CHAPTER 7

Performance Management, Motivation and Reward

Performance management, motivation and reward

• Different ways that performance management (PM) can be defined and interpreted

• Assumptions that underpin the application of performance management

• The contribution of differing theories in the development of PM

• The relationship between performance, motivation and reward

• Evaluating how PM improves organisational effectiveness and efficiency

Definitions of performance management

• ‘The outcomes of work because they provide the strongest linkage to the strategic goals of the organisation, customer satisfaction, and economic contributions’ (Bernadin, 1995)

• ‘Performance means both behaviours and results. Behaviours emanate from the performer and transform performance from abstraction to action. Not just the instruments for results, behaviours are also outcomes in their own right – the product of mental and physical effort applied to tasks – and can be judged from the results’ (Brumbach, 1988)

Perspectives on performance management

• Controlling performance – managerial perspective• The Eternal Triangle – organisational theory,

industrial engineering and behavioural science• Aligning individual and organisational needs – fit

person to job or fit job to person• Stakeholder benefit – shareholders’, customers’,

employees’ views

Corporatestrategy

Strategic goals

Individualobjectives

Organisationalobjectives

Measuring, assessingand monitoring performance

(including feedbackand appraisal)

Group/teamobjectives

Group/teamperformance

Individualperformance

Organisationalperformance

HR supporting mechanisms:Eg development and training, continuing professional development,

personal development planning, career planning, recognition and reward

SupportiveHR policies

and procedures Perf

orm

ance

gap

Desired outcomes Actual outcomes

Linking HR and performance management

Performance management, motivation and reward

motivation

job satisfaction performance

Performance management

Performance management, motivation and reward

Assumptions:• Motivation leads/can lead to increased

performance (content and process theories)• Job satisfaction does not/may not lead to

increased performance (process theories)• Rewards may or may not lead to increased

motivation (and increased performance)• Rewards may or may not lead to increased job

satisfaction (and increased performance)

What shapes motivation?

• Four basic emotional needs or drives – to:

Acquire (through reward system)Bond (through culture)Comprehend (through job design)Defend (through fairness of work

assessment)

(Source: Nohria, 2008; p.82)

Performance appraisal

Two major approaches:

Results-oriented (outputs)Based upon setting quantifiable, achievable and time-bound

objectives, between manager and subordinate

Competence-oriented (inputs)Based upon the demonstration of key skills and behaviours

associated with high performance

Factors affecting performance

• Personal/individual characteristics• Job-related factors• The performance management system• Organisational factors• Extra-organisational factors

Uses of performance management data

• To demonstrate an organisation’s ability to raise competence levels

• To assess how long it takes for a new employee to reach optimum performance

• To provide feedback on development programmes

• To demonstrate the success of internal recruitment programmes

• To indicate how successful an organisation is at achieving its objectives

• To track skills levels and movement in skills gaps(Source: Armstrong and Baron, 2007; p.111)

Techniques to improve performance

• Learning• Development• Training• Coaching, mentoring• Team-building• Culture-change programmes• Reward schemes• Structure, process, systems, job-redesign, etc• Management approach

References• Armstrong, M. and Baron, A. (2007) Human Capital Management: Achieving added

value through people. London: Kogan Page.

• Bernadin, H. K., Kane, J. S. and Ross, S. (1995) ‘Performance appraisal design, development and implementation’, in Ferris, G. R., Rosen, S. D. and Barnum, D. J. (eds) Handbook of Human Resource Management. Cambridge, MA: Blackwell.

• Brumbach, G. B. (1988) ‘Some ideas, issues and predictions about performance management’, Public Personnel Management, Winter: 387–402.

• Nohria,N., Groysberg, B. and Lee, L.-E. (2008) ‘Employee motivation: a powerful new model’, Harvard Business Review, July-August.