Performance Management Systems in Australia

Nankervis, R.A., & Compton, R.L. (2006) 'Performance management: theory practice?' Asia Pacific Journal Human Resources, 44 (1), pp. 83 -- 101. Evaluate findings authors design, implementation, effectiveness performance management systems earlier studies conducted.

Performance management systems

Performance management systems have been defended as being advantageous to both employees and businesses alike by providing workers with feedback about how to improve their output. They have been criticized, however, because the use of performance reviews is said to be implicated in a focus on "short-term performance, annihilating long-term planning, building fear, demolishing teamwork and nourishing rivalry and politics" (Nankervis & Compton 2006: 84). However, flatter organizations and increased self-management have caused many managers to defend such reviews as necessities, given the lack of everyday direction many workers experience in their day-to-day existence (Nankervis & Compton 2006: 84-85).

According to Nankervis & Compton in their study of 992 Australian companies, performance reviews are used largely to review past employee performance and assess future training needs and in some instances in a strategic fashion to better leverage the human assets of the organization. Overall, they found that while performance reviews are more common, the format is not necessarily used to its maximum advantage and is often inconsistently applied. "The two major types of performance management systems in this study are 'performance management' (64%) and 'hybrid' (21%), both of which were combinations (or customized forms) of more traditional appraisal techniques" (Nankervis & Compton 2006: 88).

For a performance review to be effective it must not merely provide input to the individual employee. It must also be strongly linked to organizational goals and strategy. Managers who used the Balanced Scorecard (BSC) seemed more confident about maximizing the use of performance reviews to achieve this objective (Nankervis & Compton 2006: 90). Of those who used general performance reviews, while most companies had expressed visions, missions, and values "fewer use critical success factors" although BSC users agreed that "their key performance measures are linked with a conscious plan, consistent with organisational missions, and include 'well-balanced' measures reflective of the key BSC categories" (Nankervis & Compton 2006: 88). But even then the use of the BSC was "not quite as effective in cascading these [values] to all management levels" (Nankervis & Compton 2006: 88).

The fact that organizations have vision and mission statements is not entirely surprising: however, merely expressing a vision in words does not necessarily mean that it is communicated to all members of the organization in a meaningful fashion throughout the appraisal process. Job descriptions are often inconsistently linked to organizational values. Once again, this means that performance reviews tend to be overly individualistic and do not really give employees a sense of how their job fits into the larger organization. Since salary reviews and discussions of promotional possibilities are often separated from the performance review process, this further lessens the degree of perceived and real importance of the review in the eyes of the employee (Nankervis & Compton 2006: 92).