Practices of Performance Management

Introduction

Performance management is the process of developing, planning, evaluating, and monitoring an organization or individual’s performance. These practices involve a range of activities, such as goal setting, performance planning, regular feedback, performance appraisal, development planning, rewarding or recognition, employee involvement, and performance improvement plans (Cappelli and Tavis, 2016), all to improve individual and organizational performance and success. o gain a thorough grasp on how these practices assist in the performance improvement of an organization, this study will look into and analyze Amazon’s performance management plans over the years using the Expectancy Theory of motivation. Therefore, it answers the ever-lingering question of how effectively performance management practices relate to the individual level of employee outcomes.

Background

Amazon, founded in 1994, is an e-commerce giant that has revolutionized the retail industry globally, spreading its influence across multiple sectors (Oyewole). Having started as an online bookstore that expanded its reach to other sectors by increasing its product offerings, the growth and development of the company can only be credited to its management. When it comes to management, the company has incorporated multiple management practices, with performance practice being a key player. Over the years, the company has established its name for the incorporation of its controversial yet distinctive approaches. It bases its success on notions such as efficiency, a result-driven culture, continuous improvement, and value for metrics (Amazon). These approaches led to the development of performance management practices such as:

• Rank Yank and stack Ranking system. This system was aimed at pitting employees against each other as a way of increasing competition and growth among employees. Although crude, the approach led to some fruitful results as performance within the company skyrocketed for a short period before the approach was changed.
• Data-driven decision making. This approach was incorporated during Bezos’s reign when he encouraged the use of the Six Sigma model (Oyewole). This model emphasizes the use of data-driven decisions as a way to monitor employee performance using metrics while providing the best customer experience.
• Leadership principles as guideposts. This approach, also known as Amazon’s 16 leadership principles, emphasizes performance over collaboration and development. This was by monitoring an employee’s ability to own and defend their ideas.
• Continuous feedback using the Anytime Feedback Tool. As an addition to its well-structured performance management processes Amazon decided to incorporate the Anytime Feedback Tool to improve on its employer-employee relationship. This tool enables continuous feedback from the employees while maintaining their anonymity (Amazon). It, therefore, allows the critiques and praise of colleagues, hence prompting improvement of the employees while helping identify the most outstanding of all. Thus, the tool stands out as the most holistic performance management approach.
• Demanding High Performance: Bezos articulated Amazon’s ideology, which called on workers to put in long, hard, or intellectual hours of work while keeping an eye on always raising the bar. This approach to performance management provides the base for its strategies.

Although these performance approaches change over time, the central notion that governs the strategies, which is high performance, continuous feedback, and use of data-driven processes, remains (Cappelli and Tavis, 2016). Therefore, to critically analyze the efficiency of the company’s performance management practices in relation to individual-level employee performance, this study will utilize the Expectancy Theory of motivation. Victor Vroom developed this theory, and it states that employee performance is influenced by three core factors, namely expectancy, instrumentality, and valence.

1. Employee expectations regarding performance at Amazon can undoubtedly be raised by their data-driven strategy and usage of transparent metrics. They have no trouble seeing the connection between their performance and their efforts (Oyewole). However, it is important to consider that their stack ranking system is competitive, which may lower expectations for some employees, particularly individuals who believe that their efforts will not be appreciated or acknowledged in the rankings.
2. Amazon’s instrumentality may undoubtedly be strengthened by utilizing a performance improvement plan (P.I.P.) and regular feedback via the Anytime Feedback Tool. Workers can observe firsthand how their actions affect their results, whether they are favourable or unfavourable for penalties (Oyewole). Nevertheless, the ‘rank and yank’ element can give the impression that the competitive nature of the ranking system does not exempt even high achievers.
3. Amazon’s strategy efficacy is a double-edged sword. The reason is that some employees might find the competitive climate and the use of clear metrics to be conducive. In contrast, others might find it to be stressful and demoralizing, particularly in light of the possibility of receiving unfavourable feedback.

Attitude Outcomes: Employees may adopt a variety of attitudes as a result of Amazon’s strategy. A competitive atmosphere may foster a culture of high performance, but it may also result in low commitment, higher stress, and lowered job satisfaction among employees who feel undervalued (Lee, 2007). A successful and effective workplace is largely dependent on promoting excellent work behaviours. Clear performance indicators can encourage workers to perform well, but it is vital to take into account any possible drawbacks as well, such as creating unhealthy competition or system manipulation. Therefore, it is essential to humanize the strategy by placing a high value on teamwork and personal development.

Based on this analysis carried out above using the Expectancy Theory of motivation, most of the performance management practices have a positive effect on the employees. They include the data-driven approach, high-performance approach, continuous feedback approach, Sixteen Leadership principle, and the Yank Rank approach. Despite the positive impact, some do have negative impacts; hence, it would be best if the company may consider some of the following recommendations.

1. Changing from a purely competitive ranking system to a more equitable one that recognizes both individual and team accomplishments is one method to do this. Employees can feel more motivated and connected when teamwork is encouraged, which creates a more positive work atmosphere.
2. Customizing development programs for each individual based on their talents and career goals is another essential component (Heneman and Schwab, 1972). This can boost loyalty and job happiness in addition to demonstrating to them how much the organization supports their personal development.
3. Fairness and transparency are crucial components of the performance review procedure. This can be accomplished by giving regular feedback sessions and allowing staff members to participate in setting goals (Cappelli and Tavis, 2016). Fair and transparent procedures can increase employee engagement and foster systemic trust.
4. Ensuring the health of employees is also essential for a productive workplace. This can be achieved by implementing programs that encourage mental health and work-life balance. Worker happiness and health are positively correlated with job satisfaction and performance.
5. Finally, it is critical to teach managers about emotional intelligence and effective feedback methods. Individual performance and team chemistry are significantly impacted by a competent manager (Heneman and Schwab, 1972). Through development investments, the organization may foster a positive and encouraging work environment for every employee.

Businesses may foster a more pleasant work atmosphere where employees are more engaged, content with their jobs, and dedicated to the company by putting these suggestions into practice. In the end, this could enhance the business’s overall success and improve employee-to-employer relationships.

Conclusion

According to the Expectancy Theory developed by Victor Vroom, Amazon’s performance management procedures have proven to be in line with their effects on workers’ well-being. This is seen in the various performance management practices incorporated by Amazon, for instance, the Yank Rank approach. Due to the highly competitive environment it creates, it can trigger both positive and negative attitudes in individual employees that, in turn, affect their performance. This proves that there is a relationship between Performance management practices and individual employee outcomes. Other than that, continuous feedback provided by the Anytime Feedback Tool further justifies the claim as critiques prompt improvement from those affected. Despite this relation, some of the performance management practices might have more adverse effects than positive; hence, recommendations on various changes were necessary. This is because Performance management practices should lead to more positive outcomes than negative ones. The main recommendation is on the Yank Rank management practice, which might have more negative impacts on the employees than positive. Therefore, performance management does affect the individual level employee outcomes.

Reference List

Amazon, W.C.A., Management Assignment: Case Analysis of “Amazon As An Employer”. Management Assignment: Case Analysis of “Amazon As An Employer” | Total Assignment Help

Cappelli, P. and Tavis, A., 2016. The performance management revolution. Harvard Business Review, 94(10), pp.58-67.

Heneman, H.G. and Schwab, D.P., 1972. Evaluation of research on expectancy theory predictions of employee performance. Psychological Bulletin, 78(1), p.1.

Lee, S., 2007. Vroom’s expectancy theory and the public library customer motivation model. Library Review, 56(9), pp.788-796.

Oyewole, O., Analysis of Amazon’s Current Organisational Performance Management System.