZATIONAL
COMMITMENT
It is very clear and there is no doubt about it that employees enjoy and
keen to learning. It is an important touch between employees and organizational commitment relationship. The value of continuous ongoing training and development in creating a virtuous spiral.
Learning process provide satisfying and rewarding experience. There are
most of employees enjoy opportunities to develop, learn and try to gain
new things to enhance their performance. The process of learning boosts
and shines the careers. It allows to employees to develop new skills and
new knowledge that raise their ability to perform.
3.1
Employee commitment to the organization

Employee commitment is the level of connection between employee and
organization. Employee commitment allows an organization to gain and
grow in competitiveness and is thus a key variable determining the employee performance. Committed employees contribute added value to the
organization because they are more determined, more supportive and give
more energy and attention to quality.
3.1.1 What determines commitment of employee

There are various factors that can positively are negatively influence the
employees commitment. Employers find it difficult to feel they fit in it
with the organization if they dont know what it stands for, so that they
have no clear idea how they contribute to the organization as a whole.
Several employees surveys will show whether employees are committed
or not and whether these employees are intending to leave. Are uncommitted employees are looking for other job s around, if so that is a good news
but on other hand if committed employees are looking for other jobs than
organization have to do something about it. Because these are the employees it needs to be retained. It is very important for an organization to provide clarity as to its identity and vision and make it clear what the employees are contributing.
3.2
Employee engagement to the organization

Engagement is to mean the commitment employees feel towards their
work and organization. It is the amount of passion that employees have for
their work. This is a fact that engaged employees go the extra miles to
contribute to the organizations success. They always try to do extra effort,
learn more and more they always try to learn very fast and are keen to
think proactively what can be done better.
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One more thing engaged employees are always often step ahead on other
people in this respect. They can see for themselves what can be done better and they take the initiative to make changes. These kinds of employees
always have an enormous influence on the organizations performance.
3.2.1 What determines engagement of the employee
Engaged employees concentrate on the organizations goals and on the results you expect of them. They always have the feelings that they really
contribute the organizations success. For the organizational high performance it is better to have star players, and that makes it important to work
on the factors that influence engagement.
3.2.2 Commitment, motivation and engagement
There are many connections between commitment, motivation and engagement. Engagement comes about through a combination of commitment and motivation. That means the employee feels at home with organization, support its objectives and also have motivation due to a positive
working environment, opportunities for growth and the ability to enhance
organizational performance. These employees show actual engagement to
the organization.
3.3
Employee loyalty to the organization

The most important aspect of loyalty is reciprocity. Loyal employees are
always true to the organization because loyal employees feel that the organization has their best interests at heart. So according to this loyal theory they work well with organization and will not go for search another job.
3.3.1 Employee loyalty at work for organizations performance

Loyal employees always are true to the organization because they think
organization has their best interest. They want to stay with the organization because they feel comfortable and they want to serve for organizational performance and do their best to enhance it. They always express
good organizational image to the world. Loyal employees are keen to continue their best effort to achieve organizational goals and objectives. These
qualities make them loyal employees which help to achieve higher level of
organizational performance.
3.4
Employee motivation
The key to create a high performance organization that generates a large
pool of rewards, so that both employees and organizations can achieve a
high level of return. My belief is that a well designed reward system can
create a large way of motivation for employees (Edward E.L2003, 178).
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Motivation is seen as the will that people have to do something. Motivation relates to the question why people do or dont take the trouble and
question is extraordinarily difficult to answer, because it can be vary from
person to person. Motivation for an employee at work is any case connected with basic human requirements.
Wanting to have significance the feeling that you are needed and that you
are making a contribution. It could be job security and having a Varity at
ones work. It could be involvement with the organization and contact
with other people.
3.4.1 What determines motivation

A good reward system contributes to employees satisfaction and their
willingness and desire to learn and improve their skills. It helps to increase
employee satisfaction and motivation (Edward E.L2003, p180).
People are motivated innately and by the context. It is not employers job
to motivate employees to go to work. These days you can assume that employees have made a reasoned decision to take a certain job. Basic motivation is therefore already there. As an employer and as a leader it your jobs
to make sure employees dont become de motivated.
That is because motivation is a dynamic process. The factors that drive
people develop with them. If an organization fails to keep this in mind and
does not satisfy changing requirements, they will just lose employees motivation and their commitment. This has a very bad effect on employee
performance. It maybe those employees need more role clarity or feedback
to enable them to grow.
3.4.2 Managing employee motivation
Motivated capability is the quality that organizations most need from employee. This means that organizations must offer employees sufficient incentives to attend work and do a good job. Like the employer, the employee is motivated to enter an employment relationship when:
The benefits of doing so (such as wages and social standing) out weight
the costs (such as increased stress, intrinsic enjoyment and travelling
costs)
If organizations are going to treat employee right way, than organization
need to know what motivates them and what determines how well they
can perform. The fact is, employee influence all the important aspects of
organizational performance in one way or another. Employee conceives
and implements the strategy. it is true that an organizations capabilities
are contained in the mix of its people and its systems. Competencies are
primarily a function of the skills and knowledge of an organizations human capital. A major feature of the environment is its ability to supply
qualified high performers who can implement strategy.
16
In simple way we can say that organizations can accomplish little without
capable people. To be successful, they must commit themselves to attracting, retaining and motivating the best and brightest.
3.4.3 Intrinsic and extrinsic motivation

Employees can be motivated for two reasons: because they are stimulated
with themselves or they are stimulated by an external factors. Intrinsic motivation means employees are stimulated from within. They just attach
values to what they are doing because they feel satisfaction. Extrinsic motivation describe, employees want to make an effort in some direction because they are stimulated from the outside and it could be money or status.
3.5
Employee performance
Employees are your most valuable asset in organizational excellence, in
growth and the image you have. For high level organizational performance
you need to have the right decision makers on the board at first place because they play a very important role to put right employee at the right position which effect at organizational performance.
What makes some employees capable of performing at high levels while
others do not? There are lot of conflicting theories that attempt to explain
why employees make certain choices concerning their work, why they
seek particular rewards, why they are satisfied or dissatisfied with their job
and rewards. There are also some commonly accepted truths.
3.5.1 The causes of performance

It is a fundamental truth that performance depends on two factors. Employees need both motivation and ability. Highly motivated will not
achieve results if they do not have proper skills, expertise, knowledge and
the personality the organization needs and on other hand it is also same,
employees with high skills and knowledge they cannot achieve organizational goal if they are unmotivated. It means organization produce great
results of performance if employees are motivated and able to do their
tasks.
3.5.2 Good employee ship

When employees are enough motivated and willing to go the extra mile
for organizational goals, you have important ingredients to boost your performance and have will to achieve organizational goals.
17

3.6
Employee satisfaction with organization

Satisfaction is the foundation for every employee in every organization.
Satisfaction is a general feeling of well being, of contentment of certain
matters. The feeling of contentment affects the employee in many respects: it affects whether he goes for work happily, whether he can work
well with co workers, whether he is committed to the organization and
whether he is enough motivated to do his/her job. As soon as a feeling of
dissatisfaction about something creeps in it negatively affect the employees motivation and commitment. In this situation he loses his or her level
of performance and it affect on organization productivity. It is very true
that dissatisfaction of employee about something can be negatively affect
the employee motivation and commitment.
So its mean that employee satisfaction with organization is very important
and meaningful for organizational success and high performance achievement all the time. Satisfy employees perform their best skills and help to
enhance organizational performance which helps to achieve organizational
goal.
3.6.1
Good dissatisfaction
It is not always wrong to be dissatisfied because some time employee
small dissatisfaction about something can be the driving force behind the
major improvements. It is very true that if employees are committed and
highly motivated, and they see something can be done better, they will always help to make it better which is very important for any organization
and have very positive affect.
Satisfaction is influenced by the extent to which the work and working environment meet the needs and expectations of the employees. An employee is satisfied and plays his or her best role in organization success when
the work and working environment are what he wants and appreciate.
18
INTERVIEW
This part was not as easy as I was expecting. I sent several emails to different organizations Human resource departments for my thesis questionnaire and I requested for a meeting with HR person. Almost after few days
I got a reply from WRSIL and they arranged a meeting time for me
with HR secretary named Ms.Sara Eder and they sent me her email for
further communications. I sent her an email for a time reservation and she
asked me to send my questionnaire in detail to her first and then she will
be able to give me an appointment.
I sent her my questionnaire in detail and after four days she replies me and
sent me the meeting time and place location. I went there almost fifteen
minutes before the time she gave me and she was so happy that I am on
time.
After a short introduction of myself and my thesis I started my interview
with her according to my questionnaire which I sent her. She gave me very
useful and briefly answers of my questions and she also promises me to
send it by email to me in brief. So I got this very useful information according to my questionnaire after one day of my interview, which I am going to explain word by word in my interview chapter.
ACCORDING TO SARA EDER (INTERVIEW 10.06.2012.)

How the performance management of employees is done in
WRTSIL?
WRTSIL employee Performance Management tools and guidelines including annual development discussions are written to ensure that people
and teams know and understand what is expected of them. Written by
these guidelines are constructed so that the line manager as well as the
employee are able to have the skills and ability to deliver on their expectations obtain feedback on their performance obtain positive reinforcement
on desired behaviours have the opportunity to contribute to individual and
team objectives.
How employee performance management is measured in WRTSIL?

Ongoing communication is the backbone of effective performance management. Often people think development discussions and employee performance management are the same; an annual meeting where the manager evaluates performance and in the worst case punishes employees who
doesnt perform according to plan. But employees performance management is much more than that.
Employee Performance Management is a strategy which relates to every
activity of the organization set in the context of its human resource poli19

cies, culture, and style and communications systems. In other words employee and organizational performance management should be:
Strategic
It is about broader issues and longer-term goals which affect the employee
performance and organizational performance. It should be always very
clear to employees according to organizational strategies.
.
Managing behaviour
Ensuring that individuals are encouraged to behave in a way that allows
and fosters better working relationships and reinforces desired behaviours.
Performance management is about establishing a culture in which individuals and groups take responsibility for the continuous improvement of
business processes and of their own skills, behaviour and contributions. It
is about sharing expectations.
Managers can clarify what they expect individual and teams to do; likewise individuals and teams can communicate their expectations of how
they should be managed and what they need to do their jobs. It follows
that performance management is about interrelationships and about improving the quality of relationships - between managers and individuals,
between managers and teams, between members of teams and so on, and
is therefore a joint process.
It is also about planning - defining expectations expressed as objectives/targets and in business plans - and about measurement; the old dictum is 'If you can't measure it, you can't manage it'. It should apply to all
employees, not just managers, and to teams as much as individuals. It is a
continuous process, not a one-off event. Last but not least, it is holistic and
should pervade every aspect of running an organization. Because performance management is all-pervasive, it needs structures to support it. These
should provide a framework to help people operate, and to help them to
help others to operate.
But it should not be a rigid system; there needs to be a reasonable degree
of flexibility to allow people freedom to operate. Performance management is a process, not an event. It operates as a continuous cycle.
What sort of performance management objectives are implemented inside
WRTSIL?
WRTSIL Corporate strategic objectives provide the starting point for
divisional and departmental objectives, followed by agreement on performance and development, leading to the drawing up of plans between individuals and managers, with continuous monitoring and feedback supported by formal reviews.
20

Having said that performance management is so much more than the annual development discussion itself, one should not underestimate the importance of the annual discussion either if it is well prepared and constructive, keeping in mind the target of the discussion. If performance management is handled well, there should be no surprises during the development discussion.
Many organizations without performance management systems operate
'appraisal' in which an individual's manager regularly records performance
(usually annually), potential and development needs in a top-down process. It is argued that the perceived defects of appraisal systems (that line
managers regarded them as irrelevant, involving form-filling to keep the
human resources department happy, and not as a normal process of management) led to the development of more rounded concepts of performance management.
Nevertheless, organizations with performance management systems need
to provide those involved with the opportunity to reflect on past performance as a basis for making development and improvement plans, and in
WRTSIL the Development Discussion provides this chance. The meeting must be constructive, and various techniques can be used to conduct
the sort of open, free-flowing and honest meeting needed, with the reviewed doing most of the talking. All issues discussed are to be documented in the Development Discussion tool in SAP HR and after the discussion, approved by both line manager and employee.
What are the main objective targets of WRTSIL for employee performance management?
To set targets practically any target must be checked based on an objective
and should be verified against the SMART principle, which is an acronym
for Specific, Measurable, Achievable, Realistic and Time-framed.
Specific - This means a target should correctly pinpoint a desired target
and not be too generic.
Measurable - There are many ways to measure targets, but without verifying and agreeing the measurement method in advance, an organization
risks not to find a measurement method further on. In many cases targets
should be further split in measurable sub targets in order to make the overall target measurable by its components
Achievable (and Agreed to) - Targets should be difficult, but achievable, they should motivate performance. Stretch targets should only exist
in very limited quantities when real breakthroughs are intended. In general
no more than 3 target areas should exist attempting to achieve too many
different targets at once will impede success. Apart from stretch targets it
is essential that all targets are well agreed when starting to work on these.
21

Realistic - In general it is better to set incremental achievable targets over
time instead of a desired end target that is not perceived realistic. It must
also be clear that all actions needed to get to the target can be executed in
the targeted time-frame. It must be prevented to set achievable targets as
such without knowing if all actions needed to reach this target are realistic.
Time-framed - Any target should be related to time. When setting final
targets in time these should be broken down to intermediate targets. This
way it enables people to see a trend. People are thus enabled to conclude
in an early stage if they are on the right track after which corrective initiatives can be raised where needed.
What is the competence assessment of WRTSIL?

WRTSIL uses competences as components of performance management. Competences describe what people need to be able to do to perform
a job. Competencies (more helpfully, 'behavioural competencies') are defined as the dimensions of behaviour that lie behind competent performance. To perform well it is necessary both to be able to do a job at a
technically competent level and to have behaviours that reinforce those
technical skills.
Competence Assessment is the technique used in Wrtsil for measuring
competences and once an analysis has been made, it provides a tool for
measuring performance and, of course, for providing development activities to help people meet the required standards.
What sort of personnel development plans is available by WRTSIL?

Employee development is the main route followed by Wrtsil to improved organizational performance, which in turn requires an understanding of the processes and techniques of organizational, team and individual
learning. Development Discussions can be regarded as learning events, in
which individuals can be encouraged to think about how and in which
ways they want to develop. This can lead to the drawing up of a personal
development plan, setting out the actions they propose to take (with the
help of others, not least their managers) to develop themselves.
Increasing emphasis on talent management also means that Wrtsil is redefining performance management to align it to the need to identify, nurture and retain talent. Development programmes are reflecting the needs
of succession plans and seeking to foster leadership skills.
What are the setting performance targets for WRTSIL?

Objectives/goals describe something to be accomplished by individuals,
departments and organizations over a period of time. They can be expressed as targets to be met (such as sales) and tasks to be completed by
specified dates. They can be work-related, referring to the results to be attained, or personal, taking the form of developmental objectives for indi22

viduals. Objectives need to be defined and agreed. They will relate to the
overall purpose of the job and define performance areas - all the aspects of
the job that contribute to achieving its overall purpose.
What are the values measured in practice by WRTSIL?

An effective employee performance management system provides behavioural standards that describe what is expected of employees in key behavioural areas. During the development discussion planning process, managers should review and discuss these behavioural standards with employees.
It is important for managers to make sure employees understand how the
behavioural standards relate to their specific jobs. Wrtsil values as
shown below (Fig 1) play a key role in measuring employees behaviour. The guidelines on how to measure these values also is available for
everyone to go through in the company intranet and it is well known that
those values are not just nice words but important models and guides for
every employee.
Energy - Achieving results, making change happen, decisiveness and action orientations.
Excellence - Planning and target setting, developing selfless and others
selves.
Excitement Communication, situational and cultural sensitivity, business
and customer focus.
Figure 1Mechanism for measuring Wrtsila Values
23

What kind of active feedback and positive reinforcement is implemented
by WRTSIL?
Apart from review meeting(s) where longer term objectives are discussed
it is essential to provide continuous feedback. Constructive feedback tries
to reinforce the positive and change the negative by identifying what has
been done well or poorly, describing what action or behaviour is desired
and explaining the effects of the observed and desired acts of behaviour.
Good feedback is timely and it should pinpoint specifics. Feedback long
delayed is rarely effective. Feedback involves both parties listening carefully. An important aspect of performance management is the usage of
positive reinforcement together with the continuous feedback.
What are the overall performance evaluations for WRTSIL?

The Overall Performance Evaluation guidelines, including harmonized/common Wrtsil Guidelines on Overall Performance Evaluation
elements and criteria bring fairness, objectivity, structure and transparency
on how individual performance is evaluated in Wrtsil. Performance is
being evaluated against the specific, agreed-upon targets set for the employee for the review period and the documented ones in the Development
Discussion tool.
The Overall Performance Evaluation is not based on mathematical formula of all of the ratings but there should be strong consistency between the
individual elements and the Overall Performance Evaluation Overall Performance Evaluation indicates which level (1-5) most appropriately describes the overall performance level of an employee during an evaluation
period, taking in consideration the following three elements:
Individual Job Performance (performance of the individual in their whole
job role)
Individual Performance against the targets set for the review period (what
needed to be achieved)
Behaviours (how the expectations have been met)
One sort of standard common Evaluation scale is used in each element,
and in the Overall Performance Evaluation.
Implications of Overall Performance Evaluations will be on individual development plan, development targets for the following review period, individual career planning and serving as an input for salary and other reward decisions.
Performance management is a positive process, and good systems will
create a culture in which success is applauded. Nevertheless, poor performance will exist. It may be a result of inadequate leadership, bad management or defective systems of work, and if so, remedies (often involving
learning and development) can be put in place. But individuals may underperform and improvements can be achieved through continuing feedback
and joint discussion between them and their managers, involving analyzing and identifying the problem, establishing the reasons for the shortfall,
24

and deciding and agreeing the action to be taken. If all this fails, disciplinary action may need to be taken.
What process is used by WRTSIL for the measurement of evaluation

of performance management?
There is only ONE-Process used in the whole WRTSILA for the more
than 17,000 employees.
In Americas
The whole WRTSIL employee Performance Management guideline
has been implemented and distributed throughout the corporation to more
than 70 different countries in all continents involving all more than 17 000
employees, blue collars included. SARA EDER provided me some reviews of WRTSIL employee's with diverse backgrounds which she
collected during her work placement at WRTSIL. Therefore, I perceived some in depth knowledge on how the process actually has been received globally (Eder, interview 10.6.2012.)
4.1
Ricardo Cambraia
Ricardo Cambraia has been working as an HR professional in North and
South America for more than two decades and is currently the Area HR
Director Americas in Wrtsil. He feels the Wrtsil performance management process applies for both Americas with no issues. He states that
the whole Americas have used the principles and guidelines for minimum
of 25 years based on other multinational companies which also ended up
being adopted by local companies. He mentioned that the companies have
sent their executives abroad to study a different technique which has contributed to this process development as well. As Cambraia put it, the
Latin's love to use whatever comes from abroad.
When asked about difficulties in understanding some performance management related concepts, Cambraia says that in the beginning, it was a
challenge to get especially Latin American managers to understand the
difference between yearly targets and daily tasks. He also highlights that
apart from some conceptual difficulties, he has never seen any difference
between different countries on the way targets have been set for a similar
position or even how to perform development discussion. However, when
joining WRTSIL, he was caught by surprise that all employees are included in the performance management process, even the blue collars.
According to Cambraia, the one major difference that separates North and
South America as far as performance management process is concerned, is
the importance of hierarchy. He says there is always the ghost of being
powerful and omnipotent, especially in Mexico and Colombia.
25

4.2
HarriAlatalo
HarriAlatalo has been working in several different locations within
WRTSIL, including India and China. He compared the process in
those cultural environments to the one in Finland, as he has experience in
all of them. Generally, according to Alatalo, the HR practices and processes were very much more developed in India than in China. He also mentioned, that when there was a new Vice President for HR China appointed,
there was a clear positive change in attitude towards HR. Also the processes started to develop also in the root level and not only in paper.
As stated in this paper earlier, there is a tool for development discussions
in the SAP HR system in WRTSIL. The tool has been up and running
for almost five years now but it was new when Alatalo was setting up a
global competence centre (corporate helpdesk services) in India. It was also quite new when he started in China and stated that the reception of the
whole online tool concept was very delighted. In practice, the helpdesk
employees in India were very punctual when filling out all questions etc.
and in other business functions the practice varied.
The Chinese attitude towards the whole development discussion was low
priority. In China, it was seen as something that the HR wants us to do
and was not really taken seriously. Although, he states that the attitude had
changed rapidly due to line managers emphasis on duly going through the
development discussions and with thought.
As HarriAlatalo mentions, the power distance in China is extremely high
which, according to Geert Hofstedes (2012) definition is the extent to
which the less powerful members of institutions and organizations within
a country expect and accept that power is distributed unequally. In Chinas case, the people feel and believe that the power is and should be distributed unequally and there is from a little to none resistance against it.
Also, the uncertainty avoidance is low which means that the hierarchy
structure is very rigid and the relationships between line managers and
employees are mostly one way.
As Hofstede (ibid.) puts it the uncertainty avoidance dimension expresses
the degree to which the members of a society feel uncomfortable with uncertainty and ambiguity. Alatalo also mentions that the distinctive factor
that separates Chinese and Indian working culture is the long-term versus
short-term orientation. Again, Hofstede (ibid.) defines short-term oriented
cultures that they generally have a strong concern with establishing the
absolute Truth. They are normative in their thinking. They exhibit great
respect for traditions, a relatively small propensity to save for the future,
and a focus on achieving quick results.
In his scale, China scores 118 meaning that there is a strong long-term orientation to be found. Hofstede traces this back to Confucian society and its
principles. In his interview, HarriAlatalo strongly disagreed with Hofstede
when it came to day-to-day working environment. In his experience, the
Chinese were very short-term oriented and the one year attention span included in the performance management process was very hard for Chinese
26

employees to comprehend. In their opinion, there should have been instant
reward for a job well done instead of waiting for a spot bonus or merit increase once a year.
In my opinion, there are two different culture systems existing, side by
side, in China. The first one follows old Confucian principles and even
communist ones where everything is done for a greater good, i.e. the nations best in mind. The second culture is a more individualistic, modern
and adopted from Western culture, where people compete with each other
in every aspects of life. In a way, Chinese are very loyal to the company in
general but with strong competition with co-workers and also the companies compete with each other.
These factors combined, following the defined Wrtsil process results to
unclear communication as we see it from a Finnish point of view. For example, when the employee is encouraged to give feedback to the manager
in Finland, we most probably will say a few things that we have appreciated during the review period and drop in a couple of constructive ideas on
how to improve (if we have any).
Having asked the same thing from Chinese employees, Alatalo received
nothing. He did certainly receive not any negative feedback, but also not
even any positive feedback. In China, giving honest feedback might result
in a person to lose his/her face and it is considered highly important to
avoid anyone to lose it - especially a person higher in the hierarchy (even
if the person would not earn it, according to Alatalo).
Alatalo mentioned that in case someone wouldve wanted to punish an
employee (theoretically, not in practice), the worst thing you could have
done would have been giving negative feedback in front of others. Naturally, the same applies to Finland and Western countries as well in the
sense of being the worst way of giving feedback, but when in China you
actually lose your face, in Finland it will probably be the manager getting
a bad reputation for awfully poor managerial skills too.
As a line manager in China, Alatalo had some trouble finding out the ways
to receive feedback and get actual and personal opinions from the employees. He implemented his own system of unofficial walks and talks, taking
one employee at a time for a walk. First few times the employees were utterly shocked about the fact that their manager (and even a Western one)
took them out on a walk, just the two of them.
At first, they of course imagined that something bad had happened but
once they got used to the Westerners strange walks, he started to gain
their trust on a more personal level. In the end, Alatalo said, it was the best
thing for him to do in order to get any real opinions or suggestions out of
anyone. Depending on the person, he sometimes had a translator with him
so that the employee could explain his or her ideas and worries in their
own language.
27

As a most difficult part of the whole performance management process to
implement in China, he mentions the competence assessment. When doing
self-assessment, the employee should evaluate him-/herself according to
their job performance and existing abilities. This is also conducted through
a competence assessment tool in SAP HR when the person needs to give
him-/her grade from 1 to 5 in each of the competence areas. They can also
fill in some free text, if they want to clarify.
Working in Chinese culture, HarriAlatalo noticed, that the whole selfassessment through the tool is a very masculine and a serious process including documentation and approvals. Having identified the Chinese culture more feminine than the Finnish one - again disagreeing with Hofstede
(ibid.) he noticed that the self-evaluation was a lot harder for them than
for Finnish. It seemed to him as if the official element of documentation
kind of scared them off from stating anything. In my opinion, this might
also have something to do with the power of officials in China in general
if something is on paper, you can be held responsible for it later on.
4.3
Interview conclusion
In this Interview, the main target was to clarify the employee performance
management process in Wrtsil including its history until this day. I have
also tried to describe the current process in Wrtsil Corporation as well as
investigate the implementation of one process for such a diverse set of
employees. The diversity in Wrtsil is not only geographical; the population consists of different races, cultures, values, ages, genders, socioeconomic statuses, educational backgrounds etc.
I tried to collect the employee and Wrtsil commitment relationship according to organizational performance. How employee play their role in
organization and how Wrtsil treat employees to enhance their performance, Wrtsil treat employees equally all over the world to achieve their
organizational goals.
28
KEY RESEARCH CONCLUSIONS

This chapter examines and analysis the practice of strategic approach to
managing employee performance in organization.
The main focus is on the well being and understanding of the performance
management system by the employees. The ways to improve employees
performance.
5.1
Employee management skills

Performance management is about managing the organization; it is a natural process of management. It is not a system or technique Performance
management concerns everyone in the business-not just line managers.
This is a skill which combines the whole structure of an organization,
Managers and employees are jointly accountable for results and are jointly
involved in agreeing what they need to do it, both in monitoring performance and in taking action.
Performance of any organization is affected by personal factors- the individuals skill, competence, motivation and commitment.
Management should be treated as part of the normal process and its process should fit the way work is done.
5.2
Meaning and empowerment

The notions of meaning and empowerment have major implications of
work place satisfaction. it should be obvious that when people are invested
with the sense of meaning in their work, they perform at higher levels,
maintain greater interest and feel more committed. Unfortunately many
workplaces are dull and the nature of work repetitive even in corporate
environment.
Many people turn up to work each day, knowing that they are just another
cog in the corporate machine, the message here is you are replaceable
and you have no value to our organization". Couple with this over controlling supervisor a bureaucratic company structure, little or no positive
feedback, no ability to enact change and a lack of autonomy and it is not
really surprising that most people hate their jobs. So, by allowing staff
some decision-making abilities giving them positive feedback about the
value of their contributions and listing to what they have to say and then
acting on it can dramatically enhance an employee individual sense of
value.
We do not shed too many tears if the burglar only takes replaceable commodity goods. What hurts is when something goes that has unique personal value, an item treasured perhaps because of association with special
people.
29

Employee empowerment is defined as a state within which an employee
connects and identifies with the personal job and organizational dimensions of his or her work resulting in retention and improved performance.
5.3
Enhancing employee performance

A well functioning organization is the product of its healthy, committed
and motivated employees. Nevertheless when your employees are not well
adjusted they will reduce the operational ability of your company or organization. In the psychological literature, when people have a strong perception of control over their immediate environment they are psychologically healthier and perform better. Conversely when there is little perceived control people become stressed, anxious and unable to make effective decisions. These findings extend to the work place so if your employees feel that they have some say in what they do and what happens to
them, they will be better able to their jobs.
Some of the things that can be done to improve perceived control include:
modification of the physical environment so that it better suits the individual; Relaxation of strict working hours, such as allowing employees to determine when they are the most productive and modify their working
hours around these times; allowing employees to have more say in their
job roles, and making these roles more flexible so that people can extend
their skills and learn new ones; encouraging employees to develop and
manage their own goals, including project acquisition, completion time
frames, allocation of resources, collaboration and outcomes, and allowing
workers to have more say in the type and frequency of work incentives not
everyone is motivated by money and rewards are most successful when
they are contingent on high performance.
As an employer, leader and line manager it is your responsibility to make
sure that your management team has your support as well as the tools and
wherewithal to deliver these products if they are unable, unwilling or
simply do not know how to make these changes then they wont happen
and your employees will remain stressed and unproductive. This brings up
a related point, is your managers capable and is they actually able to manage? More importantly are they leaders or simply administrator? What
level of abilities they have? One important thing, which is pretty easy to
forget, that managers are also employees and therefore they share many of
the same needs, ambitions and problems.
Another important variable to consider is whether your employees are able
to perceive any meaning in their work that is, do they have a sense of purpose? One very simple message when employees work hard and do their
best and if you as a line manager or as a leader do not give, you do not get
and if your employees do not feel that you care about them, they wont
care about you or your business and its future. (Adams 2007.)
The relationship between the psychological contract and perceived control
in the work place has been well illustrated (Liao-Torth, 2001). According
to Liao-Torth on the one hand the psychological contract is from the em30

ployers perspective, transactional in which hard work is rewarded by
higher pay and advancement and relational in which job security is dependent on employee loyalty and tenure.
5.4
Providing feedback
One element of employee performance management that often creates
controversy with respect to cultural context is feedback, given different
ways of confronting conflict in different cultures while the discomfort that
surrounds critical feedback is more or less universal, leading to many of
the problems with appraisal, it may be particularly acute in certain culture
5.4.1 Feedback system in Multinational Companies

Over the past twenty years, many firms around the world have developed
feedback systems to provide managers with direct input on their strength
and weaknesses as leaders. As the pace of changes has continued to accelerate, these tools have helped to formalize and speed the natural, informal
feedback processes of the past. Many different approaches have developed, but they all share one thing in common-individuals own assessments of their behavioural skills are contrast with the assessments of their
bosses, their peers, and their direct reports.
These assessments help managers to see the difference between the perception they have of them and those have of them. The results are used to
help create appropriate development plans.
360 leadership assessments can be used for both development and evaluation. While there may be some overlap in these two aims, there are some
important differences. Organizations that use 360 degree feedback for
evaluation and appraisal often encounter problems in getting honest feedback. Participant will tend to select respondents whom they think will provide positive feedback if they think that it will be used to evaluate them.
Managers whose bonuses depend on their 360 degree results will tend to
think about their bonuses first and their development later. For these reasons, many companies try to introduce such approaches by using the results for development purposes, trying to keep 360 degree feedback separate from the performance appraisal process.
Attitudes toward the process of giving and receiving feedback can vary
across nations. In general, countries with high power distance and a dislike
of conflict will be the most resistance to 360 degree feedback. But there
are also many differences that occur at the firm level rather than the national level. Individual firms have their own values about power distance
and managing conflict and may resist attempts at feedback. When a leadership 360 degree system introduced into any organization for the first
31

time it is very normal to have scepticism until the system becomes accepted and individuals become more comfortable with giving and receiving
feedback.
5.5
The different practices according to job category

How performance goals are set, who sets them, and what types of goals
are set. How performance is evaluated and who is responsible for conducting the evaluation. What kinds of training and development opportunities
are available to the expatriates? How close the linkage is between performance and the expatriates pay? Performance goals and incentives for Employee according to his/her job in business development and customer project are very important and then he concentrates on his or her job. When
an employee has specific job and tasks, feedback matters a lot and guides
him or her right direction all the time.
What employees want? They need a fair and transparent feedback, from
their line managers. Motivational feedback creates energy. He or She
wants constant system in their job not change all the time and then he or
she performed very well. Should not be another bland system differentiate.
Hiring good people is tough, but keeping them can be even tougher. Indeed, most executives can tell a story about talented professionals who
joined their company to great fanfare, added enormous value for a couple
of years, and then departed unexpectedly. Usually such exits are written
off. "She got an offer she couldn't refuse," you hear no one stays with one
company for very long time these days.
There is research over the past 12 years strongly suggests that quite another dynamic is frequently at work. Many talented professionals leave their
organizations because senior managers don't understand the psychology of
work satisfaction; they assume that people who excel at their work are
necessarily happy in their jobs. This sounds quite logical enough. But the
fact is, strong skills don't always reflect or lead to job satisfaction. Many
professionals particularly the leagues of 20 and 30 something's streaming
out of today's MBA programs are so well educated and achievement oriented that they could succeed in virtually any job. But will they stay?
The answer is, only if the job matches their deeply embedded life interests.
These interests are not hobbies, skiing and so forth nor are they topical enthusiasms, such as Chinese history, the stock market. Deeply embedded
life interests do not determine what people are good at they drive what
kinds of activities make them happy. At work that happiness often translates into commitment. It keeps people engaged, and it keeps them from
quitting.
32
After whole research what I realized this time, Job sculpting is the art of
matching employee to jobs that allow their deeply embedded life interest
to be expressed. It is the art of forging a customized career path in order to
increase the chance of retaining talented people. What I think in this case
makes no mistake -job sculpting is challenging and it requires managers to
play both detective and psychologist. According to this way we can find
better and suitable talent for every position in an organization which could
help to increase employee and organization performance very fast.
5.6
Reward system
One of the dimensions of an effective employee performance management
system is to reward performance by linking employees pay to performance.
It motivates people to perform better or to develop their skills and competences.
It delivers the message that performance is very important to get something, to achieve something special. It is very important to reward people
different according to their performance and willingness and how they
contribute.
Two decades ago Armstrong said that "It is undesirable to have a direct
link between the performance review and the reward review. The former
must aim primarily at improving performance and possibly assessing potential" (Armstrong, 2007.)
To obtain desired levels of performance, organizations must establish a relationship between demonstrated employee behaviour and employee provided rewards that have a high degree of both consistency and certainty.
33
CONCLUSION
Employee pperformance management is very simple in some ways and in
other ways very complex. It consists of lots of parts and it requires some
skills. But if it is approached with proper mindset it can work and pay
great benefits.
Performance management is a vital part of the process of managing human
resources with the aim of achieving employee and organizational goals.
The job description that occasionally accompanies the review bears little
resemblance with the work being performed. The fast changing demands
of the marketplace. Companies must adapt quickly if they wish to remain
in business. The managers who do not adjust the performance expectations
of their subordinates accordingly run a very high risk of reducing the value
of an evaluation as well as the value added contributions of the employees.
Evolutions are based upon a set of arbitrary activities from a format developed by Human resource department of company- that have little direct
impact on the material success of the department or the organization. Far
too many job discretions record activities instead of outcomes that are valuable to organizational success.
The ingredients essential for building a successful organization, Human
resources are generally regarded as the most important factor in an organization. It is people who provide experience, talent, skills and knowledge
necessary to achieve the organizational goals. The progress of an organization depends on its ability to identify, recruit, select, train and retain the
right people.
The right people mean those persons that will satisfy the needs of the organization. The needs of the organization are manifested in its business
strategy. Business strategy must therefore have a major influence on the
staffing within an organization if it is to develop into a profitable enterprise.
The main finding that came out in my study and research are that the development and implementation of a performance management system
takes time and commitment. The main purpose of my paper was to describe and analyze the role of performance management and employee relationship.
Effective communication and culture of trust are vital. The system not
having a direct impact on the achievement of results, it has had a great impact on staff, and has certainly highlighted areas that require attention and
further improvement.
34

It is indeed possible to motivate employees to perform well for an organization and that is critical part for managers. It seems that there exists a self
reinforcing circular relationship between the performance and motivation
of an employee.
An employee achieves a high performance on the base of internal satisfaction. Therefore internal satisfaction arises and the employee is motivated
to perform well in the future. It is stated that a high performance can be
reached when the organization provide certain job characteristics.
Skill variety, task identity, task significance, continues feedback, employee motivation, these job characteristics together with the ability of the employee provide the opportunity for a high performance.
In finally conclusion from me, employee performance management systems can assist an organization to achieve cooperative results. Motivated
employees work harder and it make more productive, happier and more
concerned with customer satisfaction and ultimately, more profitable for
any organization.
By recognizing and rewarding their achievements, you make staff feel
more appreciated and more willing to go that extra mile.
35
RECOMMENDATIONS
This research gives the impact that certain assumptions contained within
the organizational culture may have on the implementation of the performance management system.
What role does the leadership play in influencing the organizational culture when implementing a performance management system?
Leaders adopt a personal and active attitude towards goals. The influence
a leader exerts in altering moods, it makes images and expectations, and
establishing specific desires and objectives determines the direction a
business takes. The net result of this influence is to change the way people
think about what is desirable, possible and necessary (Zalezink, 1977, 71.)
There is very effective view which is, Leadership entails the creation of
vision about a desired future state which seeks to enmesh all members of
an organization in its net. As stated earlier by Flapper, Fortunie and
Stoop (1996.27), Performance management systems ensure that, all noses are pointing in the same direction." If the direction is undecided, the
performance management system is rendered useless as it will merely
monitor the disjointed daily activities of the employees and not the performance of an organization as a whole.
Therefore it is very clear on front of me; the success of implementing an
employee performance management system depends upon there being
consensus among the leadership as to the direction of the institution.
What is the right direction for the implementation of performance management system?
An effective performance management process sets the foundation for rewarding excellence:
By linking individual employee work efforts with the organization's mission and objectives, the employee and the organization understand how
that job contributes to the organization.
By focusing attention on setting clear performance expectations it could
be results, actions and behaviours, it helps the employee know what needs
to be done successful on the job.
Through the use of objectives, standards, performance dimensions and
other measures, it focuses effort. This help the department get done what
needs to be done and provides a solid rational for eliminating work that is
no longer useful.
By defining job mystery and career development goals as part of the process, it makes it very clear how the current position supports employee
growth and the additional opportunities the employee needs to explore.
Through check in on time, which includes status updates, coaching and
feedback, it promotes flexibility, allowing you and employee to identify.
An annual appraisal should simply be a summary of the conversations
held between you and the employee during the entire cycle; it shifts the
36

focus away from the performance as an annual event to performance as an
ongoing process.
An effective employee performance management process while requiring
time to plan and implement, can save you and the employees time and energy. The most important it can be a very effective motivator, since it can
help you and the employees achieve the best possible performance.
7.1
Defining results
Employee performance objectives and standards are two of the most
common methods to define expected results. Both objectives and standards are most useful when it being to written down and verifiable,
Specific-objectives and standards should let employees know exactly
which actions and results they are expected to accomplish.
Objectives and standards should be measured, whenever possible and have
to be based on quantity measures such as direct counts, percentages and
ratios.
The objective or standards should be achievable, but challenging and attainable using resources available.
Individuals goals objectives and standards should be in alignment with
those of the unit and the department.
Result should be delivered within a time period that meets the department
and organization's need.
Objectives and standards identify baselines for measuring performance results. From employee performance objectives and standards, supervisors
can provide specific feedback describing the gap between expected and
actual performance.
37
SOURCES
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Adams, J. 2007. Managing People in Organization, Contemporary theory
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People Dynamics, 18(7), 24-25.
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Appraisals Be Improved, 129-139.
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KEY FACTORS IN PERFORMANCE MANAGEMENT

Employee point of view

Muhammad Saeed Mustafa

Muhammad Saeed Mustafa

Subject of Bachelors thesis