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Performance Management Case Study: Finsoc

Introduction

            Recent years have witnessed unprecedented changes as organizations of all kinds and forms integrate performance management into their strategic management efforts. The goal of such a move is to optimize the output of available human resources in an increasingly competitive market. In fact, it is often claimed that organizations that have not taken into performance management as a strategy are planning to fail, and thus underlining its significance. Simply put, performance management is crucial to success of modern organizations. It is wide-ranging and often divided into various areas to ensure effectiveness as well as to maintain focus. Finsoc, a large financial services firm in United Kingdom, is chosen as the organization under analysis.

This paper analyzes the role of line managers in performance management and performance related rewards. Recommendations for improvement in each area will also be provided.

The role of line managers in performance management

            Line managers are referenced using many names including supervisor, project leader, team leader, as well as manager. This implies that line managers are often at the first level as far as management is concerned. As managers, thus, line managers must indulge in performance management, which they utilize as a tool in helping them carryout responsibilities that are associated with human resources. A case study on Finsoc revealed that its line managers are tasked with a range of performance management activities such as induction, performance appraisal, informal mentoring or coaching, planning personnel development programs, as well as managing poor performance. At the organization, for instance, performance appraisal is solely the responsibility of line managers and this has been the case since it was introduced in mid 1990s. The organization’s policies dictate that the immediate line manager including branch managers who undertake appraisal of employees in a particular branch appraise employees. Such appraisals are often, but regular informal meetings are encouraged. In addition, staff members (typically 10-12) are appraised based on performance objectives that are set out from the moment a new member is placed under a line manager. To ensure efficiency across all groups/branches under appraisal, a moderating procedure is involved. Finsoc has established policies meant to see that the business year has performance ranking meetings, which are meant to look into ratings for fairness as well as consistency.

            Nevertheless, it is evident that line managers are increasingly involved in performance management in Finsoc. Indeed, their role in performance management implies that they bring policies to life because they ensure that those working under them meet certain objectives that are intended to drive the organization forward (Purcell and Hutchinson 2007, p 9-11). Throughout the case study, the role of line managers emerge as a set of policies as well as practices that are targeted at correcting staff behavior to ensure it remains consistent with goals of the organization. This includes a continuum of activities that include on-the-job supervision as well as guidance, informal face-to-face counseling, disciplinary procedures, and formal performance review. Performance appraisal, in particular, stood out as part of performance management in the organization and it is used as a way of appraisal as well as a guide for staff development. On the day-to-day performance management gamut, line managers were involved in supervision on the organization floor. This is crucial to performance management because deviations from the laid out goals can be fast-tracked and corrected (Rashidi 2015, p 210-214). Suffice to say, this goes a long way to ensuring that resources such as time are saved and thus benefitting the organization. As well, the different branches that are meant to undergo performance appraisal were regularly subjected to review which is crucial for overseeing conformity with requirements set out by the organization. Often, performance management as a process fails because those tasked with undertaking it lose focus and fail to align the process with organizational goals. As an example, Finsoc’s line managers regularly met to ensure that the review process in each branch meets the expected standards and thus guarantee fairness.

            At Finsoc, line managers’ critical role in performance management is also evidenced in the way they handle staff performance problems. It can be deduced that whenever a line manager feels there is an issue with staff’s performance on the job and it cannot be addressed on the floor, she or he can decide to request the staff member for an informal meeting. This is crucial to ensuring that staff’s confidence is not hurt and thus motivation (O’Reilly III and Pfeffer 2000, p 47). In fact, this can happen on the initiative of a staff member who might perceive the need to address any outstanding issues. The fact that Finsoc also has formal review as part of line manager’s role is critical to performance management. Typically, staff members were put under formal review when informal review procedures proved ineffective. Formal review as a role undertaken by line managers as part of performance management process is particularly significant and they (line managers) are required to produce a document that describing the specific areas that needed change and actions as well as time when performance would be under review once more. In essence, formal review sets out specific details including actions that are recommended to improve performance. In coaching session, formal review was discussed with staff members to ensure that they are aware of what was happening round them. Worth noting, is that with time, a staff member under formal review can come off once the performance behavior is successfully corrected. At Finsoc, for example, a line manager may note in his formal appraisal that he verbally talked to a staff member about things to begin with but there was no improvement as far as overall job performance was concerned. Subsequently, the staff member was placed under formal coaching session. Without a doubt, such a measure is designed to improve employee’s job performance and thus constitutes performance management.

            Line managers also are involved in correcting poor behavior, which may contribute towards poor job performance. Worth noting, is that one of the key responsibilities of any manager in an organization involves ensuring compliance with laid out standards. After all, management is all about keeping the available resources –including humans- with organizational goals. Nonetheless, many of informal coaching sessions are geared towards correcting staff member’s activities and keeping them line with performance goals. As well, line managers at Finsoc engaged in performance ranking meetings in which the overall appraisal process was looked into to oversee consistency. The organization intends to reap benefits of improved employee performance across the divide, and it becomes important that line managers exchange ideas that can take rankings even higher.

            However, even as Finsoc has taken steps to ensure line managers’ role contribute towards performance management, improvements can be made. This is evidenced in the fact that the case study highlighted several concerns about the entire performance management process. For instance, while the idea that line managers at various branches undertake performance appraisal is plausible, it is inevitable that some managers are more diligent than their peers. This happens almost naturally, but the organization can do more to increase line managers’ role effectiveness in performance management. It is recommended that the organization design policies that are meat to ensure that branch performance appraisal forms are made available to the office after the procedure is completed (Levy and Williams 2004, p 881-905). In addition, Finsoc should seek to ensure that reports are acted upon. Such a recommendation is meant to ensure that the process of performance management realizes its objectives. It would be pointless for some branches to have full reports on performance management whilst others fail to engage in the activity. In essence, line managers must be made to understand the significance of their role as far as performance and output of staff members is concerned. In all departments or branches, the process ought to be thorough rather than a mere process in which employees engage in. in addition, it is recommended that Finsoc includes disciplinary as part of its line managers’ role to strengthen the process of performance management. In fact, disciplinary could be made the final phase of this process to ensure that staff members give it the weight it deserves. The disciplinary phase could include various steps including written warning and imposition of sanctions on a staff member. Worth noting, is that line managers often face the prospect of uncooperative members thus limiting effectiveness in their efforts towards performance management. With disciplinary phase, line managers can penalize staff members who take lightly such procedures a coaching session and job review. Altogether, the recommendations are meant to galvanize the process of performance management as well as the role of line managers towards making it a success.

Performance related rewards

            Perhaps, this area exemplifies line managers’ role even better as far performance management is concerned. At Finsoc, the case study evidenced that performance related rewards forms a critical part of performance management and the organization has linked individual performance with a merit pay system for branch staff. In fact, staff members are awarded pay rise according to appraisal rating. Line manager control this procedure including controlling a budget that is meant to reward staff members with outstanding appraisal rating. The goal is to reward good job performance in monetary jobs, and thus acting as motivation for members to carry out their work diligently. Worth remembering, is that line managers supervise staffs as they undertake their tasks and appraise them accordingly.

            It is evident that a proper performance-based reward system is crucial to improving performance in management. In fact, the process of performance management in any given organization is heavily linked to rewards because human resources constantly need motivation. Hamukwaya and Yazdanifard (2014, p 189-194) notes that rewards matters in an organization. In addition, rewards come in different forms including salary increases, allowances, as well as promotions. Such performance related awards, within the context of performance management, can be viewed as a way of reward in which staff members are compensated on a performance basis. This implies that outstanding work is attached to proper compensation as way to make employees carry out their responsibilities diligently (Sirota et al 2005, p 64-68). Indeed, it is a widespread conclusion that human resources ought to be rewarded for them to perform outstandingly. Finsoc has a system in place to ensure that such work is rewarded through pay rise. The organization, thus, implements performance related pay in its efforts to carry out effective performance management. Like other forms of reward systems, performance related pay is based upon the premise that reward almost inevitably fosters the right behavior. Just like in Finsoc’s case, money has been identified as a potentially powerful incentive for influencing the level of effort an employee puts in on the behalf of a firm. Theorists have always held that money including pay rise can prove to be a goal by itself, and staff members can value it as a symbol of internal recognition as well as external status (Kessler and Purcell 1992, p 22). Typically, management surveys have also indicated that managers favor rewarding outstanding performers and performance related pay, as a form of performance related reward, contributes to organizational effectiveness. At their core, performance management processes are meant to improve organizational effectiveness.

            The reason behind performance related pay and other forms of reward systems is rooted in motivation theories as well as the level to which financial reward may influence people’s performance. Goal theorists, for instance, recognize that money is key to improving performance although other motivators such as anticipated outcomes also play a part (Underwood 2004, p 127). In essence, what an individual expects can act as a powerful motivator, and money is a key factor. As far as performance related pay implemented by Finsoc is concerned, the goal is to make staff members expectant in terms of pay rise. Simply put, employees are made to expect reward in the form of money all of which acts a motivating factor. It goes without saying that effort will likely be made where persons expect reward, and money has been widely recognized as a match for effort put in. Pay as is powerful motivational tool is also evidenced in the fact that employers employ it as a way to improve organizations by avoiding costs associated with high staff turnover as well as poor performance (Jennings 2002, p 32). Worth noting, is performance related pay goes a long way in ensuring staff satisfaction. Employees may easily feel that that their top-notch input is not properly recognized leading to dissatisfaction and poor performance. Thus, it becomes crucial that organizations recognize staff’s efforts and reward them accordingly.

            Expectancy theory is particularly significant in explaining in explaining performance related rewards in Finsoc’s case. Initially described in the early 1960s, the theory is based on the understanding that individuals are motivated to work when there are expectations including achievement of what is required and reward of their efforts. This understanding is deeply rooted in the proposition that persons are rational beings constantly thinking about how they will act to attract an incentive. Worth noting, is that the incentive ought to be quite attractive and if possible match the effort. The implication is that persons often think about what the reward will be even prior performing a task. Accordingly, the expectancy theory postulates that the motivational factor behind an employee’s performance is dependent on such factors as; belief in effort’s capability to lead to performance as well as belief in rewards (Boselie et al 2005, p 72). In relation to Finsoc, the theory speculates that when persons are in need of more pay and their believe is that hard work will lead to such outcomes, they will put in more effort as well as perform better to get more pay. It becomes evident that Finsoc’s performance related pay system is designed to act as a motivator for staff to put in more effort leading to increased performance. In fact, the system can be linked to managerial strategy in the organization designed to improve organizational output. Managers at all levels ought to ensure their workforce is highly motivated to realize their personal as well as organizational goals. Personal goals come from the satisfaction that is associated with achievement. In essence, human resources need to feel that their efforts will not go down the drain and thus managers are needed to align the personal goals with organizational ones. Motivating an individual to achieve her or his personal goals ultimately, as the theory has implied, leads to achievement of organizational goals.

            Employees are known to strongly commit to their work for both intrinsic and extrinsic rewards. Widely, this commitment is perceived to be their positive engagement in work and thus realizing organizational objectives. Research has evidenced that extrinsic incentives such as money rewards are a motivating factor leading to improved performance. In fact, Hamukwaya and Yazdanifard (2014, p 189-194) notes that tangible extrinsic rewards are increasingly needed to encourage innovative behavior, which may help the organization in the end. Intrinsic rewards, on the other hand, are needed with an emphasis on recognition as well as the comprehensive growth of human resources, which have a telling influence on performance. The implication is that staff has to feel that they benefit even as they seek to make an organization realize its goals. Nevertheless, it seems that organizations need to encourage performance through explicitly evaluating and rewarding outstanding work. The evaluation part is crucial to performance management as it ensures that staff members are kept on their toes as far as carrying out responsibilities is concerned. In absence of appraisal, employees as well as the organization would not be in a position to tell human resource’s contribution towards realization of objectives. The fact remains that an engaged workforce and performance are complementary for improving organizational success. Research has also identified that hiring of a better workforce in terms of skills and knowledge makes everyone work harder and efficiently, and thus improving the overall excellence. The indication is that a better wages will attract qualified as well as competent and productive workforce that identifies the organization’s capacity to realize its goals. It can be said that organizations ought to recognize as well as reward outstanding staff members because the reality is that talented employees matter most in efforts to realize organizational goals. The focus is to retain the talented and pivotal workforce to preserve institutional competitive edge.

            Finsoc, however, can improve its performance reward systems to ensure the workforce is even more motivated. It is recommended that the organization increases funds meant to reward good work. Literature review has pointed out that monetary reward is particularly attractive and increasing it could lead to improved work performance and thus realization of organizational goals. Performance management has to do as much as it can to oversee that work performance is improved. Yet in Finsoc’s case, reward system has rarely ventured out of rewarding employee’s cost of living. In fact, pay increases are only attached to cost of living irrespective of work performance rating. This may not act as enough motivator, and Finsoc can do more to ensure a highly motivated workforce.

Conclusion

            In a conclusion, it is beyond doubt that line managers play a crucial role in performance management process. The success of this process is by far and large linked to skills and knowledge possessed by line managers because they are at the organization floor supervising and well as devising measures to enhance work performance. In addition, performance related reward is a critical component in performance management because it acts a motivational factor needed to foster performance. Simply put, performance related reward systems including performance related pay are the driving force behind organizational excellence. Worth noting, is that staff members are increasingly seeking satisfaction even as they help an organization realize its goals. It follows that organizations need to develop an increasingly satisfied workforce to realize their goals. As evidenced in Finsoc’s case, the enforcement of a performance related system need to be accompanied by proper measures of evaluation. This way, the process of performance management is almost guaranteed to realize its benefits.