Peer response 1
Defining Performance Management and its Importance
According to Agunis (2019), performance management (PM) is an ongoing process that seeks to identify, develop, and measure performance objectives in alignment with the goals of the company for which they work. It is important to take note that performance management is comprised of two elements, an ongoing process and the alignment therein of strategic goals. Performance management systems are important to an organization’s success due to numerous factors including but not limited to enhanced self-insight and development, increased individual self-esteem, greater motivation amongst employees, and a decline in employee misconduct.
Performance Management System in Private Sector
Lee (2020) examined the performance management systems within two large public sector organizations in Singapore, specifically SONS and SVC. FLM (Front Line Managers) used a combination of formal and informal PM. Senior managers and executives had a perceived notion of what the formal PM system should be, whereas FLMs often used a combination of the formally set tactics as well as their own creation of informal tactics. There ended up being a difference in what executives intended the PM to be and what the employees ended up perceiving it to be. Employees who were often underperforming received informal PM via no written paper trail of behaviors. Contrary, high-performing employees were often documented formally (Lee, 2020).
Activity-Based Management
According to Ponisciakov (2020), Activity-Based-Management or ABM, seeks to highlight areas where a business is losing money so that those activities can be addressed or removed from practice. ABM looks at the cost of employees, equipment, facilities, overhead, and other common factors associated with costs. For example, ABM can be sued to evaluate the profitability of a new product by analyzing production costs, sales, and warranty values ahead of product launch.
Agunis, H. (2019). (4th ed.). Upper Saddle River, NJ: Pearson. ISBN: 9780132556385
Lee, Q. Y. (2020). Frontline managers’ implementation of the formal and informal performance management systems. Personnel Review, ahead-of-print.
Ponisciakova, O. (2020). Innovative Management Perspective: Abm – Activity Based Management. Varazdin Development and Entrepreneurship Agency (VADEA).
Peer response 2
Performance Management is defined as a management tool that helps managers evaluate and monitor employees’ work. As Agunis (2019) explained, it is a continuous process of performance identification, measurement, and evaluation to ensure it aligns with the strategic goals of the organization. There are 6 purposes of Performance Management that include: Strategic purpose (help achieve strategic goals), Administrative purpose (making an administrative decision about employees), Informational purpose (act as a communication device), Developmental purpose (enable feedback), Organizational Maintenance purpose (provide info for workforce planning) and Documentation purpose (collect information). The goal of PM is to create a workplace where employees can perform to the best of their abilities and produce high-quality work that is tied to strategic objectives. There are many advantages of implementing a PM system. They include significant contributions to employees (self-insight, increase of self-esteem, motivation, engagement) managers ( insight into employees, ways to differentiate between good and bad performers, making employees), and company ( fair administrative actions, clear goals). According to Agunis (2019), companies with a formal and systematic PM process are 51% more likely to have better financial outcomes.
The company I work for just implement a formal Performance Management process and system. We have been using a very informal process that more than half of the managers did not even utilize and the managers that did were very subjective in terms of employee evaluations. It was not a very effective tool to understand and monitor employees' performance. According to Stone (2009), PM systems miss the mark if they are not able to address the ineffective habits of employees. This was exactly what was happening, all employees were either not rated or given excellent reviews. This is the first year where we have a formal system that helps employees and managers have a better view and understanding of goals, career processes, expectations, and performance. This however is being met with resistance from the manager which we are working through. My opinion is that we did not have a culture to support it and did not prepare the organization for this rollout. I do believe that this new process, will enable managers to view their employees in the context of the broader workforce (as part of the process we are conducting calibration sessions). The new PM process includes Goal setting including developmental goals ( all goals heave targets and measurements) appraisal forms, calibration sessions, quarterly check-ins with employees, employee self-assessment, and management assessment that includes rating. The rating is tied to the incentive plan by enabling managers to adjust incentive payout based on employee rating.
Activity-Based Management (ABM) is about effectively managing costs where managers identify which activities consume resources with the goal of reducing cost. Managers need to identify what activities are required to finish a product, figure out if those activities are value or non-value added, and strive to minimize or eliminate the non-value added activities. Phan et all (2014) concluded that ABM will not reduce costs, but help managers understand costs to know what to correct. The greater accuracy of ABM information in an early stage and management decision making, the greater the results.
Agunis, H. (2019). Performance management (4th ed.). Upper Saddle River, NJ: Pearson. ISBN: 9780132556385
Phan, T. N., Baird, K., & Blair, B. (2014). The use and success of activity-based management practices at different organizational life cycle stages. International Journal of Production Research, 52(3), 787–803.
Stone, R. D. (2009). Achieving Results with a Performance-Centered Design Framework. Performance Improvement, 48(5), 37–44