Performance Management

Performance management is a complex function of human resource that incorporates a set of activities. They are cooperative goal setting, constant improvement review and recurrent communication, feedback and training for improved performance, enactment of employee expansion programs, and reward structures of employees. Performance management starts with integrating a new requirement in a system and terminates when an employee quits the organization. Performance management is a practical method of handling employee performance for motivating the employees and the organization towards achieving the results desired by organization. The objectives of the current paper are as follows: to indicate the issues arising when two firms merge their performance management systems, to identify associated risks and the ways in which they could be softened, to explain the value of having a performance management system, and to analyze the costs of having inadequate measurement methodologies.

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The process of buying one firm by another is termed as an acquisition, hence a combined firm is formed from the two companies with different operating systems. It is to the management’s choice whether or not to merge the various aspects of these two firms towards forming an integrated system that will work for the benefit of the firm and will help in realizing its goals. Since different firms have different performance management systems, the merged firm might have to deal with the following issue: developing job descriptions and employee performance plans might become a serious matter as each accompany has its own approach to doing so (Bensako et al., 2010). The selection processes in choosing the right people for the right job will also be an issue as they may differ. The two firms may vary in their views on the requirements and performance values for estimating the result and evaluating general productivity against the set benchmarks (Aguinis, 2009). Another issue will be the identification of training and development needs of the employees by assessing the results achieved against the established standards and executing the effective development programs for perfection. Employee evaluation can also cause controversies as different firms have different evaluation methods. As for the formulation of an effective compensation and reward systems for recognizing the best employees, every company has a different remuneration system, and this may be a question of concern as well (Aguinis, 2009). Lastly, different views on providing guidelines on promotions and career development may lead to disagreement between the human resource managers of these firms.

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As the chief reason for merging is to achieve synergy, i.e. to combine, replace, and transform the diverse systems of the firms into forming a new distinct operation system, there are some risk that the management encounter. Firstly, the combined firm faces weak or inadequate communications where the management of these companies are not willing to communicate freely with one another as they both want to be dominant, hence no one wants to listen (Bensako et al., 2010). Secondly, the lack of transparency and incompetence in preparing for the insertion and retaining of fundamental proficiencies and staffing. This is a risk where the companies are not willing to disclose all the material information for the reason behind the merger or to include and retain the capabilities of the employees of the respective firms. Thirdly, the combined company will have difficulties determining whose branding, marketing and sales effort to retain or which of them should be forgotten, and the new advanced brands and new marketing strategies should be found (Bensako et al., 2010). Fourthly, the combined firm may differ in formulating strategic goals, as each management will have different objectives. Lastly, there might be a challenge regarding what organizational culture and service standards to adopt (keep the best of both and loose the worst of both).

The above-described risks can be mitigated by developing effective communication methods and learning to listen to each other. The combined firm should also develop systems that will cater for the needs of both firms, e.g. the compensation system, the operation system, etc. The two firms should align their goals and objectives so as to come up with the common ones, and design strategies on how to achieve them (Bensako et al., 2010).

Performance measurement is the process of gathering, examining, and reporting facts concerning the performance of a group, an organization, or an individual (Neely, 2002).Performance measurement tools include Balanced Scorecard, Economic Value Added, Activity-Based Costing, Quality Management, and Customer Value Analysis. A principled performance assessment system is the one that is designed for the precise performance. Such system helps to measure the progress against internal and external goals, to achieve better performance, to implement strategy, to communicate effectively, to encourage balanced performance, and to ensure that the right measures are provided(Neely, 2002). Having inadequate performance measurement methodologies may result in following: unbalanced profit, growth, and control, unequal opportunities and consideration to the employees, imbalance of performance expectations of different populations, demotivation of employees, and leads to imbalance between short-term results, long-term aptitudes and growth opportunities (Neely, 2002).

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In conclusion, a merged firm should develop a performance management system that favors both the firms in order to avoid any possible disagreements. A good performance management system is designed to improve business profits, increase employee responsibility and motivation, ensure that all employees are treated equally, and also to enhance the quality of work life. It should also be instigated for a specific performance to improve efficient performance.

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