From the point of view of a large number of companies the concept of performance managemet is the same as performance evaluation, so that the performance management system becomes a larger concept that takes into account a series of processes, attitudes and the independent components or a concrete strategy concerning performance improvement.
Performance management is a method of obtaining greater individual and organizational results by understanding and by leading performance, especially from the point of view of the established objectives and standards.
Performance management consists in an systematic approach of the human resources management and of the performance evaluation by using the objectives, performances, appreciations and feed-back as means for motivating employees in order to understand and maximize the usege of their potential. One important aspect is the method used to underline the negative aspects from an employees performance, at the same time discussing about a way of improvement. This means that performance management implies the establishment of an agreement upon the objectives and needs for improvement, upon the performances and their need for constant evaluation, as well as upon the support that is offered through counseling.
Performance management takes into consideration all the formal methods and techniques used by the organization and its managers in order to improve the individual and organizational efficiency and effectiveness. In the case of a corresponding performance management system the employees are aware of their priorities, of the current actions that need to be taken, their objectives, as well as how they have to contribute to the performance of the organization. As a result, performance evaluation has key role and represents one of the most important elements or base component of the performance management system, the objectives of the organization becoming individual objectives.
The practice of the management proves that performance evaluation was and still is one of the weakest components from the human resources management systems.
The performance evaluation approach as a component of the performance management system implies we take into account some potential problems:
‘ The need for creating a performance culture in order to prevent the risk of encouraging individual performance against organizational performance;
‘ Involving the high level managers in the evaluation process in order to satisfy individual needs as well as organizational needs, so that they become more suitable to local requirements, in general, or especially to lower levels even more taking into consideration the fact that some high level managers do not treat appropriately the performance evaluation, influencing others to do the same;
‘ The influence of performance management upon its evaluation role by the proper operation of the feed-back, meaning that within performance management the organizations strategic goals and their implication at an individual level can be influenced and changed.
The problem regarding performance evaluation involves practical considerations referring to the way in which the evaluation must be carried on. Practical and philosophical considerations regarding the performance evaluation must be treated in reciprocal way, as any disfunctionality of the evaluation process influences in a negative way the achievement of the activity`s main objectives.
Performance evaluation is a justified activity, always present and extremely important, that has multiple individual and organizational implications. As a result, when used properly, performance evaluation can be benefic for organization as well as for its employees.
At individual level, performance evaluation represents an important psychological component due to the evaluation process in which the employee has to report to himself as well as to the other workers in the company. Simultaneously, this load of emotions resulted from the evaluation process may significantly affect the behavior of the employees towards the company and towards themselves.
Regardless of the evaluation methods and techniques that are used and regardless of how this managerial activity is organized, the support of the employees is required, as well as the full implication of the managers, regardless of their position in the hierarchy. Some experts in this field consider that performance evaluation is one of the inevitable ”diseases” of the current managerial practices.
It must be taken into consideration the fact that performance evaluation has a negative influence due to the misperceptions regarding the fact that performance variations are the caused by individual employees, while reality process that these performance variations are a result of the evaluation systems created and controlled by the managers.
In this setting, the reasons why some managers do not express their appreciation when they have to are also important. For instance:
‘ The organizational tradition or environment does not encourage expressing appraisals regarding achievements;
‘ The managers do not spend enough time between their subordinates in order to observe their important achievements;
‘ Some managers do not deem it necessary to reward the extra effort;
‘ The employees are doing only their job without standing up in the eye of their superiors;
‘ Some managers consider that severity is more efficient that appraisal because appraisals do not stimulate those that receive them.
Performance appraisal is a process through which it is decided how well a working activity is performed by the employees of a company or of a certain work place. The information provided by the professional performance evaluation is used for fixing wages, obtaining an adequate distribution on the post, organizing trainings for improvement, as well as implementing a wage system according to merit.
Promotions, compensations and penalties are the base performance appraisals for taking all the decision regarding personnel.
Performance evaluation represents the base component of the employment. As we accept the fact that in general the employee will appreciate the level of his compensation, we also have to accept the fact that the employer will evaluate the performance of the employee. The evaluation can be used in order to decide upon possible promotions or layoffs, this leading to the necessity of performance evaluation as a motivational and improvement process for the employees of the organization.
The modern trend regarding the professional evaluations or appraisals emphasize more and more the idea that the interpretation of the result should be offered as a positive feed-back. It has to be considered more like an incentive for a job well done and not a penalty. Performance appraisal is seen at this moment as process of social communication, of decision taking and not as one of measuring.
The first thing we need to do in order to evaluate the human potential of a working force is to know each employee through scientific means and make an objective estimation about his competencies.
From an employee`s point of view, being aware of one`s professional performance and potential represents an understanding of how he fulfills his work objectives, how efficient he is, what he expects from the company in which he works and how he fulfills its needs.
The impact of professional performance evaluation on those that make its subject can be positive as well as negative.
When the results are communicated with the purpose to promote, increase the wage, offering settlements, they will be received with fear by those that underestimate their qualities, those that have a low productivity or persons that consider the appraisal to be unfair.
If the evaluation results are weak they report the organizational deficiencies. Personnel evaluation is an action that is useful for the company, considered necessary by everyone, but that is not agreed by neither the evaluator or evaluated.
Although it is necessary, evaluation is a potential threat for the employees, representing a difficult enough activity that is sometimes hated, the more so as the concerns in this domain are sources of complaint, because they are associated with the personnel reduction and some employees fear that the evaluations will be used in an abusive manner as a threat, leading to a lack of security. Likewise, the evaluators can confront with negative reactions or disproof of their decisions.
Although the employee appreciation systems have been present in the past, concerns regarding this domain have just appeared due to the fact that performance evaluation needs to obtain a high level of importance so that it can become a component of performance management.
The efficiency of a professional appreciation system depends on a wide variety of factors such as:
‘ The preparation of the evaluation session;
‘ The seriousness through which the evaluation scales have been designed;
‘ The preparation of the evaluators for the evaluation;
‘ The aim of the evaluation;
Within a company in which the aim of the periodical evaluations is a method used in order to reduce the number of employees the evaluation process takes an unwanted turn by increasing the work dissatisfaction, the evaluation leading to a decrease in the employee performance.
In the case of companies in which the aim of the evaluation is to motivate the employees to increase their performance the result can be seen as an increase in competitiveness and productivity.
The success or failure of a performance evaluation system depends on the way the company management understands the role of the employee in the improvement and survival of the organization.
Performance management represents one of the most important processes that, when is carried out in an efficient way, helps employees understand that their contributions are observed and accepted. Performance management is an open-ended process of communication between an employee and a supervisor that unfolds during the year, reinforcing the accomplishment of the strategic objectives of the company. Clarifying expectations, identifying goals, setting objectives, providing feedback and evaluating results are comprised by the communication process.
Analysing performance and offering feedback is not a secluded event, concentrated on a performance evaluation, but a continuous process that is carried on throughout the year. The process is a cycle, the discussions differing from year to year because of the changing objectives. This cycle is formed of planning, checking-in and assessment.
2.5. Correlations/implications on the effectiveness of the company
The success of the organization depends in the first place on its ability to frame the company policy, strategy and tactics that can assure the company can adapt to the requirements of the economic, technical, social, ecological and political environment in which it operates.
Adopting a strategy is not enough in order to assure the success of the organization. In order to do this the company needs to develop an organizational and training system that is able to assure the employee participation in the achievement of objectives. The organization needs to heavily rely on its employees and in order to so they have to be prepared from an emotional and intellectual point of view. The success of the organization highly depends on whether or not it manages to motivate the employees into making the necessary effort in order to achieve the objectives, stimulate the creativity and innovation part of each employee and develop a strong bond between the employees and the company.
The evolution of the managerial thinking determined the displacement of the focus from the material factor, which held the main position on the beginning of the scientific management, to the human resources. The conclusion reached was that within the organization the workers are more than a simple component of the production cycle and the administration of the human resources exceeds the rigid principles of the company assets administration.
Today`s companies confront themselves with the need to increase the labor in order to produce more, the available possibilities such as increasing investment flow and improving the human resources performance being limited. As a result it is only natural for them to frequently direct their attention towards the human resources as a source of increasing the obtained surplus.
In these conditions, the employees represent a common source, a key resource and a vital resource of all companies, that ensure their survival, development and competitive success. As J. Pfeffer and E. Lawler were saying: ‘The competitive advantage of an organization depends more and more on its employees’.
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