Managing and Measuring Employee Performance: Original Research into the Measurement and Valuation of Employee Performance within the World's Leading Organizations

Citation

Brennan, E. (2008), "Managing and Measuring Employee Performance: Original Research into the Measurement and Valuation of Employee Performance within the World's Leading Organizations", Library Management, Vol. 29 No. 1/2, pp. 137-139. https://doi.org/10.1108/01435120810844757

The annual performance review has evolved. But to what extent, why and who is doing it best? It is these questions authors Houldsworth and Jirasinghe tackle in Measuring and Managing Employee Performance. The answers to which provide the clues to designing our performance review systems. And, based on the field‐research presented, it appears if you are not designing or reviewing your performance management system you are one of the few who aren't.

Designed for the HR practitioner or those responsible in organisations for the creation, maintenance or review of performance management systems, Managing and Measuring Employee Performance provides an evolutionary view of performance management, mapping its history as a once‐a‐year event to its transformation in the best companies as an integrated support mechanism driving strategy and organisational culture. Divided into three parts and using literature, surveys and case studies, the authors present pathways that assist us in answering the fundamental question for our own organisations: “Why manage performance and how should we do it?”

For many, the annual performance review has almost become an obligatory component of human resource management with little thought to the first part of the question above. When done poorly it is a difficult and sometimes painful process for employees and managers alike. When done well it can motivate staff and lead directly to improved organisational performance. Underlying the positive results of performance management are two distinct approaches. Soft, developmental approaches, also known as the “how” of performance management focus on motivating and building employee capabilities. Hard, measurement approaches, also known as the “what” of performance management focus on the tangible outcomes required of employees and the ways in which we rate and reward effort toward these. Houldsworth and Jirasinghe use the delineation of these two approaches throughout the text to draw a distinction between the objectives of each and their links to organisational and HR strategies. This is a key theme throughout the book, posing the challenge for readers not to choose one or the other but to give consideration to balancing the two.

Part One provides a historical context for performance management, outlining its evolution and underpinning theoretical bases. The chapters seek to contextualise performance management within the strategic aims of organisations and outline the drivers, characteristics and outcomes of the two sides of the performance management coin: performance development (soft) and performance measurement (hard).

Surveys of line managers make up most of Part Two and provide a view of how performance management is being used and perceived in the field. It paints a picture of change within performance management systems across the board as organisations have sought greater alignment between their human resource practises and strategic outcomes. Case studies are used to illustrate how this is playing out across a range of organisations. And specifically, in Chapter 7 “The secrets of the world's most admired companies” which highlights performance management success factors in these organisations. Perhaps not surprisingly, the key characteristics for success point not to a system or to review forms but to organisational culture, clarity around strategy, holding people accountable and a mix of both developmental and measurement approaches to managing people.

Part Three brings the two previous parts to their practical conclusion, setting some guidelines for how performance development and performance measurement might be integrated with organisational and human resource strategies. Each component of performance management – planning, managing and reviewing – are looked at in depth and supported by case studies that make the leap from the framework to the real world, outlining existing and future challenges and organisational‐specific considerations.

The text avoids providing easy answers or solutions but does use the examples set by peer‐rated best organisations from Fortune 1,000 and Global 500 lists to consider implications for use. While advocating the importance of executive support in achieving successful implementation, and of management skills in delivering performance reviews, the authors refrain from telling us how to develop our performance management systems. Their field research shows that successful organisations use performance management to support the strategic objectives of the business. To do this they use bespoke systems and processes that sit synergistically with organisational plans and other human resource strategies.

Managing and Measuring Employee Performance is not, for the most part, designed for the manager who engages in the performance management process with their staff. Having said this, line managers will find certain chapters containing contextual information and case studies beneficial in gaining a greater understanding of this human resource process which is required of them, but often difficult and stressful to use. The text, however, is primarily aimed at the next level up, for personnel charged with determining the kind of system that best fits the organisation, whether to choose hard or soft approaches or what combination of these, and the executive support, communication and line manager training required for successful implementation. As such, the authors present a welcome resource for HR personnel or managers seeking to understand how to maximise performance management.

The research presented in this text makes clear the impact of measurement‐based management on strategic human resource functions and, in particular, performance management. The result, as the authors sum up, is a move from “managers and employees having high quality conversations” to an organisational culture whereby ongoing conversations are “aligned to what needs to be done to deliver the organisational strategy” (pp. 222 and 223). The annual performance review has evolved. At the very least it has moved away from a yearly event to an ongoing process. If it is up there with the best it integrates employee performance measures and management seamlessly with organisational strategy. If the first challenge is to seek answers to the question “Why manage performance and how should we do it?”, the text makes clear the next challenge for organisations is to ensure the answers are fully integrated with business objectives for those who must use it.