CC BY
26ECONOMIC SCIENCES
PERFORMANCE MANAGEMENT: THE ESSENCE, REWARD SYSTEM, MOTIVATION, AND EMPLOYEE ENGAGEMENT
Cherlenok Y.
Suleyman Demirel University Almaty
DOI: 10.5281/zenodo.7523802
ABSTRACT
Object. As one of the tools for achieving organizational success, today's existing organizations all have their own performance management systems. These ideas have not yet achieved their full potential because workers view them with skepticism and prioritize expertise and talent over other factors in determining a company's success. This article addresses features of organizational effectiveness, its core, and its structure. The right mindset and expert application of this strategy at work open up numerous chances and boost an organization's potential, enhancing its ability to compete in today's global economic environment.
Method. This research paper used Social Cognitive theory and an instrumental case study method
Results. The organization has become one of the key factors in achieving the most crucial organizational efficiency after adopting numerous methods and tools to increase management productivity and enhance employee and overall organizational efficiency.
Conclusion. Back in the twenties, performance management was all about command and rigorous control, not to mention mechanical thinking that tackled genuine problems and tasks without striving for improvement and flexibility for advancement. Currently, performance management has taken on a completely new shape as a result of several modifications and new techniques of human management.
Keywords: Performance management system, employee engagement model, social cognitive theory, human resource, productivity.
Introduction
From the point of view of natural sciences, such as mathematics or physics, performance management is interpreted as a more free science or in some cases an art. But the definition of the term itself and the main purpose are two different things because its ultimate goal is to achieve the goals and principles of the organization. Performance management does not always relate to a group of people, that is, at the individual level, it has its role for the company. Individual efficiency, considered the first stage of a company's success, is a key element in growing and taking on the creation of collective productivity. This is achieved through performance management, which has become a discipline and is used in the management and control of employees and their productivity. Although this concept of management has existed for a long time, performance management is a relatively recent and young phenomenon, the study of which has not yet been brought to its maximum (Cappelli, 2016). This is expressed in some flaws in the structure and principle of its operation. Also, the focus on efficiency management in favor of employee incentives and remuneration has called into question the effectiveness of employee training and qualification. To create a stronger management formula, it is necessary to find a balance between a systematic approach and team control. It also implies not only the management of efficiency but also its measurement, which lies on the shoulders of the organization's leaders (Joo, 2011).
Performance management is crucial to organizational effectiveness because it can effectively manage the organization's people resources. Any business has human capital, and how well it manages that capital determines how well it can compete in a given market.
While performance management processes appear to be less appealing to employees, for managers and employees, a performance management system is a satisfying way to work with other employees. The profitability of an organization is the main activity by which their potential is determined, and the productivity of employees directly affects these indicators, so many organizations, faced with problems in the field of management, decided to revise the efficiency management system for further development of the organization. Employee engagement obviously has an impact on how productive employees are. Staff engagement also plays a significant part in enhancing efficiency management inside the firm, paying close attention to enhancing employee cohesion with the ultimate goal of increasing employee productivity. In order to support and enhance one another and help the organization achieve its goals, various personnel management approaches should be coordinated.
Many people criticize performance management by contrasting it with the reward system as two components that do not work together harmoniously. There were several solutions put out to improve employee remuneration and performance management systems. Each individual and the accomplishments of the company should be connected by performance management. One of the most crucial components of good management is the distribution of salaries based on performance evaluation, annual bonuses, and employee incentives because it encourages employees to maximize their own productivity and realize their full potential. Also, such a system allows you to keep talented and experienced employees in the organization in check because it motivates them. Performance evaluation is an
integral part of performance management and it is crucial for managers to take this into account as part of their management system that can change the course of people's productivity. Performance evaluation without feedback, which has no consequences, has a bad effect on management since employees are less interested in improving productivity if it is not rewarded in any way.
Literature Review
In the organizational structure of performance management, organizations are divided into three types: individual, strategic and operational management. Analyses were carried out to clearly understand each of these levels by examining their origin and initial tasks. Performance management refers to the so-called administrative science, which is less inclined not to theory, but for the most part to practice. Also, the theory of constructivism, which connects everything with interaction with society, gave rise to management and efficiency management. The most popular is individual performance management. Individual performance management has been built for a long time, being introduced into organizational activities. Initially, such a concept as performance management was not a separate branch in the administration, and only individual people were engaged in evaluation and promotion, and their methods were simple (Aguinis, 2011).
Efficiency management has begun to transform through the use of large industrial, state, and military institutions. That is, the foundation of performance management was laid in constructivist theory. Over time, various methods and management methods began
to appear. The need to apply performance management came along with the fact that organizations needed to evaluate, analyze and improve performance management activities. Psychologists, personnel management managers, company development consultants, and behavioral managers were involved to cover a variety of factors (Armstrong, 2006). For example, in the USA, people were selected for the performance management manager relying on their characteristic features in order to designate him as an individual. In relation to the military, such a system was used to select officers in wartime. In the public sector, individual performance management has been used as a powerful weapon to achieve cultural and ethical change. In addition to the individual, operational management developed in parallel. It was aimed at achieving the company's goals through the management of work activities.
Almost every organization has an efficiency management system, which is expected to achieve a number of key human capital management goals. Goals frequently include motivating productivity, assisting individuals in developing their skills, creating a productive culture, determining who should be promoted, eliminating people who are not performing well, and assisting in the implementation of business strategies. There is no doubt that a performance management system that achieves these objectives can make a significant contribution to organizational efficiency; however, there is less agreement on what methods make a performance management system effective (Gruman, 2011).
Graph 1. Performance management elements
There are numerous design elements that can potentially affect the effectiveness of a performance management system, and many of them have been empirically studied to determine their impact. A significant study, for example, shows that the effectiveness of performance management increases when there is constant feedback, behavior-based measures are used, goals are set, and evaluators are hired. However, one potential
factor that determines the effectiveness of the performance management system that receives little attention is how closely the performance management system's results are associated with significant rewards (Gru-man, 2011).
The lack of attention to this influence is especially noticeable when it comes to the issue of systematically
removing employees with lower indicators from the organization using a performance management system. There are several reasons to believe that systematically linking rewards to performance management system results will make the performance management system more effective in terms of motivation, but there are also some reasons to believe that this will make the performance management system less effective in terms of development (Saks, 2011).
According to a 1965 paper based on research by G.E., Meyer, Kay, and French, when remuneration is linked to a discussion of performance, people tend to hear only part of the message about the reward system. They do not receive such valuable feedback, which would enable them to increase their productivity and develop their skills.
Individuals, on the other hand, are aware that important rewards will be derived from how well the performance review goes, so they may be especially motivated to prepare for the session and ensure that it goes well. Furthermore, when evaluations are used to determine rewards, organizations are more likely to put more pressure on managers to differentiate between the employees they are evaluating, as this is the key to rewarding individuals for their work. Currently, no discussion of a performance management system can ignore the growing popularity of forced distribution and serial ranking (Saks, 2011).
Methodology
For this essay, a social cognitive theory that demonstrates performance management at a deeper level, that is, self-efficacy management was chosen, in which each employee observes his conduct and can react autonomously in making and correcting problems that have emerged. According to this hypothesis, motivated personnel who trust in their talents boost production. In addition to the theory, a qualitative approach is used, the case study method, that is, an instrumental case study that allows you to determine the essence and reveals the factors of productivity management and employees in organizational effectiveness. It is important to emphasize the factors of employee performance management and analyze performance from the point of view of management.
Case study
One of the most important factors in the management of efficiency is the analysis and evaluation of the effectiveness of employees by the manager. This allows you to see a clear picture of how individual self-efficacy affects the productivity of the organization and creates a career ladder up, taking into account salary increases, positions, and responsibilities. Such an analysis and evaluation is called a performance appraisal. Mainly managers and managers are responsible for evaluating each employee, whether it is positive or negative. Performance appraisal usually has two types within an organization, the first is more administrative factors that are used to provide feedback to employees in their work (Buchner, 2017).
The second is to see what future developments can be applied to a certain employee. The main purpose of evaluating employee performance is which area of the company needs improvement and highlight strengths
while evaluating overall performance. Employee productivity should become more productive due to proper evaluation. Some organizations do not clearly see the positive aspects of performance evaluation and, moreover, tend to consider it as an ineffective tool in performance management. Performance evaluation seems to be a good method for administrative decisions, and in determining human behavior and management activities (McAfee, 2017). Employee behavior for managers is the main factor in productivity and the use of performance evaluation can identify this. Performance evaluation is one of the components of performance management. The other two are planning and management. The second component of productivity planning is the process of determining further tasks, achieving a new level, and the willingness of employees to follow these goals and principles of work. This component focuses on the individual level, what level the employee will reach and how he can achieve future goals. The manager's responsibility is to provide resources and create strategies to promote employee plans. In addition to individual goals, the impact of these achievements on the overall goals of the company is also assessed (Champagne, 1993). To implement management planning, it is necessary to create a relationship between departments and develop strategies. At the very initial stage of planning, a meeting between managers and employees should be organized to determine the goals and future implementation of plans. The last component of performance management is the process of achieving the daily planning results defined in the initial stage. In the process, it is essential to check the effectiveness of the employee and manager. In the event that the level of productivity is higher than the initial plan, the manager uses additional methods to maintain this level of employee efficiency. The responsibility for increasing productivity lies with the manager and the employee, and a good relationship based on trust should be built between them (McAfee, 2017).
A number of media outlets and academic institutions began to pay close attention to employee involvement in businesses (Mone, 2011). Over time, it became recognized as one of the variables in attaining organizational success, and with the help of involvement, the level of competitiveness of the company could be determined. New issues, new systems, and new technology developed to improve human life and work have revealed that traditional techniques of managing productivity and employees are obsolete. Employee engagement focuses on the relationship between employees and their interdependence. This is used as a primer for performance management. Employee involvement in the modern sense is not a common workspace or a common set of company goals, but rather mutual understanding, the resolution of personal difficulties amongst them, a shared desire to achieve the company's goals, and a friendly team (Eisinger, 2011).
The association between performance management and employee engagement is shown in table 1. It denotes the various sorts of productivity management efforts associated with employee engagement. One of them is to establish future goals and strategies to improve the organization's efficiency and development.
Feedback is also critical for improving engagement and staff management. Professional traits and skills development have a positive impact on performance management. Employee performance evaluation is one of the components that enable managers to understand how far employees have advanced and how effective they are. Employee engagement is also an essential factor in establishing organizational effectiveness. Top executives are continuously seeking methods to include
staff in the workflow, which leads to increased productivity. Initially, there was no apparent association between employee engagement and organizational effectiveness because only individual employee engagement was evaluated. Many employee engagement studies have been postponed to include the influence on productivity and organizational relationships (Guggenheim, 2011).
Table 1.
Performance organizational capabilities, leadership behaviors, and employee involvement are all part of
the conceptual framework.
Performance management activity Manager behaviors associated with both performance management and driving
employee engagement
Setting performance and development goals
Providing ongoing feedback and recognition Managing employee development
> Conducting mid-year and year-end appraisals
> Building a climate of trim and empowerment with employees
> Jointly setting goals
> Helping employees understand how their work supports the overall company strategy and direction
> Providing a satisfactory amount of recognition
> Providing feedback that helps improve performance
> Providing sufficient opportunities for training
> Supporting career development efforts
> Conducting career-planning discussions
> Conducting an effective performance appraisal discussion
> Encouragement to he innovative and creative
> Encouragement to improve work processes and productivity
> Valuing ideas and opinions
> Fail and respectful treatment
• Listening to and acting on needs and concerns
> Being trustworthy
> Providing the resources and decision-making authority to perform effectively
> Providing control over the quality of work
The largest businesses of the industrial era divided their managerial functions into supply, production, sales, service, marketing, planning, and other areas. Such a method of conducting business is no longer helpful in today's climate of fierce competition, political unrest, greater risk, and, first and foremost, high levels of information technology adoption throughout all processes (Brudan, 2010). Due to market saturation and businesses' capacity to satisfy it, both the standards for the quality of goods and services have changed. During the industrial society, the company's employees were clearly divided into two divisions. The first category consists of senior and middle-level administrators who dealt with customers and suppliers, solved operational tasks, developed new products and technological innovations, and relied on their intelligence and knowledge. Employees who directly perform routine technological tasks that do not require great mental abilities make up the second group. The level of physical operations and the demand for intellectual labor have changed due to the modern automation of production and difficulties in management (Brudan, 2010).
It should be noted that the management of personnel procedures is a much more complex task than the management of production technologies, due to the complexity of the control element itself and the rapid change of tasks performed manually. Acquiring new
skills and competencies will take much longer than acquiring new material resources. In addition, we should not lose sight of the social aspect of this process, which is associated with balancing the demand for highly motivated and qualified employees with the need to retain essential employees who are loyal to the company and have extensive work experience.
Conclusion
In conclusion, the history of performance management back in the twenties was only command and strict control, not to mention mechanical thinking that solved real problems and tasks without striving for development and flexibility for promotion. The growing demand for educated workers, competent employees, and competitive organizations has prompted the transition to a more modern approach to personnel management. Managers used a command and control strategy to set goals for staff and track their progress toward achieving these goals (Seddon, 2008). Financial results and performance indicators, which were used to assess whether employees performed their duties in accordance with the instructions of managers, were the main factors of performance management. The atmosphere we live in now is really different. The performance management system, which should solve a number of important human capital management tasks, is present in almost
every company. Motivating productivity, helping people develop their abilities, developing a production culture, choosing who should be promoted, getting rid of laggards, and supporting the implementation of corporate strategies are all common goals.
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