Human Resources Management Essay
The latest Hay Group research dedicated to the issues of performance management and conducted in more than 30 countries worldwide over 1660 senior managers of large companies responsible for making critical decisions, revealed serious discrepancy between the goals set by companies and their actual capabilities (Nielsen & Ejler, 2008). Generally, managers of organizations seeking to achieve high growth rates in 2011 should apply a different approach to performance management system in their companies. This is also related to the company under consideration, the performance management system, together with its strong and weak sides, is discussed below.
Performance management system analysis
On a whole, the results of the company for the current year show high level of effectiveness. Particular and overall indictors of profitability in the current year are high enough; moreover, the level of economic efficiency as compared with the previous year has significantly increased. For instance, according to the latest reports, sales volume has increased by 70%, and taking into account the trends of the developing market, this allows building sufficiently optimistic forecasts for the future. The effectiveness of the company has risen by 21%, which is indicating a significant increase in company’s potential. Profitability of production has increased by 32%, which demonstrates the growing demand for goods manufactured, and, therefore, it is advisable to continue making additional investments in promotion and expansion of the enterprise in certain directions. However, the efficiency index of commodity exchange has decreased compared to previous year at 15%, which is due to the increase of the share of costs associated with commodity circulation.
The strength of the organization is also the fact that originally its activities involved a number of management factors that are crucial for the market and differentiate the company from others, such as rapid lead times and maximum coverage of the model series with their price differentiation, as well as promoting leadership perspective inside the sales department.
At the same time, the negative aspect in the management system is that other values of the company than production, i.e. its employees, are, unfortunately, not paid enough attention, which is reflected in the current authoritarian management style, in which little space is given to the delegation of authorities, intangible incentives, and motivation system in general, etc. This fact does not promote the unity of the team and negatively affects the microclimate of the company. Generally, the mission of the company does not fully contribute to the identification of the personnel with the organization.
In addition, special practical interest is presented by the situation that when it comes to the periodic evaluation of employees’ effectiveness, many line managers treat the subordinates through “leveling”, motivating this decision by good intentions not to complicate relations in the team and not to provoke conflicts.
It’s not just that they do not want to think about the fact that each person is unique in its own way and that everybody cannot work “good” in equal extent. But the question is whether it is possible to talk about development and improving the efficiency, if a manager cannot distinguish good work from bad one, as well as good work from excellent. This is a problem of quality management: fair assessment of the personnel should pose realistic goals in front of the employees, it motivates them, and thus, it works to improve the overall efficiency of a certain division, and then, the company as a whole (Nielsen & Ejler, 2008).
Thus, despite the successful entry and conquest of stable positions in the market by the company, the analysis of its performance management system in recent years revealed the following:
1) The leadership of the company lacks clear vision of company’s future state and its prospects in the long term;
2) There is no clear guidance presented in the form of transitional goals at each stage, and company’s activity is mainly reduced to the low rank retention of existing competitive advantages, such as the saturation of commodity stocks and reducing lead time;
3) There is no understanding of the need for introducing the division of commodity stocks management, while its absence is reducing the profitability, which is dictated by the growth in sales and the inability of existing personnel to monitor the dynamics of trade;
4) Company’s management has understanding of the key strategic issues, which could further not only hamper the company’s activity in the home sales market, but also become the cause of displacement from this market.
On average, the company aims to achieve growth of 5,4% in 2012, and as the top-management is still uncertain about the prospects of mergers and acquisitions, they tie the expected increase in productivity with the increasing the effectiveness of employees. Meanwhile, it is quite clear that the existing staff is overloaded, and demanding the increase of labor productivity from the overloaded employees actually means to expose the company to additional risks, in particular reduction of motivation and increase of employee turnover (Boudreau & Ramstad, 2006). Though the leadership of the company understands the role the performance management system plays in solving this problem, it does not take steps to make connection between the methods of performance management, company’s development strategy and corporate culture (Hou et al., 2003).
Recommendations for improving company’s performance management system
Eliminating many of the above mentioned problems can be possible through developing a generalized strategic plan where the priority should be given to (Daniels & Daniels, 2004; Aguinis, 2008):
– In the short terms, to addressing the most pressing problems, one of which is rationalization of commodity stock management;
– In the long terms, to the mechanism of forming benefits of high rank that can hardly be replicated by competitors.
This plan should contain a set of interim goals and priorities and be a tool of decision-making guidance on investment funds. In order to build a strategic plan and make the further choice of an effective strategy of company’s development, the following procedures should first be held (Afiouni, 2007; Aguinis, 2008):
1) Detailed study of industry factors and driving forces in order to understand those of them which could be applied by the company in the first place, and those of them which can become the main critical success factors and the reproduction of which should be pursued at any cost;
2) Assessment of market position of the main competitors and their models of performance management for the choice of a competitive strategy in each strategic group.
Concrete solutions of performance management system problems could also be presented by the formation of clear job descriptions, which would clearly define the sphere of competence of employees and their horizon of responsibility, as well as by the improvement of intangible methods of staff motivation, introduction of training and qualifying courses for staff, implementation of corporate principles and values, improvement of the organizational culture and employee loyalty, in particular, at the expense of special corporate events.
Conclusion
It is crucial to focus top-management’s attention to the fact that performance management of the company is not a single-time event, but a process, everyday work of line and HR managers (Hou et al., 2003). It often turns out that spending huge amounts of funds for implementing performance management system does not give the expected result to the companies. The only one conclusion is while managers are not properly applying the tools and methods for managing employees, there will be no apparent shift in enhancing the effectiveness of the organization.
Therefore, before taking their path of performance management system models, top managers of each company need to answer the questions: Are we willing to invest in efficiency? Are line managers ready to cultivate striving for efficiency in their divisions? Are the employees ready to be constantly involved in the race for efficiency? Is the whole team ready to join the fight for efficiency, and literally – with the global entropy?
Generally, the growth performance effectiveness of each individual employee significantly increases the efficiency of company’s divisions and company as a whole (Aguinis, 2008). As soon as the number of highly effective employees reaches a critical point, there is a “quantum leap” of the efficiency throughout the company. The main task of managers is to possibly hasten the moment of transition from quantity to quality by rational decisions and adequate strategic plan and goals.
