Introduction
Performance Management constitutes one of the core Human Resource (HR) practices, usually called the systematic efforts required to enhance employee performance through the best-fitting objective setting up for them, measuring the results, and providing continuous feedback. Armstrong (2017) refers to Performance Management as a strategic tool that is monumental in anchoring an employee with stable goals and marshalling them against the organisation’s strategic objectives in its quest for productivity and competitive advantage. This research is, therefore, intended to establish a clear explanation of the role of performance management in improvement, establish how performance management enhances organisational effectiveness and creates an edge in the wake of competition, and explore the various ways through which performance management creates and develops a competitive edge for organisational survival and competitiveness.
Section 1: Theoretical Background
The theoretical underpinnings regarding how performance management should be applied and how the effectiveness would be determined in the organisation. In this case, the Building Block Model stipulates that at the core of the concept is the existence of the Building Block Model performance into three main components: dimensions, standards, and rewards. The model introduces the idea that effective performance management should include a clear definition and measurement of the dimensions of performance critical to an organisation’s success, the development of standards of measurement against which performance can be compared, and the development of a system of rewards consonant with those measurements of performance. This gives an employee the awareness of what is expected and the motivation to achieve those expectations.
Performance management links the performance of HR with a competitive advantage at the heart of the model through its emphasis on alignment and motivation. Well-designed performance management systems and their appropriate implementations increase individual and organisational performance, in other words, ensuring that the employees’ attempts take place better in the direction of organisational strategic interests. Further, the reward system component of a control model reinforces those desired behaviours and outcomes that may contribute to the competitive advantage. An organisation is bound to motivate employees who operate at the above-standard level to improve and innovate when rewarded.
Bratton and Gold (2017) add that performance management could form a strategic driver of delivering a competitive HR advantage as it helps develop high-performing cultures. A high-performance culture will then breed effectiveness, efficiency, and flexibility, all of which are vital features essential in today’s troubled ambience characterised by rapid changes and demands in business. Besides, excellent or effective performance management in GAO, or any other organisation for that matter, could aid in developing capabilities in companies that are necessary for them to be adaptive and resilient, hence capable of obtaining a competitive, sustainable advantage.
Section 2: Performance Management Evaluation
The GAO follows models of performance management supported by an advanced perspective that includes the Building Block Model, accommodating performance accounts, standards, and rewards. In particular, the approach takes into account that open and transparent objectives of performance are developed across the series from individual to organisational levels, reflecting strategic orientation at GAO (Armstrong, 2017), where feedback constantly rebinds constructively in a manner that the employees make an improvement, enhancement or manage to develop their skills and careers in the organisation. The GAO rests on a refined reward system that does not only regard financial incentives but also non-financial incentives, such as innovation and teamwork. These non-financial incentives give vent to a comprehensive view of performance.
Therefore, the general importance of performance management must be considered to provide GAO with a prized advantage. Employee goals are therefore aligned to strategic goals, detailed goals and objectives internal to this organisation to ensure that the employees are perpetually tuned to the activities that directly impact the success in the competitive market. This is paramount in developing an environment in which employees know what and how to do. It not only forms clear expectations of what will inspire employees to reach greatness in performance but also offers an environment to develop and learn of the same (Dessler & Vahle, 2016). Other than the preceding, non-financial incentives incorporated into the performance management system at the GAO enhance employee engagement and satisfaction, which are necessary for retaining a high-performance culture (Bratton & Gold, 2017).
Furthermore, the performance management system at GAO goes a step further in encouraging continuous improvement and innovation. The organisation has set such mechanisms as constant review and updates of the performance standards that will ensure the workforce members remain agile and responsive to changes in the market. It then turns out that this adaptability has been the most significant point of competitive advantage for GAO in manoeuvring through complexities related to the global market.
Section 3: Challenges in Reward System Implementation
GAO organisational implementation at organisational reward systems can face multiple barriers that will later be visible in the section. Sometimes, the whole workforce is their one hurdle because, as Mullins and Linehan (2017) point out, frontline employees originate from the heart of cultural backgrounds with conflicting interests, values, and motivations. This would mean that a reward system developed by GAO would greet this highly diverse employee base and not simply favour one group over the other – from persons understanding the various cultural dynamics to approaches to rewards likely to work best.
To ensure harmony between organisational strategic goals and reward systems, a significant problem is fairness and visibility. GAO, as Bratton & Gold (2017) note, has grappled with its workers over time with the indication that the criterion towards the performance-based rewards remained obscured or unfair, meaning the workers would be dissatisfied and lack motivation. This brings up the real essence of communication and performance measures that are non-discriminative in the design and implementation of a reward system.
This is so because, to the extent that rapid technological change alters work and employees’ contributions, GAO’s reward system must also keep up with and reflect changes promptly. This is so well bound up again with Mullins’ view, and Linehan is advanced by Mullins and Linehan (2016): “Digital transformation in workplaces brings changing demands requiring a constant change in the application of reward systems, from recognition for new skills and digital competencies, usually hard to value or reward effectively.
For instance, the GAO gives examples of a performance-based bonus system that tried to motivate innovation but left employees confused and unsure of what they could do to get the bonuses since no clear guidelines were there to sum up as “innovative contributions.” Setting clear reward criteria is hard (Dessler & Vahle, 2016).
On the contrary, the GAO experience brings hurdles to the development and execution of a compensation scheme that is non-arbitrary, neutral, and inclusive vis-à-vis various organisational strategic objectives and specific workforce requirements. These barriers imply actions that should be kept abreast of, along with evaluating and adjusting rewarding systems to ensure their systems remain inspiring and involve the workforce truthfully.
Conclusion and Recommendations
Therefore, this report identifies the central role of performance management in supporting GAO HR’s competitive advantage, focusing on employees’ objectives, strategic alignment to organisational goals, and the need for a comprehensive reward. Under the same, new emerging issues under workforce diversity, the alignment of workers with organisational strategic objectives, and adaption with technological advances have been noted to be a likely hurdle to the effectiveness of the same systems.
Lately, the further use of performance-based rewards has raised criticism and can give birth to malpractices, unfair behaviour, and other problems. In order to mitigate all these, GAO is advised to subject its reward systems to a more open and inclusive design by clearly laying down communication of the performance criteria and involving employee feedback, bringing into focus the elusive and varied needs and expectations. Further, technology can be a tool to gauge and evaluate performance, enhancing fairness and transparency in rewarding performance.
Such implementation could add to the effectiveness of GAO’s performance management and reward systems for the recommended strategies. In summary, the Competitive Human Resources Plan would further strengthen GAO’s human resource competitive advantage in installing a culture of clarity, fairness and adaptability to further take the lead in managing high performance and motivation of the workforce in a highly dynamic global market.
References
Armstrong, M. (2017). Performance management: Key strategies and practices. Kogan Page Publishers.
Bratton, J., & Gold, J. (2017). Human resource management: Theory and practice. Palgrave Macmillan.
Dessler, G., & Vahle, J. B. (2016). Strategic human resource management. Pearson Education Limited.
Institute for Employment Studies (IES). (n.d.) Performance management toolkit. https://www.employment-studies.co.uk/what-we-know/performance-management
Lawler, E. E., & Mohrman, S. A. (2003). Shaping the future of work: Building high-performance organisations through effective human resource management. John Wiley & Sons.
Mullins, L. J., & Linehan, M. M. (2016). HRM in a digital world: People, analytics and the future of work. Pearson Education Limited.
Society for Human Resource Management (SHRM). (2023). Performance management and development. https://www.shrm.org/topics-tools/tools/toolkits/managing-employee-performance
Torrington, D., Hall, L., Taylor, S., & Sinclair, P. (2019). Human resource management. Pearson Education Limited.
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