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11 Performance management

Anthony McDonnell and Patrick Gunnigle

They [managers] had to identify the people in their organization that they consider in the top

20 per cent, the vital middle 70, and finally the bottom 10 per cent. The underperformers

generally had to go. Making these judgements is not easy, and they are not always precise.

Yes, you'll miss a few starts – but your chances of building an all-star team are improved

dramatically. This is how great organizations are built. Year after year, differentiation raises

the bar higher and higher and increases the overall calibre of the organization.

Jack Welch, former CEO of General Electric (2001: 158)

Introduction

In recent times, the interaction between corporate governance and human resource

management has become a topic of widespread interest. Particular concern has been

expressed as to the extent organizations are solely focusing on maximizing shareholder value

to the potential detriment of other stakeholders (Gospel and Pendleton, 2005). For example,

there has been a purported decrease in job security for employees as well as increasing pay

inequality, where senior executive pay levels are increasing much more than that of

employees (Gospel and Pendleton, 2005). Many organizations are now operating in

pressurized competitive environments than heretofore. This is largely the result of increased

international trade and price competition, re- and de-regulation of product, capital and labour

markets, and changes in technology and communications. As a consequence, many firms are

reviewing their structures and operations, which often result in employment cuts while

attempting to secure enhanced performance from the residual workforce. In other words, they

are attempting to get more for less. Tied in with this has been the relatively recent emergence

of performance management as an integral process in organizational management. The

message portrayed above by Jack Welch, much vaunted for his management and leadership

of General Electric (GE), encapsulates a particular, if perhaps extreme, view regarding how

organizations should manage performance. He believed in and used forced rankings during

his time at GE, working on the premise that 'managing out' the bottom ten per cent of

employees could substantially enhance performance. But does this approach stand up to

scrutiny in practical terms? By definition there will always be a bottom 10 per cent, no matter

how well people perform. Indeed this percentile of staff may actually be performing at an

acceptable level and 'managing out' may not necessarily be in a company's best interests.

Performance management has developed from a very operational focus to a more

strategically oriented concept, i.e. where it plays an integral role in the formulation and

implementation of strategy (Scott-Lennon, 1995). It is this strategic impetus which

differentiates it from performance appraisal. Performance management seeks to align a

number of processes (e.g. performance related pay systems) with corporate objectives

(McKenna and Beech, 2008). Theoretically it involves a shared process between managers,

individuals and teams where goals are agreed and jointly reviewed. Further, corporate,

divisional, departmental, team and individual objectives should all be integrated.

Performance appraisal is a crucial element of the performance management process,

involving a formal review of individual performance. It is suggested that performance

management represents possibly the greatest opportunity for a human resource (HR) system

to make a telling contribution to organizational performance (Sparrow and Hiltrop, 1994). It

represents a system that can inform how the firm's human resources contribute to the

organization's strategic objectives. Unfortunately the extent to which it is an effective and

useful system in practice remains open to question. For example, the high use of various

facets of performance management does not always correlate with high results regarding

perceived effectiveness (CIPD, 2005).

This chapter provides a contemporary review of performance management which is now

believed to be used in some form or other in most organizations (Lawler, 2003; CIPD, 2005).

We begin by defining performance management and reviewing its evolution. We then

consider the performance management process by applying a critical lens to some of the main

approaches set out thus far. Following this, we consider the primary tool used in performance

management systems, namely performance appraisal. We then discuss some of the more

contemporary developments, including the use of 360-degree feedback and forced

distribution, before concluding.

Performance management: definition and evolution

Performance management represents a relatively new management concept with its roots

traceable to Anglo-Saxon management (Sparrow and Hiltrop, 1994). It was not until the

1980s that it truly emerged as a standalone concept. In simple terms, performance

management is a process that enables employees to perform their roles to the best of their

abilities with the aim of achieving or exceeding established targets and standards that are

directly linked with the organization's objectives. Performance management is posited as a

strategic management technique that supports the overall business goals of the firm through

linking each individual's work goals to the overall mission of the firm (Costello, 1994;

Sparrow and Hiltrop, 1994). It is further hypothesized as an integrated system where

management and employees work together in setting objectives, assessing and reviewing how

these are being met and rewarding good performance. This requires 'the ability to interpret

the more abstract goals and objectives at board level into more practical operational goals and

objectives at employee level to meet them' (Chase and Fuchs, 2008: 226).

Performance management evolved from the management by objectives (MBO) approach,

first popularized by Peter Drucker (1954). MBO was a scientific type approach with an

emphasis on achieving results that were linked to established targets. It involved management

focusing on achievable objectives to produce the best possible results using available

resources. Both MBO and performance management hold a number of similarities, including

the requirement for distinguishable job based goals and development objectives to be

achieved (Fowler, 1990). However performance management has evolved considerably in the

interim. MBO tended to be only applied to management whereas performance management is

applied to all staff – it seeks to integrate all organizational actors in the pursuit of improved

performance. MBO utilized quantitative performance measures, whereas performance

management is more likely to include both quantitative and qualitative measures. This moved

organizations away from solely focusing on financial performance and in parallel, to ensure

its employees were being developed.

There are four principal normative concerns of performance management (Armstrong,

1999). First, is that it aims to improve performance. Second, it endeavours to develop

employees. Third, it seeks to satisfy the expectations of the various organizational

stakeholders. Finally, communication and involvement is imperative due to the ideology of

arriving at jointly agreed goals and objectives. In other words performance management

seeks management by agreement rather than dictation. However one must question whether

such lofty expectations play out in practice? It is logical that top management may

unilaterally agree the strategic objectives and then attempt to cascade these down the line and

translate them into individual performance targets.

The performance management process

Many of the pertinent models on performance management involve a simple four or five step

process (see Figure 11.1 for an example). These models tend to be based on the assertion that

all work performance stems from and is driven by the corporate objectives. These are then

broken into functional/departmental objectives. Individual objectives shoot out from these

and all are monitored and reviewed on an ongoing basis with a formal review or appraisal

conducted at least annually. The results of this may or may not be linked to pay. A body of

work has taken place arguing for and against linking appraisals to pay. The main argument

for this is that all parties take the process more seriously, while the main argument against is

that pay becomes the central issue to the detriment of the developmental aspect of

performance management (cf. Armstrong, 1999). Linking performance to pay is a market-

based approach to gaining employee commitment, whilst simultaneously helping 'to align

managerial interests with shareholder value and shift downside risk' to the employees

(Gospel and Pendleton, 2005: 17).

[Insert Figure 11.1 here]

[caption]Figure 11.1. St ages of a typical performance management system. Adapted from

Torrington et al. (2008: 299).

These models fail to adequately capture the intricacies of applying performance

management in practice, or – more pragmatically – how performance management might be

utilized as an effective means of managing and improving employee and organizational

performance. In its current guise, performance management can be criticized for being overly

normative. This is largely due to its apparently unitarist underpinning ideology. Indeed it has

been proposed that the unitarist perspective 'may represent one of the threats to performance

management as it fails to recognize the plurality of interests that are so much a part of

organizational reality' (Williams, 2002: 252). For example, little consideration is given to the

effect different markets play on employment relations systems. Gospel and Pendleton (2005:

10) note that Anglo-Saxon countries (e.g. US and UK) are characterized by 'labour

management systems which are essentially based on market signals'. Depending on the

conditions of the day, organizations in these countries will adjust recruitment levels and

redundancies, pay tends to have a performance element, job tenures will vary and so forth.

On the other hand, systems in other countries (e.g. Germany) are influenced less by market

conditions. Jobs tend to be of longer tenure, organizations are more likely to invest in its

workforce and pay tends to be based more on seniority than performance based.

No one best, universally agreed performance management model exists and – as already

highlighted – those being used tend to be quite basic in their orientation. Buchner (2007)

suggests there has been a failure to utilize sufficient theory to support performance

management. More specifically he argues that existent models fail to make explicit linkages

between the various elements of the process. Similarly, Bevan and Thompson (1992) suggest

a major issue is the lack of integration of activities and that some activities are utilized while

others are not. This phenomenon is described by Torrington et al . (2008: 307) as

'unfortunate' since one of the primary espoused advantages of performance management is

the integration of activities for managing performance: performance appraisal is integrated

with performance planning where individual objectives are linked to the overall

organizational objectives. The success of these objectives is supported through ongoing

feedback and personal development plans and assessed in order to reward superior

performance (Torrington et al., 2008). Yet a key concern is that many organizations are

purported as failing to know whether practices are actually aligned or pulling in different

directions.

Den Hartog et al. (2004) have attempted to redress some criticizms of existing

performance management models by setting out a conceptual model that gives greater

prominence to the role of the line manager. Much research contends that for performance

management to be effective and beneficial it needs to be owned and driven by line

management (cf. Sparrow and Hiltrop, 1994; Williams, 2002; Torrington et al., 2008).

Simultaneously, top management must support and be committed to the system (Sparrow and

Hiltrop, 1994). As with any system, if there is insufficient support from the top how can one

expect that personnel further down the organizational hierarchy take the system seriously?

Line management have a major mediating influence in the implementation of HR practices

(Den Hartog et al., 2004). Employee perceptions will be crucial. Consequently if there is

perceived inequality over pay it may be difficult to achieve the espoused benefits of

performance management (Gospel and Pendleton, 2005). For example, if a practice is

perceived as being manipulative it may have a negative impact. This can be witnessed

through both overt and covert outcomes through decreased motivation which may result in

worse performance and increased labour turnover (Dobbins et al., 1990). They also take

account of possible reverse causalities and the contingencies that may evolve from these. The

commonly held view is that human resource management is a possible cause of improved

organizational performance. However the likelihood of a reversed link also exists.

Organizations with improved financial performance may have greater scope for investing in

human resource management.

Critiquing performance management

Classically, the starting point of a performance management system should be setting out the

organization's mission, aims and values. Following this the organization's objectives are

identified, and these need to be intrinsically linked to, and support, the firm's mission. These

objectives should be cascaded down the organization with strong links to the objectives of the

various managers and individual employees. The end result should be integrated objectives

across all organizational levels and personnel (Fowler, 1990).

In practice though, converting the business strategy into clear performance objectives is

often problematic for a variety of reasons. Business strategies do not always result from a

rational plan but may – sometimes serendipitously – evolve over time. Mintzberg (1978,

1987) distinguished between 'realized' and 'unrealized' strategies and also between

'intended' and 'emergent' strategies. Deliberate organizational strategies refer to those that

are intended and realized. However there are also 'unrealized' strategies, which for one

reason or other are never implemented. In addition, 'realized' strategies may 'emerge' over

time without the conscious intervention of strategists. Hence strategies may emerge that do

not follow the traditional planned view but may develop in a more incremental fashion. There

may be great difficulty in setting measurable objectives unless the firm operates in a

relatively stable environment, which is often not the case in modern business. By means of

emphasis, Mabey et al. (1998: 133) remark that 'it is possible that objectives and hence

performance dimensions targeted today may b e inapplicable tomorrow'. As such firms need

to set out appropriate time intervals within which objectives apply and must be reviewed on

an ongoing basis to establish if changes are required.

Furthermore, organizational objectives can conflict with one another. Corporate

governance needs to be taken into account as managers do not make decisions in a vacuum.

For example, if considerable emphasis is placed on shareholder value (Gospel and Pendleton,

2005), management will need to consider the effect any decision they make will have on this.

A firm that is downsizing but maintains its commitment to investing in its workforce by not

reducing headcount or cutting 'training spend' represents such a scenario. In this instance,

commitment towards its employees may conflict with a corporate strategy of cost

containment. Likewise adopting a total quality management (TQM) system sets out to do

things right first time, whereas a learning organization orientation suggests that it is alright to

make mistakes as long as one learns from them – two conflicting perspectives (Torrington et

al., 2008). The individual versus team dynamic represents another dilemma in performance

management, which to date has not received sufficient attention. For example, there is a

danger that individual objectives could be detrimental to the achievement of team based

objectives and vice versa (Torrington et al., 2008). Van Vijfeijken et al . (2006) illustrate this

potential conflict through an interesting example regarding management teams. An employee

may have individual objectives in relation to achieving their department's objectives.

Simultaneously they may be part of the firm's management team which will have its own set

of objectives. Conflict may arise, where for example, the management team have an objective

of undertaking a major marketing campaign to increase the profile of a particular product or

service. At the same time the head of marketing has an objective of reducing costs in his/her

department. This clearly conflicts with the management team's objectives of which s/he is a

part. Unfortunately these factors are sometimes not addressed when setting performance

objectives and targets.

Performance measurement is a further area of contention. For effective performance

management clearly the organization needs to know what performance it seeks (Torrington et

al., 2008). Fowler (1990) makes an interesting point in suggesting that particular performance

dimensions are chosen by organizations, not because they are the most important but because

they are the most straightforward to measure. This links into the much debated issue of

demonstrating a link between human resource management practices and organizational

performance (cf. Huselid, 1995; Guest et al., 2003). To date there remains a lack of

conclusive evidence on the existence of such a link, including research specifically on

performance management and organizational performance (Bevan and Thompson, 1992;

Armstrong and Baron, 1998). Furthermore, it is commonly assumed that improved individual

performance will lead to better organizational performance. However, in reality it is much

more complex. Improvements at lower individual levels may be insufficient in improving

organizational performance (DeNisi, 2000). For example, improvements at an individual

level may not result in improved organizational performance if their objectives are not

intrinsically linked with team, departmental and organizational objectives.

The extent to which performance can be solely measured through quantitative measures is

open to question (Fowler, 1990). Arriving at crude, quantitative measures (e.g. number of

sales in a week or number of products produced) may mean a firm is not gaining a true

picture of overall performance. An interesting example is provided by Chase and Fuchs

(2008) regarding a teacher who tries exceptionally hard to improve his/her students learning

but the final marks turn out similar to those of students whose teacher does not make half the

effort. Which teacher is doing the most to improve performance? If rewards were based on

student performance, it may serve to de-motivate the hard-working teacher. There is also the

phenomenon of unanticipated side effects (see Figure 11.2).

A computer salesperson is primarily assessed on his quarterly sales. While he is aware that a

current laptop range is being phased out, he focuses his efforts on maximizing sales of this

line over the current quarter. He is successful in this regard and receives a substantial bonus

for his sales effort. However, he also leaves many dissatisfied customers who soon realize the

laptop they purchased has been replaced by a superior version at a similar price. The

company goal of sales maximization is achieved but to the detriment of arguably more

important goals of enhancing customer satisfaction and loyalty.

[caption]Figure 11.2. Unanticipated side effects to performance measures.

Qualitative measures, such as customer attitude surveys, can also yield vital information.

Criticizms of the use of qualitative measures largely relate to their particularly subjective

nature. Due to this, appraiser training provides an important tool in reducing subjectivity.

Mabey et al. (1998) contend the greatest challenge faced regarding performance management

is to ensure that the procedures incorporated in the system can be audited. This helps ensure a

fair and effective system is being used. Regular appraisals are often utilized to bring a degree

of formalization to the process of performance management. The most important

characteristics of performance measures are their validity and reliability (Mabey et al ., 1998).

Reliability simply refers to whether the same decision reached would be reached if other

individuals made it. Validity refers to the extent to which the method used measures actually

what it is supposed to measure. Thus it is imperative that sufficient time is given to deriving

the performance indicators and ensuring they accurately depict the performance the

organization wants to measure.

The provision of feedback is a major component of effective performance management.

Buchner (2007) points to control theory as a basis for critically assessing feedback provided

through performance management. Ongoing feedback and support is an absolute necessity,

though the extent to which this takes place in practice is questionable (Coens and Jenkins,

2000; Fletcher, 2001). The performance of timely, ongoing feedback is highlighted by the

very fact that unforeseen events occur. This may require a reappraisal of objectives. Having

ongoing reviews allows the employee to provide detail on how they are progressing and the

manager can provide detail on any organizational changes that may impact on the

achievement of these objectives. It also allows one to see how their performance to date is

being viewed and what might be required to engender improved performance (Williams,

2002). The annual appraisal remains the dominant mechanism whereby objectives are set and

feedback is provided (in theory at least). Such a scenario is largely insufficient (Williams,

2002) because an annual appraisal cannot be construed as ongoing feedback.

Performance management: a beneficial management system?

From a normative perspective, the effective and strategic use of performance management

provides a means for recognizing good performance, as well as clarifying tasks and providing

support in achieving these. It carries the potential to provide a structured means of directing

and guiding individual employees, teams, and departments towards the pursuit and

achievement of corporate objectives. This can result in a greater level of decentralization with

each organizational actor taking added responsibility for improving business performance,

resulting in 'a cultural change centred around continuous performance improvement'

(Sparrow and Hiltrop, 1994: 567). It can also be useful in identifying 'high potentials' thus

helping succession planning and management development. Furthermore, it can aid the HR

planning process through the identification of training and skills gaps. Through holding

review sessions with employees the opportunity is afforded to set out action plans as well as

discussing personal and career development. This can be extremely beneficial as it may be

construed as showing how valued an employee is to the firm. In addition, it allows the

identification of sub par performers. Firms may adopt the 'Jack Welch approach' and attempt

to get rid of these poor performers or to bring their performance in line to what is expected.

However, the extent to which these benefits are actually realized remains open to

question. This is largely due to an underlying dissatisfaction with performance management

(Ellis and Saunier, 2004). It is viewed by some as representing another administration

exercise for line managers in order to allow HR rate and reward employees (Armstrong,

1999; Ellis and Saunier, 2004). For many organizations performance management is about

working out a rating for employees and making pay decisions based on this rating (Ellis and

Saunier, 2004), rather than a concerted attempt to improve the organization's performance

and develop employees. Others have suggested that there is often a failure to align

performance management with other crucial organizational processes such as strategic

planning (Ellis and Saunier, 2004; Torrington et al., 2008). A study by Fletcher and Williams

(1992) on 26 private and public UK organizations concluded that performance management

tended to be a reactive process dealing with external pressures rather than a conscious

strategic effort. Further they found that the development of employees, viewed (theoretically)

as a major aspect of performance management, tends to be a decidedly secondary concern

relative to the bottom line. There also appears to be a feeling among some organizations and

managers that performance management brings a low return of investment in terms of the

bottom line (Chase and Fuchs, 2008). Performance management is also posited on the

assumption that individual employees take responsibility for improving their own

performance. This assumes that every individual wants this increased responsibility, which

may not necessarily be the case.

Performance appraisal

The performance appraisal is essentially a formal mechanism of reviewing individual

employee performance. Fletcher (2001: 473) defines it as the 'activities through which

organizations seek to assess employees and develop their competence, enhance performance

and distribute rewards'. It generally involves line managers appraising their subordinate's

performance, often on an annual basis. In terms of the content of appraisals, there is no

definite 'one best' prescribed approach. For example, job performance will nearly always be

reviewed, whilst personality and behaviour may or may not. Performance management is

often conflated with performance appraisal and vice versa. Performance appraisals are

concerned with individual performance, whereas performance management looks at

individual, team, and organizational performance. The appraisal may be just another HR

technique used by an organization, while performance management attempts to link the

appraisal process to the wider values and objectives of the firm (Foot and Hook, 2008).

However, appraisals constitute an integral part of the performance management process.

Traditionally, appraisals concentrated on aspects of personality that were believed to be

integral to carrying out the role, e.g. being an extroverted person for a sales job. However

such an approach is blighted by problems. People may define personality traits differently

(Torrington et al., 2008). This may cause problems if ratings are being used because

appraisers may have different views on what the traits mean. Thus considerable potential for

bias exists. Further, many organizations tend to have common appraisals across staff,

meaning that some employees may be appraised on traits that are irrelevant to their role

(Torrington et al., 2008). Clearly appraisals carry a high potential for subjectivity, bias and

prejudice. Consequently there have been developments to make the process more objective.

Typically these involve establishing measurable objectives which are formally reviewed,

normally on an annual basis, to establish whether they have been met or not. Survey data

showed 89 per cent of respondent firms measured performance against objectives, 56 per cent

measured against competencies and 53 per cent appraised against pre-set performance

standards (IRS, 2005). Each employee may have a say in setting their objectives but the

extent of this involvement varies greatly between firms. If objectives are not jointly agreed

and/or there is no shared understanding and acceptance of them, the normative ideals of

performance management are questionable. Furthermore, it is vital that the organization's

own circumstances and what they are trying to achieve in appraising various employees are

taken into account, rather than adopting the approach used in another organization, i.e. using

an off-the-shelf appraisal may not be wise.

The effectiveness of appraisals

Appraisals are believed to enhance managerial and organizational performance as well as

positively contributing to employee motivation (Randell, 1989). Conducted effectively, they

are credited with a number of positive benefits (cf. Longenecker, 1997):

1 Performance planning and goal setting

2 Providing feedback and coaching

3 Employee development

4 Linking employee performance to compensation and promotion decisions.

However, Mabey et al. (1998) identify two schools of thought regarding problems with

the effectiveness of performance appraisals in evaluating employee performance. The first

school focus on performance appraisal as a social process. Since appraisal generally involves

one person rating another's performance 'it is impossible to disentangle the social influences

which are present' (Mabey et al., 1998: 136). Second, performance appraisal has a political

dimension (cf. Barlow, 1989). Rather than being an objective, neutral process, the

performance appraisal represents a political process whereby those involved may pursue

personal agendas and strategies (Mabey et al., 1998). For example, there may be a poor

working relationship between employee and appraiser. This may result in appraisees

perceiving the appraisal as unfair. This may de-motivate employees, possibly resulting in

overt and covert outcomes, including poor performance and higher labour turnover. In

addition, the appraiser may not possess enough information to effectively review the

employee's performance. This may lead to a situation whereby the appraisee receives

incomplete and inaccurate information on their performance. Some firms have tried to negate

such issues by having more than one appraiser, with the objective of reducing the potential

for bias.

The use of inappropriate rating instruments is another source of criticism and a potential

weakness in performance appraisal. Table 11.1 summarizes the main characteristics and some

of the primary strengths and weaknesses of the most commonly utilized performance

appraisal techniques. Many are criticized for failing to accurately capture what is involved in

different jobs. Often managers may have an overall opinion on how well a person has been

performing but there is a lack of specifics on the employee's actual performance. For

example, the 'recency effect' is a common error in the appraisal process. This refers to where

the appraiser fails to keep a formal record of performance since the last appraisal.

Consequently, at appraisal time the appraiser realizes s/he can only remember specific

examples of performance within the most recent period.

Table 11.1 Performance appraisal techniques.

Appraiser specifies on

a scale to what

degree relevant (job,

behaviour or

personality)

characteristics are

possessed by

Ease of comparison;

can range in

complexity from very

simple to very

involved, using

descriptions of

behaviouror

Subjective; personality or

behavioural traits difficult to

measure; may ignore

variables that impact on

work performance; may

suffer from 'central

tendency'

Appraiser ranks

appraisees from best

to worst, based on

specific

characteristics or

overall job

performance

Simple to use;

facilitates

comparisons

Limited basis for making

decisions; degrees of

difference not specified,

subjective; may suffer from

'central tendency'

Performance or

objective-

oriented

systems

Appraiser evaluates

degree to which

specific job targets or

standards have been

achieved

Job-related; objective;

participative

Needs measurable targets,

strong quantitative focus

may overshadow more

qualitative measures; danger

of collusion

Appraiser observes

incidence of good

and bad performance.

These are used as a

basis for judging and

assessing or

discussing

performance

Job-related; more

objective; useful

when jobs difficult to

quantify in

measurable terms

Needs good observational

skills; time-consuming

Appraisees evaluate

themselves using a

particular format or

structure

Participative, facilitates

discussion; promotes

self-analysis

Danger of lenient tendency;

potential sources of conflict

between appraiser and

appraisee

Adapted from Gunnigle et al. (2006: 193).

The appraisal may suffer from trying to achieve too much (IRS, 2001). For example,

performance appraisals may be used to identify poor, good and exceptional performers, spot

high potentials, discover training and development needs, and decide on appropriate rewards.

The most recent Cranet-E survey (2003) shows appraisals are most commonly used to

identify training and development needs (Chase and Fuchs, 2008). Links to rewards are also

strong but there are notable variations in how extensive this is across countries. For example,

the link to rewards is far stronger in Germany and Sweden than in the United Kingdom. This

is quite interesting given that Germany and Sweden are characterized by high levels of

unionization and the conventional wisdom is that unions may often be averse to systems

where pay increases are partially and wholly dependent on performance appraisals (cf.

Gunnigle et al., 1998). Utilizing appraisals for both developmental needs and for ascribing

rewards is particularly interesting because – to all intents and purposes – they are two

conflicting approaches. The appraisee might be loathe to identify training or developmental

needs for fear of it being construed as a sign of weakness which may negatively impact

rewards to be received.

Longenecker (1997) found that often it is the basic fundamentals of the appraisal process

that reduce its effectiveness. For example, over eight in ten respondents in his study

suggested that the failure to have clear performance criteria negated the potential benefits of

conducting an appraisal. The conventional performance management literature is premised on

the view that having clear and explicit goals is imperative in eliciting improved employee

performance. Whilst ability and motivation are important ingredients they are not the sole

determinant of improved performance (Torrington et al., 2008). It draws from expectancy

theory which basically sets out that employees will be motivated to perform as long as they

believe their goals are achievable and that they will lead to valuable rewards (Vroom, 1964).

Hence, if objectives are unclear the appraisal may do more harm than good. This can include

both individual and organizational level outcomes. For example, individual level outcomes

may include de-motivation amongst employees and increased tension in the manager-

appraisee relationship. Organizational level outcomes may incorporate a loss of credibility for

the HR department and a loss of managerial focus.

A key related question is what type of individual objectives should be set. Should only

tightly defined results oriented objectives be set? This often seems to be the case, probably

because they provide an easier benchmark against which to measure performance. It is argued

that such objectives should follow the SMART (specific, measurable, appropriate, relevant,

timed) rules (Torrington et al., 2008). However setting SMART goals can be problematic if

they are not continually reviewed and updated. The business environment is subject to rapid

change, possibly rendering pre-set goals a constraint on the firm. Is setting results oriented

objectives sufficient? People are not always necessarily in control of whether they can meet

their goals or not. External influences can constrain the achievement of performance.

Consequently it has been suggested that behavioural targets should also be set (Williams,

2002). Almond and Ferner (2006), in their research on US multinational companies in

Europe, found that the nature of objectives were changing whereby objective criteria based

on job performance were increasingly supplemented with softer, more difficult to quantify

objectives such as 'cooperation' within the team.

Contemporary developments

Recent decades have witnessed considerable evolution in the spheres of performance

appraisal and performance management.

Forced distribution

One such change has been the use of systems of forced distribution. Forced distribution

forces the appraiser to rate a certain proportion of employees in different categories. Thus, a

certain number of employees must be in the top grade, and further specific proportions must

also be in the various lower grades. As mentioned earlier GE, under the leadership of Jack

Welch, made this concept famous whereby on an annual basis they 'culled' the worst

performers, termed the 'vitality curve' (Welch, 2001). He argued it was a good system

because it continually raised the performance bar in the organization. He also contentiously

argued it was 'good' for those employees who were 'culled' since it took them out of

scenarios that were not good for them (Lawler, 2003). In the GE system, managers ('business

leaders') were forced to identify the top 20 per cent of performers, the middle 70 per cent and

finally the bottom 10 per cent. The primary aim was to avoid 'central tendency', i.e.

clumping all employees in the middle performance categories in an attempt to avoid

extremes. This system of identifying those poor performers and outstanding performers has

seemingly increased in popularity in recent years (Lawler, 2003; Almond and Ferner, 2006;

Gunnigle et al., 2007). Whilst one may ascertain logic in this, such a system fails to take into

account that competent performers may be sufficient in certain roles (Boudreau and Ramstad,

2005). In any workforce there will inevitably be differences in performance – even the best

performing team will have its best and worst performers. However the 'worst' may be

performing to a very satisfactory level. This system raises a number of questions. Can it be

sustainable long term? If the firm operates in a tight labour market could it prove a detriment

to organizational performance and success? Does it proffer the possibility of detrimental

competition within an organization? And, more generally, has it the potential for placing

undue stress on workers, leading to 'burn-out', work family balance, and so on?

360-degree feedback

A 360-degree feedback is credited with providing a more holistic and effective source of

feedback on individual performance. Essentially it involves getting feedback from multiple

sources, including peers, supervisors, colleagues and so on. We earlier noted that appraisals

typically involve a manager giving feedback on their subordinate's performance – a very one-

dimensional view. 360-degree feedback 'can provide a unique opportunity for individuals to

make an objective comparison of their self-assessment with the assessments of their peers,

managers and customers and other interested parties involved in the process' (Chase and

Fuchs, 2008: 237). This is normally achieved through the use of questionnaires rather than

face-to -face appraisals (Ward, 1995). Clearly this brings other potential difficulties since

questionnaires may be overly long or complex (Fisher, 2005). A 360-degree feedback seems

to be predominantly used as a development mechanism insofar as it provides a more rounded

insight into how various stakeholders view performance. However, were it to be used as a

basis for decisions regarding performance, promotion or pay, it is likely there would be

greater issues (Fisher, 2005). Managers may view the multi-faceted feedback as an excellent

exercise concerning their development but would be uncomfortable if their staff were

influencing decisions regarding pay or promotion. This method is very time-consuming given

the various sources of feedback that need to be collated and it requires skilled interpretation

of results. Although it has been the subject of much research and interest Chase and Fuchs

(2008) note that the most recent Cranet survey (2003) suggests it still remains a relatively

uncommon mechanism utilized in European countries. Gunnigle and colleagues (2007) found

that half of all multinational companies in Ireland utilize peer or 360-degree feedback for

their managers.

Balanced scorecard

Another important development in performance management is the application of the

'balanced scorecard' (Kaplan and Norton, 1992, 1996a,b). The balanced scorecard is a

strategic planning and management system used to align business activities to the

organization's vision and strategy, improve internal and external communications, as well as

monitor organizational performance against strategic goals. It seeks to integrate the various

functions and translate corporate goals into short-term measurable objectives which are

linked to the achievement of the firm's long term objectives. By integrating financial and

non-financial data, managers are provided with a more rounded perspective to make better

strategic decisions (Kaplan and Norton, 1992). Specifically three areas of measurement are

identified in addition to financial measures: customer measures, internal business process

measures and learning and growth measures (see Figure 11.3). This approach advocates the

establishment of clear specific measures across each of these areas. Internal business

measures should involve metrics which allow managers to know how well their business is

running. Learning and growth measures are linked to individual and company self-

improvement through incorporating employee training and development and changes in

organizational culture. The customer perspective includes the need to incorporate indicators

of customer satisfaction. The balanced scorecard approach claims to represent the first

attempt to develop performance management in an 'integrated causal, and most importantly

systematic way' (Voelpel et al., 2006: 44). This should, they argued, lead to improved

efficiency and effectiveness of communication priorities within firms, and increased

individual and organizational performance (Kaplan and Norton, 1992).

Despite its fairly widespread acceptance, others have been slower to praise its usefulness

and indeed some contend it is neither an overtly positive nor useful system in today's

business environment. Voelpel and colleagues (2006: 49) go as far as to suggest it 'exerts a

tyrannical impact and influence on the firm and its stakeholders'. They point to the rigidity of

the measurement tool in limiting the number of perspectives that can be used. They argue that

it fails to integrate additional perspectives which may be required. They also criticize the

uniformity that the scorecard inevitably brings. The overall strategy is translated into

particular measures that align the firms' objectives. This increases the orientation and

uniformity towards the overall goal but it may neglect further possible goals and activities.

For example, employees may have a number of set objectives which they will work towards

achieving but outside of these they may do little else. In essence, they argue it may cause

'static- ism' that ensures maximum focus on a number of prescribed goals but may limit the

opportunity to go beyond these (Voelpel et al., 2006: 51). A third main criticism is that it fails

to account for the external environment. Essentially it focuses on improving performance and

realizing the achievement of strategy within the organization and ignores external factors that

need to be integrated into the system: 'Today's business reality involves non-linear and

interactive activities that consider the entire system, not only the direct and visible factors,

but also those that reside unseen within the environment in which they take place' (Voelpel et

al., 2006: 54). Despite such criticism, the balanced scorecard continues to make beneficial

contributions to organizations due in no small part to its continual development and

refinement.

[Insert Figure 11.3 here]

[caption]Figure 11.3. The balanced scorecard. Adapted from Kaplan (1996a: 54).

Increasing managerial control

A further development in performance management stems from technological advancements.

These advances can be ascribed as a positive development through allowing more efficient

sharing of information across organizational levels (e.g. local, regional and global) (Chase

and Fuchs, 2008). However, it has also led to critical comment, notably the view that

performance management represents the 'new Taylorism', whereby performance

management is centre stage in controlling the performance of the workforce (Winstanley and

Stuart-Smith, 1996). Performance management may or may not afford greater autonomy over

how work is carried out. It depends largely on how it is administered and the underlying

management ethos. At one level, the idea of being appraised can be construed as 'akin to a

police state, where the control occurs through the collection of documentation and evidence,

a dossier on the individual. Instead of standing over ones' shoulder, sup ervision becomes a

matter of spying through keyholes' (Winstanley and Stuart-Smith, 1996: 69). This is an

accusation that is particularly noteworthy in certain sectors, such as the call centre industry.

This industry has been characterized by some as a re-creation of the sweat shops, 'dark

satanic mills', and the ideal environment for exercising 'panoptican' control over all aspects

of employee behaviour (cf. Taylor and Bain, 1999; Kinnie et al., 2000). Call centre agents are

often subject to the most in-depth monitoring of their performance through collecting 'hard'

quantitative performance measures, including time to answer a call, call length, abandoned

call rate, accuracy and adherence to script and wrap-up time. These scenarios can be

categorized as a particularly illustrative controlling form of performance management.

However it is not a unique scenario, what may be distinctive is the 'overt and pervasive

nature' of this management approach (Holman, 2005: 115).

Conclusion

Stereotypically, performance management seeks to manage human resources through the

establishment of specific objectives for individuals, teams, departments and divisions that tie

in with achieving the overall strategic objectives of the firm. It draws together HR policies

and practices to form an overall coordinated system in which to manage performance.

Performance management draws, in particular, on two theories, namely, expectancy theory

and goal-setting theory. Although this integration of theory is welcomed and indeed the case

for more can be argued, these theories also point towards problems that as of yet remain

unresolved. These include issues regarding setting feasible goals, how performance is

measured, should there be a link to rewards and – if so – what type of rewards should be

provided, and how does feedback work in the system.

Mabey et al. (1998: 149) note that performance management can be 'criticized for relying

on a model of management which is more rational than is achievable in practice'. More

specific criticisms include the universalistic form it tends to follow. By this we mean that

performance management is often applied, with little consideration given to contextual

factors such as the differences between organizational roles, cultures and national

institutional environments. Performance management systems invariably incorporate multiple

objectives and content including linking objectives to organizational strategy and developing

employee skills. As a result, many practices and tools will have to be incorporated, rendering

performance management systems quite complex. In turn, such complexity clearly poses

considerable challenges to organizations regarding the design and implementation of

performance management systems. Nor is this complexity likely to diminish anytime soon

due to pressures for improved performance, technological advances, and cultural issues in

implementing performance management across borders (cf. Fletcher, 2001; Almond and

Ferner, 2006).

In conclusion, whilst performance management has come a long way and may be working

effectively in many organizations there is a need for a more nuanced research agenda

regarding the innermost workings of performance management. To date, many of the extant

models are too simplistic. Not enough credence has been placed on the inherent complexities

and potential for contradictions that exist in making performance management an effective

system in organizations.

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... In the first chapter titled 'An Expanded View of Performance Management', Herman Aguinis draws heavily from the opening chapters of his text book (Aguinis, 2009), reflecting on different functions of performance management in organizational management context. He also presents his 6 step model of performance management which starts from fulfilling perquisite of the system and moves through planning, executing, assessment, review and re-contracting phases. ...

• Nadeem Ishaq Kureshi

If you were really looking for a review of this book, there is all likelihood that you may already have come across the review written by Brumback (2010); same copies of which are available in the Wiley-Blackwell and Business Source Premier databases. Abbreviated version, which are pretty much a redoing of what is available on many booksellers websites are available on ProQuest Central and ABI/INFORM Global databases. Well, that's not the point. The point is that Gary (Brumback) has lashed out at the book as if you will be lucky if you don't contract cholera after reading it. I don't blame him too much and I am also not sure about the Society for Industrial and Organizational Psychology being the best forum for launching this book. If you are an industrial psychologist, stop here; go and read Gary's review. If not, perhaps you will understand some percentage of Gary's fury if you compare the title of this book with its contents which does not seem to offer too much for professional practitioners. The book is very long; 17 chapters on more than 700 pages; but edited books tend to be rather longish due to diverse topics covered by multiple authors. Most authors are academicians with experience of consulting, and most contributed chapters have roots in their previous works (published in their own books or research papers). Being a performance management researcher and practitioner myself, I find this book of little value. As a professor of this subject, I find it fairly valuable. If you want to dig deep into contemporary performance management issues after having read one of many well-known textbooks on the subject, think of this book as a ladder that can connect you to further research. The following section partly discusses selected chapters briefly after giving an overview of the subject itself. Performance Management has become a super star over the last two decades. Many US public organizations, after the introduction of GPRA in 1993 (Radin, 1998) and Sarbanes-Oxley Act (2002), were forced to adopt new standards to get more out of less (Moynihan, 2008). Presently, President Obama's consistent pressure on Performance, manifested by the creation of the new position of Chief Performance Officer, is driving evolution of performance standards. In the for-profit sector, Performance Management is now seen as the only robust vehicle which can carry your business strategy towards its goals. With such focus, it is but natural that publications on the subject

... Extensively cited researches and texts such as Moynihan (2008), Aguinis (2012) and Metzenbaum (2009) suggest that active engagement of employee with the business can be measured through: (a) An employee's perception of the performance management system through which she is evaluated, or evaluates her subordinates; along with: (b) The perception of relationship between the performance management system and reward system including promotions, awards, raises etc. If your workforce believes they are being evaluated fairly and reward system is linked with evaluation, the likelihood of their engagement with the organization increases. ...

• Nadeem Ishaq Kureshi

Performance management is a sure top seller in the contemporary public and for-profit management systems (Lee and Kim, 2012). There is enough evidence to believe that well performing organizations excel at getting better performance out of available resource, and that they have considerably less knowing-doing gap when compared to their lagging competition. (DuFour, Eaker and DuFour, 2005). Growing ferocity of competitiveness and pressure on public resources is also ensuring that performance management standards are getting ever more rigorous to eke out more from less (Moynihan, 2008). A recent Gallup study (GI, 2013) of more than 50,000 business units across USA indicated a clear relationship between employee engagement and healthy balance sheets of organizations, though the study chose to remain short of actually ascertaining the direction of this relationship. Extensively cited researches and texts such as Moynihan (2008), Aguinis (2012) and Metzenbaum (2009) suggest that active engagement of employee with the business can be measured through: (a) An employee's perception of the performance management system through which she is evaluated, or evaluates her subordinates; along with: (b) The perception of relationship between the performance management system and reward system including promotions, awards, raises etc. If your workforce believes they are being evaluated fairly and reward system is linked with evaluation, the likelihood of their engagement with the organization increases. Add another construct of the organization-wide (depth & width) of communication of business strategy and you may well be able to measure your ability to achieve your strategic goals through an engaged workforce (Lee and Kim, 2012). Let's try to construct a logical sequence from it (Fig 1). Fairly simple, isn't it? Let's have a look at the outcomes of some of the recent research on performance management systems. Despite all the focus on performance management and seemingly simple constructs of ensuring organizational success, many US government reports indicate serious problems with capacity of different organizations in setting clear goals, producing valid information (GOA 1999, 2005) and linking employee performance and rewards (MPSB, 2007). Only 30% of US workforce is engaged in their work and active disengagement of employees is costing the US economy up to US $ 550 billion per year (GI, 2013).

• Saleh Al. Harbi
• Denise Thursfield
• David Bright

This article explores the relationship between Arabic culture and employees' perceptions of performance appraisal in a Saudi Arabian company named SACO. Using an interpretive and qualitative methodological framework, the article suggests that Western models of performance appraisal rooted in rationality and objectivity conflict with aspects of Saudi Arabian culture. Specifically, the personal relations implicated in the social practice of Wasta. However, the article also shows how SACO employees are beginning to reject Saudi Arabian cultural norms and adopt alternative values which are linked to notions of organisational justice and individual egalitarianism. These values are compatible with Western models of performance appraisal.

We investigate four facets of the post-editorship research performance of journal editors (i.e., number of articles in refereed journals, books, book chapters, and presentations at professional conferences) and their relationship with nonresearch performance at the university (i.e., department, school/college, university) and professional (i.e., professional organizations, journal editorial boards) levels. Our sample included 31 of the 32 journal editors from the mid-1950s to the mid-2000s of Academy of Management Journal, Academy of Management Review, Administrative Science Quarterly, Journal of Applied Psychology, Journal of Management, and Personnel Psychology who have not retired or passed away studied by Aguinis, de Bruin, Cunningham, Hall, Culpepper, and Gottfredson (2010). Results based on robust regression analysis indicate that post editorship productivity does not involve a simplistic dichotomy and mutually exclusive choice between research performance versus other types of contributions. Results show that past editors can do well-be productive researchers-and also do good-make meaningful nonresearch contributions to their universities as well as their professions in general.

• Ahmed Abdel-Maksoud

This study focuses on two Arab developing countries following the view that scope, role, and positioning of management accounting differ across organisations and countries, and, in the same direction, the study draws on the recent literature on localisation of global management control systems. Furthermore, the study embeds the view that certain contextual variables such as country differences and organisational culture possess particular cultural characteristics, which in turn affect individuals to respond distinctively to Management Accounting Systems' (MAS) applications. The main objective of this study is to investigate whether or not there are significant associations between the use and levels of importance of operational non-financial performance indicators (ONFPIs) and the extent of a set of contextual variables including firms' and managers' characteristics and workforce involvement. The study reports and discusses findings of surveying manufacturing firms belonging to various industry sectors in Egypt and Saudi Arabia (SA) in mid-2005. Findings show that levels of importance of ONFPIs in Egyptians firms are higher than those in use at their Saudi peers' firms. In general, findings on significant positive associations between the levels of importance of ONFPIs and the incorporated contextual variables in the Egyptian firms seem to be in line with prior literature findings drawn from global practices. Interestingly, the effect of organisational culture seems to be witnessed in Saudi firms evident by the negative, rather than positive, associations between two variables belonging to managers' characteristics and workforce involvement and levels of importance of ONFPIs.

• Herman Aguinis
• Ante Glavas

The authors review the corporate social responsibility (CSR) literature based on 588 journal articles and 102 books and book chapters. They offer a multilevel and multidisciplinary theoretical framework that synthesizes and integrates the literature at the institutional, organizational, and individual levels of analysis. The framework includes reactive and proactive predictors of CSR actions and policies and the outcomes of such actions and policies, which they classify as primarily affecting internal (i.e., internal outcomes) or external (i.e., external outcomes) stakeholders. The framework includes variables that explain underlying mechanisms (i.e., relationship- and value-based mediator variables) of CSR–outcomes relationships and contingency effects (i.e., people-, place-, price-, and profile-based moderator variables) that explain conditions under which the relationship between CSR and its outcomes change. The authors' review reveals important knowledge gaps related to the adoption of different theoretical orientations by researchers studying CSR at different levels of analysis, the need to understand underlying mechanisms linking CSR with outcomes, the need for research at micro levels of analysis (i.e., individuals and teams), and the need for methodological approaches that will help address these substantive knowledge gaps. Accordingly, they offer a detailed research agenda for the future, based on a multilevel perspective that aims to integrate diverse theoretical frameworks as well as develop an understanding of underlying mechanisms and microfoundations of CSR (i.e., foundations based on individual action and interactions). The authors also provide specific suggestions regarding research design, measurement, and data-analytic approaches that will be instrumental in carrying out their proposed research agenda.

• Herman Aguinis
• Sola O. Lawal

eLancing, or Internet freelancing, is spreading at an incredibly fast pace worldwide. The eLancing work environment is called a "marketplace," which is a website where individuals interested in being hired and employers looking for individuals to perform some type of work meet. eLancing allows individuals from literally anywhere in the world to sign up and complete work using the Internet for an employer who literally can also be anywhere in the world. eLancing boasts millions of users and billions of dollars in transactions and it involves fundamental changes in the nature of work and in the employer–worker relationship. We discuss eLancing and challenges and opportunities it creates for human resource management (HRM) research and practice. Also, we offer a research agenda with the goal of understanding eLancing and its effects, particularly pertaining to the core HRM areas of job design and analysis, workforce planning, recruitment, selection, training and development, performance management, compensation, and legal issues. Given the increased importance of eLancing worldwide and its implications for worldwide work arrangements in the 21st century's international society, results of such scholarly research have the potential to help narrow the science–practice gap and also elevate the status, perceived value-added, and organizational and societal influence of HRM and related fields.

The extrinsic rewards from editorial work can be erratic and disappointing. Even those who edit highly prestigious journals may find it difficult to persuade their deans to allocate resources to this activity, and their deans or department heads may advise them to publish more articles themselves instead of publishing articles by other authors. Those who receive payments from commercial publishers are likely to find that these payments translate into ludicrously low hourly wages. Those who edit journals published by their universities may hear their colleagues asking why resources are going to that specific field or topic rather than to other topics or fields.

• Osnat Bouskila-Yam
• Avraham N Kluger

Many supervisors and subordinates hate performance appraisal exercises. Moreover, the benefits of performance appraisals for organizations are questionable. To address these challenges, we participated in the development of an alternative Strength-Based Performance Appraisal (SBPA) and a goal setting process, considering ideas both from performance appraisals practitioners and from Positive Psychology scholars. SBPA emphasizes learning from success stories using the Feedforward interview [Kluger A.N. and Nir D., 2009. The feedforward interview. Human Resource Management Review 20,235–246.], reflected best self [Roberts L.M., Dutton J.E., Spreitzer C.M., Heaphy E.D., Quinn R.E. 2005. Composing the reflected best-self portrait: Building pathways for becoming extraordinary in work organizations Academy of Management Review 30(4),712–736], finding new ways to use existing strengths (Seligman, Steen, Park, & Peterson, 2005) and a win–win approach (Pruitt & Rubin, 1986). However, SBPA does not avoid negative feedback; it constrains it for prevention-focus behaviors, where it appears to be effective in increasing motivation and performance [Van-Dijk D. & Kluger A.N. 2004. Feedback sign effect on motivation: Is it moderated by regulatory focus? Applied Psychology: An International Review, 53(1), 113–135]. Following an elaboration of the theoretical rationale of SBPA, we describe a case study of applying SBPA at SodaStream (formerly Soda-Club), coupled with an initial evaluation of its impact. We conclude with lessons learned from the first implementation, followed by a call for replications.

• Hiraku YAMAMOTO

This article discusses whether a paradigm of organizational management and public management has been sifted or not, i.e. the continuity of discontinuity of a paradigm. Just like the reflection of modernity, a paradigm shift is not brought about by an instantaneous leap and severance with traditional framework, but rather by a gradual long term scientific revolution. The transformation of organizational management has also proceeded not as a fully changed model having leaped instantaneously, but as a model repeatedly and incrementally modified by the reflection of public policy processes. One of such models is NPM approach underlying the concept of TQM approach brought about by the paradigm shift during the 1990s.In this context, we will consider PPP schemes, underlying both NPM approach and TQM approach, as a typical example of multi-dimensional ways of governing. PPP schemes is based on the co-governance as a multi-level governance by the collaboration, cooperation and mutual interpenetration of the trilogy of the three sectors; the public sector, the private business sector, and the civic nonprofit sector. The trilogy model of the three sectors, each of which must be an equal subject and actor of governance in principle, will lead to the setting which would make PPP schemes work more usefully and effectively, expand quality public services, and seize the opportunity to meet needs of citizens as customers and stakeholders.In this article, we will scrutinize in turn; (1) a historical overview of the idea of public management in the prewar period, especially the scientific management and the human relations; (2) outstanding management theories in the postwar period, that is, Simon's theory of decision-making in the administrative organization, and management theories of TQM, the representative of which is Deming; (3) the idea of reinventing government to supplement the dysfunction of bureaucracy; and (4) the trilogy of PPP schemes underlying NPM and TQM as an example of multi-level governance.

Country approaches to managing performance vary according to the levels of integration of measurement and incorporation. This paper focuses on countries with developed performance management systems at the national level, and the implications of extending such approaches to inter-governmental relations and sub-national jurisdictions in terms of outcomes and accountability. Four ideal types of managing performance (performance administration, managements of performances, performance management and performance governance) are combined with three approaches to assess IGR performance (segregated, partly integrated, consolidated) resulting in twelve theoretical models for assessing IGR performance. Integrating management There has been an international trend to seek integration in public management. One indication of this emphasis is the rise of 'joined up government' - also variously termed whole of government and horizontal government - a development in public sector practice that attempts to promote inter-agency collaboration and cooperation in the pursuit of government policy goals that reflects both traditional coordination and new forms of organising to connect distinct parts of the public sector (Bogdanor 2005). A second and overlapping tendency, has been a more general move towards 'integrated government' in countries seeking to counter the fragmenting results of new public management (Halligan 2007; Verhoest and Bouckaert 2005).

• Angelo S. DeNisi
• Kevin Murphy

We review 100 years of research on performance appraisal and performance management, highlighting the articles published in JAP, but including significant work from other journals as well. We discuss trends in eight substantive areas: (1) scale formats, (2) criteria for evaluating ratings, (3) training, (4) reactions to appraisal, (5) purpose of rating, (6) rating sources, (7) demographic differences in ratings, and (8) cognitive processes, and discuss what we have learned from research in each area. We also focus on trends during the heyday of performance appraisal research in JAP (1970-2000), noting which were more productive and which potentially hampered progress. Our overall conclusion is that JAP's role in this literature has not been to propose models and new ideas, but has been primarily to test ideas and models proposed elsewhere. Nonetheless, we conclude that the papers published in JAP made important contribution to the filed by addressing many of the critical questions raised by others. We also suggest several areas for future research, especially research focusing on performance management.

• Robert S. Kaplan
• David P. Norton

Executives know that a company's measurement systems strongly affect employee behaviors. But the traditional financial performance measures that worked for the industrial era are out of sync with the skills organizations are trying to master. Frustrated by these inadequacies, some managers have abandoned financial measures like return on equity and earnings per share. "Make operational improvements, and the numbers will follow,"the argument goes. But managers want a balanced presentation of measures that will allow them to view the company from several perspectives at once. In this classic article from 1992, authors Robert Kaplan and David Norton propose an innovative solution. During a yearlong research project with 12 companies at the leading edge of performance management, the authors developed a "balanced scorecard;" a new performance measurement system that gives top managers a fast but comprehensive view of their business. The balanced scorecard includes financial measures that tell the results of actions already taken. And it complements those financial measures with three sets of operational measures related to customer satisfaction, internal processes, and the organization's ability to learn and improve-the activities that drive future financial performance. The balanced scorecard helps managers look at their businesses from four essential perspectives and answer Some important questions. First, How do customers see us? Second, What must we excel at? Third, Can we continue to improve and create value? And fourth, How do we appear to shareholders? By looking at all of these parameters, managers can determine whether improvements in one area have come at the expense of another. Armed with that knowledge, the authors say, executives can glean a complete picture of where the company stands-and where it's headed.

• Howard Gospel
• Andrew Pendleton

This chapter begins with an explanation of the focus of the book: corporate governance and labour management. It then discusses national systems of corporate governance and labour management and mechanisms linking corporate governance and labour management. An overview of the chapters included in this volume is presented.

• Robert S. Kaplan
• David P. Norton

The Balanced Scorecard was developed to measure both current operating performance and the drivers of future performance. Many managers believe they are using a Balanced Scorecard when they supplement traditional financial measures with generic, non-financial measures about customers, processes, and employees. But the best Balanced Scorecards are more than ad hoc collections of financial and non-financial measures. The objectives and measures on a Balanced Scorecard should be derived from the business unit's strategy. A scorecard should contain outcome measures and the performance drivers of those outcomes, linked together in causeand-effect relationships.

Source: https://www.researchgate.net/publication/31591116_Performance_management

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