Performance Management: Employee and Labor Relations

Contrary to popular belief, improved performance by employees in a particular organization is not always linked to incentives; in today's dynamic business environment, it is crucial for human resource managers to balance the needs of individuals with those of the organization. One critical component that leads to good individual as well as organizational performance is the application of an effective performance management process. In fact, companies that invest in good performance management practices generally perform better than those that do not measure and manage their performance (Leeuw and Berg, 2010). According to Cardy and Leonard (2011), performance management can be defined as the integrated and strategic approach used by human resource managers to deliver successful results by improving the performance of all the individuals in the organization. It ensures that the goals of an organization are achieved in an efficient and effective manner, while at the same time maintaining good relations between the management team and the employees.

From the scenario, Hudson College, a private liberal arts institution, seems to be a favorite in the community. This can be attributed to its low faculty to student ratio, its proximity to New York City, and its strong partnership with the vivacious Beacon community (Riccio, 2014). With more than 700 employees, Hudson's endowment is at its peak, having reached $350 million. However, despite being named one of the best organizations to work for in the city of New York, the Director of Organizational Management, Elizabeth Guthry, has noticed that the employees are highly unmotivated, which is starting to affect their performance. To better understand the cause for the employee's low morale, this text presents the performance management measures that are applied by Hudson College, identifies the problems, and recommends the most effective performance management practice that should be applied.

The problem

The employees at Hudson College have lost faith in the management team of the institution. When Guthry suggests that the employees should talk to their supervisors about the challenges they faced throughout the year and suggest improvements, they outrightly decline and assert that it is of no use as it never amount to any changes (Riccio, 2014). Moreover, the employees do not communicate openly because they wait for meetings to end for them to voice their personal opinions to Guthry; and they feel that past opinions have often been ignored.

The major issue that needs to be explored by the Human Resource managers, however, is the negative attitude the employees have on the performance management process. The supervisors see the process as a 'necessary evil' with no substantial benefits, and this attitude trickles down to the employees, who are not willing to cooperate with the HR managers claiming that they still get their pay increases regardless of effort (Riccio, 2014). Although this is true, there arises a problem because there are a lot of uncertainties this year and the employees are not guaranteed a salary increase. Therefore, HR has needs to come up with an effective performance practice that will be appreciated by both the leadership team and the employees, which will improve their performance and eliminate their dependence on the payment increase.

Alternative solutions

Hudson College can solve the problem it two ways. Since the employees opine that they can do the bare minimum and still get the same pay rise as everyone else, HR can stick to the pay-for-performance systems and withdraw benefits and incentives for those who perform poorly. The employees may be motivated to work harder if they fear losing their much cherished pay increase.

The second option the HR may choose is to develop the employees' capabilities in a way that aligns the performance improvement initiatives with the goals of the organization. For this to be done, the performance management process has to be redesigned, for the problems to be identified and solved. This option targets the entire chain of command and it will encourage personal as well as organizational growth.

The solution

According to Stone (2009), the major reason why performance management processes fail is because they are poorly designed, in that the goals of the improvement initiatives are not aligned with those of the organization. Leeuw and Berg (2010) also state that there is a link between performance management and performance improvement particularly because performance management targets the behavior of individuals, in this case the employees, which then facilitates achievement of the goals of organizations.

Rather than taking an authoritative stance and withdrawing incentives offered to employees; the best solution would be to develop their capabilities in line with the goals of Hudson College. This year, the college plans to foster diversity and inclusion, initiate projects that involve construction and renovation of academic and residential facilities and increase the school's affinity among the alumni (Riccio, 2014). Therefore, it will be more beneficial for the institution to improve the skills of the employees in a way that will lead to the achievement of these goals.

Stone (2009) claims that ineffective habits are the key reasons that employees do not perform as well as they should. One such habit HR needs to change is the employees' negative attitudes towards performance management. Performance appraisal interviews should first be conducted, where each employee will be commended for their contribution to the institution, after which poor performance will be addressed. The employees and their supervisors will then be taught the importance of performance management practices, their contribution to the process, and how it translates to better performance by the entire organization. As Leew and Berg (2010) state, involving the employees in the process makes it a companywide project, which facilitates the change process.

Having gotten the top and bottom hierarchy to change their attitude towards performance management, and received their input, then next step is to develop their skills and capabilities. Through the use of workshops, team building activities, conferences and training programs, the communication, and problem solving skills of the employees should be improved. This will greatly contribute to the institution's goal of increasing interactions between the school and the alumni. In line with the goal of diversity and inclusion, the employees should also attend lectures and conferences that provide insight on diversity in the workplace. Workshops can add to their professional qualifications, and they will contribute significantly to the selected construction and renovation projects.

In agreement with Stone (2009) this option will be effective because it does not offer a single solution to all of the organizations problems; as would be evident when withdrawing the pay increase. Furthermore, while the autocratic approach might make the employees more frustrated, this option will make them appreciate their contribution to the organization and hence work harder. The option also targets both personal and organizational goals because the employees gain more skills, which they will be more willing to use to ensure Hudson College achieves all the goals set for the year.