In a positivistic point of view, performance management is often intended as a total approach on how to manage people and their performance (Hornsby and Kuratko 2005; Sims 2002). It involves setting out of performance aims and expectations for the organization level, for each business or operating unit, and for work groups, and for individual employees (Schuler 2004). It also covers the following managerial tasks and areas: performance planning; performance measurement; performance appraisal and feedback; training and development; managing the organisations reward system, and in particular employee remuneration; employee discipline and termination; and health and safety. Performance management framework is currently and generally regarded as essential to the success of any system of performance planning and review. In performance management, significant factors are considered and make up the evaluation criteria.
One of the reasons why companies implement rewards system is to encourage employees on learning. Through this process, the employees can strengthen their knowledge and assist the company to grow continuously. It can also support the company to meet the new competition, customers’ needs and new technology. To implement the rewards system in an organization, it is important to understand different kinds of rewards system. Rewards system can be categorized into two types, that is, financial and non-financial rewards. During the process of rewards system implementation, the company needs to consider whether or not a single or different kind of rewards system motivates the employee on learning. Before the rewards system is implemented in the company, it is essential to understand the main motivational factor that drives the employee to learn as rewards system and motivational theories are often intertwined. Different kind of motivational theories have different impact on the learner due to several considerations like individual differences, type of learning, culture, etc. Hence, it is necessary for the company and its management to understand the needs of the employees in order to apply the most appropriate rewards system.
Some organizations and its people may think that money is the most effective motivator while some of them opposed this kind of thought. According to Burke and Cooper (2004, p. 26), when organisations value and reward people these people are committed to performing well. As a result, the organisation accomplishes more and it can then provide additional reward to employees and attracts and retain more talented ones. This leads to even higher organisational performance. It also involves developing a variety of HR practices that motivate people to peak performance with accompanying rewards. Staffs, in turn, are more committed to the organization and more responsible for their own behaviours (contribution, learning, development, etc.). The following information will identify the components of two different kinds of reward.
Armstrong (1993) states that “A reward system contains arrangements in the form of processes, practices, structures, subsystems and procedures which will be concerned with providing and maintaining appropriate types and levels of pay, benefits and other forms of reward” (p. 1). A reward system may be used to encourage and support specific behaviours. Meanwhile, Frith (1997) stated that learning can be influenced by the reward and punishment. There are two types of reward system: Financial and Non-financial reward (Armstrong, 1993). Thorpe and Homan (2000) presented examples of some of the financial and non-financial rewards in the following table:
Figure 1 Financial & Non-financial Rewards
| Financial Rewards | Non-Financial Rewards |
| Basic Pay | Recognition |
| Individual, team, and corporate bonuses | Career Opportunities |
| Performance related pay | Status |
| Skill and competency based pay | Responsibility |
| Pension and other benefits | Achievement |
Scholars and HR authors are very particular in describing the nature of a reward and its appending system. Furthermore, authors set their line of thinking on the effects of rewards or employee benefits per se to organizational productivity and job performance, regardless of which kind of rewards system that is. For example, Champion-Hughes (2001) conducted an evaluation study on employee benefits. She presented various kinds of employee benefits that will somehow affect their productivity and job performance. In relation to reward system, she stated that the organisational reward system can influence both job satisfaction and employee motivation. With this, she related the benefits of certain types of reward system like skill-based pay and pay-for-knowledge. Relating to the subject of the research, Champion-Hughes supports the initial supposition that organisational reward system influences employee motivation. What is not included in her research, however, is the specification on employee learning. Granted that she mentioned on skill-based and pay-for knowledge as kinds of reward system but she had failed to create emphasis on learning particularly in using these rewards system as motivation to learn. Thus, this research points out the relationship of such kind of rewards system especially when used as motivation towards employee learning.
The study of Allen and Helms (2002) mainly discussed on the perception of employees on the relationship of various organisational factors namely strategy, rewards, and organisational performance. Results state that reward practices affect the level of organisational performance provided that the management implements the appropriate strategy. Another result is that reward practices might be considered as strategy to create a highly productive workforce. Allen and Helms concluded that the reward system must be continually adapted to give consequent strengthening and advancement of the chosen strategy. The difficulty in this research, however, is the fact that the research design is exploratory. There is little effort of investigating the relationship between strategy, rewards, and performance.
On a related case study, Sprinkle and Williamson (2004) studied John Deere’s compensation system known as Continuous Improvement Pay Plan (CIPP). John Deere is one of the world’s largest equipment manufacturer and distributor and is widely known as the world's premier producer of agricultural equipment. In the case study, the authors looked on the two different compensation plans and relate it to employee motivation, cooperation, and innovation. They provided a concise analysis on the role of performance-evaluation and reward system in organisations and further consider if such role is relevant all types of organisations. Results state that performance-evaluation and reward systems play vital functions in justifying inherent conflict of interests between the employers and employees. These functions are categorised as motivating effort, directing attention, extracting private information, and attracting highly skilled employees. On the case of this research topic, the intention of applying reward system is similar as it was supposed that reward systems motivate employees. However, Sprinkle and Williamson’s case study does not pay particular attention on the motivation of employees in relation to learning. As such, this is the focus of this research topic.
It is said that culture in organizations is among the most important factors contributing to organizational efficiency and success. Kanungo and group (2001) simply describe it as “a set of norms, routines and myths specific to an organization” (p. 32). Earlier studies conducted on area of management show that the benefits of established organizational culture includes increased effectiveness, enhanced service quality and customer satisfaction, and developed workforce (Hofstede 2001). On the other hand, other studies argue that organizational changes bounded in culture can also lead to failures (Ramsey 2004). Though findings tend to have contradicting arguments, it is still important for all organizations to understand cultural factors as it mainly affect all organizational functions (i.e. planning, decision making, strategy formulation, implementation, etc). Cultural factors facilitate the process of learning (Cummings and Worley 2001), motivates employees to perform and to commit themselves to the organization (Van den Berg and Wilderom, 2004). In coming up with a new performance management system strategy, cultural assessment and the effective strategies for overcoming challenges on cultural change should be emphasized. The integration of the findings to the strategy formulation is essential as it will greatly contribute to the implementation of the proposed strategy. On this case, the newly appointed Chief Executive is accustomed with the culture of private organizations and this will significantly affect the management style that is to be implemented in the council considering that it is public in form. There is a need to devise a culturally based performance management investigation that could be both formal (standardized questionnaire) and informal (interview) in design and focuses on management and employee levels. The HRD may also have preliminary investigation on the benefits and drawbacks of the existing performance management system. Basing on the findings obtained, the existing performance management system might be subjected to redevelopment. Cultural elements are to be integrated in all research and development (R&D) efforts (especially on HRD) provided that culture needs to be managed in alignment to the organizational goals
Performance management is always and will always be directed on how organizations manage people and their performance in relation to organizational conditions. The new Chief Executive is also a key consideration in coming up with new performance management system. Managers and leaders are frequently identified in the ways and manners they manage situations and people through cultural inclinations (Achua and Lussier 2000). Her managerial and leadership styles and the changes or plans that she has at hand need to be in compliance or directed to the betterment of the council. The knowledge that she has in the private sector can differ significantly in the public sector, thus, she needs to familiarize herself on the state of affairs of public organizations particularly on culture. As previously recommended, the council needs to have a new performance management investigation that is mainly focused on culture and cultural considerations before coming up with a new strategy. The existing performance management system may also be revised or scraped entirely and replace by a new one. After employing the mentioned suggestion, the management can already create a new performance management system strategy based on culture and cultural considerations in response to the existing problems confronting the organization. The interest of Davies on appraisal, work-life balance, flexible working hours, and other cost-efficient mechanisms can then be used in the creation of the new strategy. The new strategy can be based on the interests of Davies and should also in accordance with the findings of the prior investigation particularly on the role of culture. In the process of creating a new performance management system, it should serve as an integrating force.
This principle, also called performance appraisal, is a process of assessing whether organizational objectives are met. This is arises from the three previous concepts because it would evaluate how the employee’s performance have fared to satisfy the organization (Debrah, et al., 2003). However, it is specifically a tool which stems from supervision because performance measurement and rewards system is covered by the concept of supervision (Spencer, 2004). Evaluation seeks to monitor and improve effectiveness by giving the employee feedback on his/her performance. This process should be carried out at regular intervals and should follow specific protocols to maintain objectivity in the evaluation process.
The company should have a clear set of evaluation or assessment tools that will be used in all levels of the organization. The process should either be carried out as an individual consultation or a face-to-face evaluation. Lastly, a standard review mechanism conducted by a third party should be commissioned for the reassurance of fair play and objectivity in the evaluation (Spencer, 2004).
This concept has its strengths as defined by Caruth & Handlogten, 1997) for it helps the manager to be able to identify individual present performance along with the employee’s future potential. Evaluation also assesses the weaknesses and the accompanying disciplinary actions. The third strength is that it can determine which training aspect should be developed for the particular employee. It also increases the communication line between the employer and the employee because of the feedback and evaluation process.
According to Spencer (2004), evaluation is also a way for the organization to assess the role of the manager as well for evaluation and supervision are interdependent because evaluation is a tool for measuring supervision. Moreover, another advantage is that evaluation aims to establish trust among the entire organization because objectivity and fair play are called into this task. Lastly, the evaluation process is a good way of providing employee satisfaction and maturation which will improve the performance in the future.
Performance management will be assessed according to three theoretical categories of human resource management. The first is that performance management is viewed as a key integrative mechanism which connects individuals’ goals and responsibilities to the objectives of the business and integrating major interventions such as appraisal, rewards, training and development which encourages a strategic improvement within the company (Beer et al., 1984; Fombrun et al., 1984; Storey, 1992). To fulfil this category, the company introduce the system as an important way of incorporating the company’s vision mission statement and objectives with the day to day work. It can be strengthened further by creating a performance appraisal information form which aims to link performance of the individual to the company’s vision mission and the objectives of the business plan.
The second category deals with performance management as the means to enhance organisational control over employees, constructing a consistent statement of managerial expectations which promotes a unified view of the company (Stiles, 1999). This is clearly a way of manifesting control over employees as it will keep track of actions of each individual. It will also involve an individual monitoring system using the performance appraisal information form as well as team-monitoring.
Lastly, performance management is an important driving force in determining valuable outputs such as employee loyalty. According to Peters and Waterman (1983), it is important for organisational success and strong organisational culture for employees to identify with the company in terms of values, goals and desired behaviours. The performance appraisal system does not only test the skills of the workers but also their values and goals in congruence with the company’s expectations.
Looking on the theory of Burr and Girardi in contrast to Ulrich’s model, it explicates on the impact on work and project design. The effectiveness of this theory to employee performance is seen on how it clarifies the issue of competence and commitment as limited or insufficient factors in the development of intellectual capital. It is used in understanding HRM principles particularly in employee performance. For example, the model facilitates the assessment of HRM functions in three categorical ways. The first is that performance management is viewed as a key integrative mechanism which connects individuals’ goals and responsibilities (form of behaviour) to the objectives of the business and integrating major interventions as stated in earlier literatures (i.e. Beer et al., 1984; Fombrun et al., 1984; Storey, 1992) such as appraisal, rewards, training and development which encourages a strategic improvement within the organizational setting. To fulfil this category, the organization can introduce the system as an important way of incorporating its vision-mission statement and objectives with the day to day work. It can be strengthened further by creating a performance appraisal information form which aims to link performance of the individual to the overall strategy or business plan (Boxall and Purcell 2000). Further, the second category deals with performance management as means of enhancing organisational control over employees by constructing a consistent statement of managerial expectations that promotes a unified view of the company (Brown 2001; Stiles 1999). This is clearly a way of manifesting control over employees as it will keep track of actions of each individual. It will also involve an individual monitoring system using the performance appraisal information form as well as team-monitoring. This is seen on the last proposition made by Burr and Girardi. Lastly, performance management is an important driving force in determining valuable outputs such as employee loyalty. According to Peters and Waterman (1983), it is important for organisational success and strong organisational culture for employees to identify with the company in terms of values, goals and desired behaviours. The performance appraisal system does not only test the skills of the workers but also their values and goals in congruence with the company’s expectations. All in all, it could be concluded that the proposed model is good because it recognizes opportunity for enhancement. However, it is similarly argued that there is a need to look into further aspects or factors as well as its relationship so as to understand the model’s real value particularly in intellectual capital development. The advantages of Ulrich’s model are not neglected and are integrated on Burr and Girardi’s theory.
In general point of view, HR Development (HRD) is an integrated area of study of the developmental practices of organizations so that they may accomplish higher levels of individual and organizational effectiveness (Sambrook 2000). The development of intellectual capital is seen on how individuals work towards their own motivations (willingness or commitment) and application of behaviours (capacity or competencies). The missing element of opportunity is provided using training and development mechanisms (Noe 2006) that aim to identify, assure, and help individuals to perform current or future jobs with planned individual learning accomplished through training, on-the-job learning, coaching or other means. In these ways, intellectual capital is developed towards productivity and performance.
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