Relationship between variables in the context of employee’s performance

 

Area’s Focused,

• Effect of capacity building on the employees’ performance,
• Effect of managers’ support on the employees’ performance,
• Moderating effect of employee retention between capacity building and employee performance.
• Moderating effect of employee retention between managers’ support and employees’ performance.

Employee performance can be defined as “the record of outcomes, produced by specifying job activities or functions during a given period” (Bernardin, 2002). The performance of an employee is derived from considered as possible job-related employee work practices are implemented. Employee performance is evaluated by a manager every year on a quarterly basis or monthly basis that provides insight for the betterment of employees (Saleem & Amin, 2013). As defined by Tzafrir (2005), capacity building is a critical component in developing effective human capital. Financing in capacity building and training programs can make employees feel grateful to a firm.

Employee performance (dependent variable) is a primary interest of this research. The main goal is to understand and describe the importance of employee performance in the textile sector, which is a labor-intensive industry. According to Delaney and Huselid (1996), clarifications, performance, and results depend upon the way the managers are used to deal with their employees. So, manager support and capacity building can directly affect employee performance and business outcome. Employee performance can be developed by accepting special measures that include job-related skills, knowledge, social capital, organizational capital, leading role, employee job development, authorization, redesign of work, training and development programs based on skills, evaluation, and reward system (Pfeffer & Jeffrey, 1998).

Manager Support

Manager support involves the process of influencing employees to work for the achievement of organizational goals (Lussier, 2011). A manager’s leadership can have direct impact on the satisfaction of employees through personal contact and indirect impact through shaping supporting policies (Yukl & Becker, 2006). Manager support is described as the degree to which the leaders appreciate the contributions of its employees and care about their welfare. Employees are probably going to remain in those associations where they trust that their capacities, commitments, and positive attitudes are valued (Terera & Ngirande, 2014).

Capacity Building

The term capacity building has been used in varying contexts, expressing different meanings and explanations. It was considered that the term correlates closely with HR development, that is, enhancing employees’ knowledge and training. The field was quite narrow, which concentrates on the development of staff by formal education and trained workers to fill the gap of the qualified personnel in the industrial operations (Rajabifard & Williamson, 2004). However, the past few years have transformed this old concept into a broader and global perspective. It focuses on employee development, covering institutional as well as specific initiatives of the country (Williamson, Rajabifard, & Enemark, 2003).

Each has distinct abilities and needs. On the same day of recruitment, employee training should be started. According to the nature of the job, employers try to bring knowledge, experiences, and skills in their employees. However, some employees rely on the knowledge and training provided by the organization in their orientation session to perform their jobs. All organizations must include on-the-job training and off-the-job training in their standard operating procedures (SOPs) and manuals. Managers invest in the HR and capacity building of their employees to change and adapt the knowledge, behavior, and skills related to their job. As a result, the trained employee becomes the ambassador of the brand and uses their updated knowledge and skills to do their job better, which results in the positive outcomes and employee retention (Benson, 2006; Gull & Azam, 2012).

Employee Retention

“It is the percentage of employees remaining in the organization” (Phillips & Connell, 2003). According to the study conducted by Fitz-Enz (1997), on average, a company loses almost one million dollars with every 10 executive employees who leave the organization. Usually, the total cost of employee turnover is equal to 2 years’ salary and benefit of the uncertain employee. Losing the most significant employees of an organization not only affects the economical growth but also the organizational growth. Knowledge is gained by the experience and formal education, and it is applied to meet the customer expectations. Knowledge management is a process of acquiring and sharing knowledge to improve a firm’s performance (Bassi, 1997).

Conceptual Framework

In the literature review, we have found that managers’ support and capacity building have a significant impact on employee performance. Organizational performance depends on both employees’ and managers’ performance. Capacity building and manager support and employee retention are antecedents to enhance employee performance in the industries. The following theoretical framework was designed to describe a relationship between managers’ support, capacity building, and employee performance in the presence of moderating variable such as employee retention. Managers’ support and capacity building have an impact on employee performance. Managers’ support and capacity building not only morally develop employees but also organize their abilities for enhancing the productivity of organizations (DeJoy & Wilson, 2003, Figure 1).

                            Source : SAGE Journals 

Reference

Bernardin, H. J. (2002). Human resource management: An experiential approach. New York, NY: Irwin Professional Pub.

Ahmad, T., Farrukh, F., Nazir, S. (2015). Capacity building boost employees performance. Industrial and Commercial Training, 47, 61-66.

Asfaw, A. M., Argaw, M. D., Bayissa, L. (2015). The impact of training and development on employee performance and effectiveness: A case study of District Five Administration Office, Bole Sub-City, Addis Ababa, Ethiopia. Journal of Human Resource and Sustainability Studies, 3, 188-202

Delaney, J. T., Huselid, M. A. (1996). The impact of human resource management practices on perceptions of organizational performance. Academy of Management Journal, 39, 949-969.

Lussier, R. (2011). Management fundamentals: Concepts, applications, skill development. Boston, MA: Cengage Learning.

Pfeffer, J., Jeffrey, P. (1998). The human equation: Building profits by putting people first. Boston, MA: Harvard Business Press.

Saleem, S., Amin, S. (2013). The impact of organizational support for career development and supervisory support on employee performance: An empirical study from Pakistani academic sector. European Journal of Business and Management, 5, 194-207.

Terera, S. R., Ngirande, H. (2014). The impact of rewards on job satisfaction and employee retention. Mediterranean Journal of Social Sciences, 5, 481-487.

Tzafrir, S. S. (2005). The relationship between trust, HRM practices and firm performance. The International Journal of Human Resource Management, 16, 1600-1622.

Yukl, G. A., Becker, W. S. (2006). Effective empowerment in organizations. Organization Management Journal, 3, 210-231.

Williamson, I. P., Rajabifard, A., Enemark, S. (2003). Capacity building for SDIs

Behavioral Drivers of Employee Performance in Public-Sector

 

Performance improvement in public-sector organizations is a daunting challenge for the governments and public managers alike. Several strategies and techniques have been used. However, comprehensive literature on improving organizational performance through employees’ performance in public sector is rather scant. U.S. personnel department defined performance management as “the systematic process by which an agency involves its employees, as individuals and members of a group, in improving organizational effectiveness in the accomplishment of agency mission and goals.” (U.S. Office of Personnel Management, 2020). However, most literature on performance management system is concerned with measurement models or strategic management models rather than with behavior-oriented models.

Moreover, there is no ambiguity about the broad horizon of performance management system in the public sector. Bouckaert and Halligan (2008) classified performance systems in public sector into three major domains: macro-, meso-, and micro-level domains. Macro-level performance of government deals with country wide or supranational aspects of performance. Meso-level deals with intraorganizational-level performance. Micro level is concerned with performance of individuals in the public-sector organizations. However, managing performance at micro level, particularly at public employee and organization level, is a least explored arena in public-sector research (Dooren et al., 2015; Pulakos et al., 2019).

Significantly, performance management within a public-sector organization is one of the most important functions with which inefficiencies of employees and systems can be reduced to improve the overall effectiveness of the organization. In fact, not only does the effective management of performance may lead to minimal wastage of resources and increase the overall efficiency of the organization, it may also result in better outcomes in terms of citizen satisfaction with the government (Ma, 2017).

However, managing and improving the performance of a public-sector organization via its employees is a formidable challenge. Several studies have examined performance measurement (e.g., Arnaboldi & Azzone, 2010; Brignall & Modell, 2000; Micheli & Neely, 2010) and outcome-based performance management within the public sector (Borgonovi et al., 2017; Heinrich, 2002) with the goal to improve organizational performance by setting standard and predetermined performance indicators for evaluating employees’ performance. Interestingly though, few research studies have tried to address the effect of internal management on improving individual and organizational performance at micro level and the role of employee behavior as a determinant and regulator of performance. This study focuses on empirical studies that connect aspects of administrator behaviors toward performance such as leadership, management, and HR practices; and how these can act as drivers of performance at organizational level.

Performance management has been an important topic in public administration literature for the last three decades (Osborne, 2016) and improving the performance management system is still one of the most important tasks in a public-sector organization (Arnaboldi et al., 2015). To unravel the intricacies of performance management, research has been conducted in several national contexts (Goh et al., 2015; Ohemeng et al., 2018; Rimkutė et al., 2015). Recent studies focused on gaining an understanding of the issues surrounding the implementation, design, and use of performance management in different types of public organizations and the impact of performance on stakeholders. Although several studies have highlighted the need for organizations to “buy in” performance management and measurement systems if they are to be successful, relatively little literature is available that views performance from the perspective of behaviors of public administrators (BPAs).

However, there is little literature that investigates the internal management practice related with human side of performance, that is, employee and management behavior, leadership behavior, and Human Resource Management (HRM) practices that are helpful for driving individual performance. Therefore, this study attempts to fill in the main lacuna in the literature by investigating the drivers of performance that have to do with behavioral aspect of public administrators and identify what needs to be focused in future research agenda. In other words, this study has looked at determinants of performance in public-sector organizations from the behavioral perspective.

Effective performance management is not only dependent on technical aspects such as the tools used to gather, measure, and analyze performance data, and a routinized design of performance evaluation. Merely measuring performance on a quarterly or monthly basis and using the information to aid in decision-making by public-sector managers may not be enough. A more dynamic and novel approach is required to cast a real impact on improving both employee and organizational performance in public sector. This could be achieved via an employee’s daily interaction with organizational behavior (OB) and management tools. http://Gao (2015) stated that better management of performance required a more dynamic view that goes beyond simple direct methods of task performance measurement and resultant performance evaluation tools toward the more “human side” of performance management methods.

Leadership and Performance

Various studies have shown that leadership plays an important role in improving the performance of an organization by finding a positive link between leadership factors and job outcomes such as the “citizenship behavior,” “job performance,” and “creativity.” Leadership motivates individual employees by fulfilling their nonmaterial and psychological needs (Bouckenooghe et al., 2014; Burke et al., 2007; Hassan & Hatmaker, 2014; Zhu et al., 2013). Improving the performance of a public-sector organization can be achieved at the least cost by developing and providing the needed leadership. Therefore, research needs to focus on aspects of administrative leadership which are known to motivate followers/employers to perform their job that in turn drives organizational performance

Leadership change in public organization, both through leadership development and change in incumbency, affects the performance outcomes at employee and organization level, though internal or external constraints may cause hindrance in effects of leadership to influence employee performance (Boyne & Dahya, 2002; Seidle et al., 2016). Petrovsky et al. (2014) explain the reason of leadership success in some organizations. The study identified leaders’ previous experience and competency among the few factors responsible for differences in performance accompanying leadership change. These factors are brought by the new leaders or better-trained leaders to bear on the situations in need of change through improved performance. New or improved leadership is justified in the eyes of both leaders and followers by a need for improvement in performance.

Some literature suggests that the style of leadership does not only influence the behavior of public-sector employees but also has the potential to boost the capacity of management as well. For example, Andrews and Boyne (2010) showed that leadership has the potential to influence financial, technological, and HR capacity in organizations if it provides the direction and support needed to accomplish the missing skills. However, literature is yet inconclusive in showing what kind of leadership style and attributes work best to generally improve capacity building in public organizations, or what other factors in an organization’s context (such as organizational politics and culture) influence capacity building.

 

Similarly, Fernandez et al (2010) found that “integrative leadership” (which is based on the five leader orientations, namely: task orientation; relationship orientation; change orientation; diversity orientation; and integrity orientation), had a positive effect on the performance of employees in federal-level organizations. However, this impact was weak, which suggests that other factors may also be intervening between leadership and performance relationship. This latter suggestion is reinforced by the findings of Bellé (2013) showing that good leadership alone was not enough to improve performance; other factors such as job design may also be needed by good leadership to improve performance.

Overall, literature suggests that leadership has important role to play in driving employee and organizational performance in the public sector. Thus, public organizations should focus on developing transformational, ethical, and empowering leadership styles and a contingency approach toward leadership for boosting performance of public-sector employees and organizations. Research needs to focus on the processes that may lead various forms of leadership to performance in varied and dynamic environment of contemporary public sector.

Management Behavior and Performance

Performance management in public-sector organization is not about just developing sophisticated measurement tools, gathering performance data, and then decision-making by both executives and politicians based on performance data analysis. Performance can be managed more directly and on a more regular basis by managing the behavior of employees. Moynihan and Pandey (2005) stated that a modern administrative state carefully nurtures a healthy relationship between management and employee performance. Research studies have attempted to find the relationship between the management of public employees’ behavior and their subsequent performance. Nicholson-Crotty et al. (2016) stated that there is a link between the performance of a public-sector organization and the degree to which its managers are willing to psychologically empower employees and encourage them to innovate and to take risks. The study also concluded that the degree of success or failure of the organization in turn affects the predilection of managers toward empowerment and decentralization.

 

HRM Practices and Performance

HRM practices are known to influence employees’ behavior in public organizations (Paré & Tremblay, 2007). For instance, HRM practices aimed at building high involvement and commitment of employee shape the development of psychological links between administrative behavior and organizational mission and goals (Arthur, 1994).

                                                        Source : SAGE Journals 

References

Allen, M., Ericksen, J., Collins, C. (2013). Human resource management, employee exchange relationships, and performance in small businesses. Human Resource Management, 52(2), 153–173.

Andrews, R., Boyne, G. (2010). Capacity, leadership, and organizational performance: Testing the black box model of public management. Public Administration Review, 70(3), 443–454

Arnaboldi, M., Azzone, G. (2010). Constructing performance measurement in the public sector. Critical Perspectives on Accounting, 21(4), 266–282.

Goh, S., Elliott, C., Richards, G. (2015). Performance management in Canadian public organizations: Findings of a multi-case study. International Journal of Productivity and Performance Management, 64(2), 157–174

Hassan, S., Hatmaker, D. (2014). Leadership and performance of public employees: Effects of the quality and characteristics of manager-employee relationships. Journal of Public Administration Research and Theory, 25(4), 1127–1155

Kroll, A. (2015). Drivers of performance information use: Systematic literature review and directions for future research. Public Performance & Management Review, 38(3), 459–486

Paarlberg, L., Lavigna, B. (2010). Transformational leadership and public service motivation: Driving individual and organizational performance. Public Administration Review, 70(5), 710–718

Factors Affecting the Performance of a Service Organization

 

The performance excellence of a service organization and its continuation has become a great challenge for the management. The availability of research articles on performance measurement of a manufacturing organization is very large in comparison to the service organization. However, some research articles on the performance of service organizations have also been published such as Husgafvel et al. (2014) has given more stress on the social sustainability of the process industry. Similarly, Hussain et al. (2016) has focused their attention on supply chain sustainability in the service industry.

The performance management of a service organization has been a challenging task due to the involvement of human psychology and the self-satisfaction of producers and consumers in service production and consumption. The term performance measurement can be defined as the quantification of the efficiency and effectiveness of action (Neely et al., 1995), where the effectiveness is the extent of satisfaction of the customer’s need and efficiency is the rate of economically using the corporation’s resources in service production. For better performance management, some approaches have been proposed in the literature. 

Kaplan and Norton’s (1993) proposed a balanced scorecard for performance measurement, considering all the perspectives such as internal customer, financial, customer and stakeholders, and learning and growth of the organization. Dixon et al. (1990) utilized their Performance Measurement Questionnaire (PMQ) to recognize the qualities and failings in the execution. Shieh et al. (2020) measured the efficiency of the life insurance companies using a four-stage Data Envelopment Analysis (DEA).

It has been observed that the design of performance measures is very poorly defined in many companies creating a lot of confusion and misunderstanding. According to Bourne et al. (1998),

a performance measure record sheet is used to record the definition of the performance measure. Once the information is collected regarding each measure, four tasks are to be completed which are, data creation, data collection, and data analysis and information distribution.

Most of the performance measures used are quantitative which may fit in the manufacturing industry, but for the service industry, many performance measures are qualitative. The decision about the service quality is very subjective, it must include the wellness of customers, employees, and society. It depends on many factors such as top management vision and leadership (Arshida & Agil 2013), corporate social responsibility (Hopkins, 2012), respect for the rules of law (Zurn et al., 2012), and transparency in dealing (Rawlins, 2009).

Very few researches have addressed these issues which lead to word of mouth for the appreciation of the services and the organization. The Top management commitment is considered an important success factor for the performance improvement of the organization. The main direction of the organization regarding the operations of various activities is based on the policy of the top management consisting of the vision and mission of the organization.

Service quality is one of the parameters of the performance of the organization. Responsiveness, Tangibility, Assurance, Empathy, and Reliability are picked as free factors while consumer loyalty and customer satisfaction are considered as needy factors (Masrurul, 2019). However, in the present study, the responsiveness of the service provider toward customer complaints regarding services gives more importance than the other service parameters.

Customer satisfaction and customer loyalty are the important parameters to judge the service performance. However, considering financial success, customer loyalty, and customer satisfaction are not always related closely (Williams & Naumann, 2011). There are various reasons and factors such as product, market segment, and price that can influence customer behavior. Some of the important references for the various factors considered in the performance analysis in the paper are summarized in Table 1.

Source: SAGE Journals 

It can be observed that the existing literature does not give the proper weightage to the employee satisfaction and welfare for performance measurement of the organization. In this study, customers’ and employees’ satisfaction with service cost and quality, e-commerce, transparency in dealing, corporate social responsibility, respect for the rule of laws are kept in the center to measure the performance of the organization. Following research gaps are identified based on the literature review:

1. Most of the measures identified for the performance measurement of service organizations are quantitative. The qualitative measures are also to be incorporated.
2. Very few research highlighted the factors having subjective, such as respect for the rule of law; corporate social responsibility, that is, well-being of broader society employee empowerment; employee participation; and satisfaction.
3. There is a lack of studies on the causal relationships among the factors influencing the performance of service organizations.

References

Ariani, D. W. (2015). Employee satisfaction and service quality: Is there relations. International Journal of Business Research and Management, 6(3), 33–44

Beamon, B. M., Balcik, B. (2008). Performance measurement in humanitarian relief chains. International Journal of Public Sector Management, 21(1), 4–25

Dess, G. G., Lumpkin, G. T., Eisner, A. B. (2010). Strategic management: Test and cases. McGraw Hill/Irwin Press.

Karakas, F. (2010). Spirituality and performance in organizations: A literature review. Journal of Business Ethics, 94(1), 89–106.

Williams, P., Naumann, E. (2011). Customer satisfaction and business performance: A firm-level analysis. Journal of Services Marketing, 25(1), 20–32.

How Can Personnel Performance Evaluation Systems Be Improved?

 

The employment environment, nowadays, is becoming increasingly competitive (Thurston et al., 2012). Organizations are confronted with new challenges concerning their human resource management (Bogaert & Vloeberghs, 2005).

Organizations are faced with fast-paced change and the need to ensure ongoing change intervention success (Fuchs & Prouska, 2014). Potential employees not only become more and more diverse with respect to socio-demographic characteristics but also with respect to their needs and expectations (Berman, 2002).

Personnel management is vitally important to the maintenance and preservation of the administrative state and its democratic institutions (Stivers & Hummel, 2007). Appraisal of employee performance is among the most controversial management practices (Anisseh et al., 2011). Performance evaluation processes are situated in an organizational context (Miller et al., 2014).

The long-term viability of a business organization depends on its ability to evaluate the performance of the employees and to examine the contribution of its personnel in achieving the assessed goals (Grigoroudis & Zopounidis, 2012). The importance of evaluating an Employee Assistance Program (EAP) cannot be overestimated (Sithole & Khorombi, 2009).

Performance evaluation is critically essential for the effective management of the human resource of an organization and the evaluation of staff that helps develop individuals, improve organizational performance, and feed into business planning (Ahmed et al., 2013). Performance appraisals (PAs) are a reality in organizations of all sizes and types (Clausen et al., 2008).

Employers worry about whether employees will devote sufficient effort to work, and employees are concerned about whether employers will compensate them appropriately (Fisher et al., 2005). The evaluation results provide the basis for the human resource management department to develop a staff satisfaction promotion strategy (Li & Wang, 2014). Semantic technologies provide to human resource management issues an integrated approach to assess both employee performance and learning outcomes as a result of competence evaluation (Fuchs & Prouska, 2014).

Every day more organizations recognize that their people are a source of competitive advantage (Cabrera & Cabrera, 2003). Perceptions of effectiveness are positively related to job attitudes (i.e., job satisfaction, engagement, perceived organizational support; Wilson & Narayan, 2016).

While individual characteristics, such as personality and core self-evaluation, are good predictors of job-related attitudes and performance, they cannot be acted on in a human resource development (HRD) capacity (Thurston et al., 2012). PA has been the focus of considerable research for almost a century (DeNisi & Pritchard, 2006). The sheer scale and speed of the shift of payment system from time-based salaries to performance-related pay (PRP) in the British public services provides a unique opportunity to test the effects of incentive pay schemes (Marsden et al., 2000). PA is a western management concept that is meant to improve individual and, concomitantly, organizational performance (Bai & Bennington, 2005).

Employee performance evaluation study finds that although there is clarity around the performance criteria on which public employees in welfare offices are evaluated, the measures are not linked to one of the principal goals of welfare reform—“welfare-to-work”: moving people off welfare and into jobs (Riccucci & Lurie, 2001). The mathematical evaluation shows that the correct evaluation of employees by the system effectively motivates employees in favor of the industry (Kaur & Sood, 2017).

Change is frequently mentioned as a defining quality of the new workplace and, in turn, employment relationships (Chaudhry et al., 2009). Employee compensation moderated the relationship between the types of employee participation and employee retention (Khalid & Nawab, 2018).

HRD can play a key role in helping employees foster social capital, leading to employee voice in the organization (Cumberland et al., 2018). Employers every year struggle to find just and fair ways to identify the best performers as it is a quite subjective task (Mittal et al., 2009). Multidimensional constructs of trust and service climate were developed using the literature in the trust and service management domains (Chathoth et al., 2007).

An important issue discussed is how employers can ensure the anonymity of employees in surveys used for management and human resources (HR) analytics (Frederiksen, 2017). Strategic compensation theory argues that rewards should be used to encourage employee activities that support organizational goals, but reward strategies often have confounding effects on employee attitudes and behaviors (Howard & Dougherty, 2004).

Employee evaluation is one of the soft topics that play a chief role in the total efficiency of human resource management (Nobari et al., 2019). Research support results in a reform process that minimizes “deadly combinations” and maximizes “powerful connections” rather than simply transplanting personnel practices from the private sector onto the public sector (Huff, 2011).

We find that pay knowledge has an independent impact on organizational outcomes, rather than being mediated through pay satisfaction (Sweins et al., 2009). The model for training and managing scientific personnel tends to change (Petroni et al., 2012). The findings of the investigation suggest that sales managers were more likely to make internal attributions for failure when the salesperson had a poor, rather than a good, work history and external attributions when the salesperson had a good, rather than a poor, work history (Dubinsky et al., 1989).

Personnel management is rooted in the Tayloristic concept and has to be revisited before it can join the changing conditions and contribute to these fundamental changes (Sluijs et al., 1991). Surveys of government personnel have shown that they are much more likely than their counterparts in business firms to say that it is hard to fire a poor performer, to raise the pay of a good performer, and to base promotion on performance (Jin & Rainey, 2020).

                                                   Source : SAGE Journals 

If the actual personnel evaluation scores are found to have an effect, these results will suggest that objective evaluation, apart from assessment effectiveness measurement tools, is important in reviewing the appropriateness of the personnel evaluation system rather than the factorial structure of the evaluation effectiveness. In this study, the personnel evaluation score given by the person’s direct supervisor was used as an indicator, as an objective evaluation concept. The evaluation effectiveness factor is shown in Figure 1.

References

Ahmed, I., Sultana, I., Paul, S. K., Azeem, A. (2013). Employee performance evaluation: A fuzzy approach. International Journal of Productivity and Performance Management, 62(7), 718–734.

Clausen, T. S., Jones, K. T., Rich, J. S. (2008). Appraising employee performance evaluation systems. CPA Journal, 78(2), 64–67.

Grigoroudis, E., Zopounidis, C. (2012). Developing an employee evaluation management system: The case of a healthcare organization. Operational Research, 12(1), 83–106

Stivers, C., Hummel, R. P. (2007). Personnel management: Politics, administration, and a passion for anonymity. Public Administration Review, 67(6), 1010–1017.

Thurston, P. W., D’Abate, C. P., Eddy, E. R. (2012). Mentoring as an HRD approach: Effects on employee attitudes and contributions independent of core self-evaluation. Human Resource Development Quarterly, 23(2), 139–165

Effectiveness of Performance Management System

 

Effectiveness of Performance Management System for Employee Performance 

Performance management system effectiveness (PMSE) is the measure of alignment between employee and organizational objectives (Armstrong, 2015).

Researchers (e.g., Kennerley & Neely, 2003; Kolich, 2009; Tan & Smyrnios, 2006) have substantiated that a careful implementation of an effective PMS ensures this consistency. An effective PMS implementation process necessitates that employees eagerly accept and effectively participate in the goal-setting process. A detailed examination of previous literature show that majority have focused on PMSE in the context of organizational performance only (Busco et al., 2008; de Wall & Coevert, 2007; Elliot, 2016; Garengo et al., 2005; Ohemeng, 2009; Payambarpour & Hooi, 2016; Thursfield & Grayley, 2016), while ignored the employees’ perception completely. Some recent literature has attempted to address this aspect and recommended exploring PMSE from employees’ perspectives.

More specifically, studies recommended the exploration of PMSE in terms of its impact on employees’ motivation, work engagement, performance, and retention (Audenaert et al., 2019; Mishra, 2014; Sharma et al., 2016). The current study examines the missing link between PMSE and employees’ work engagement and performance

Dewettinck and van Dijk (2013) have studied PMSE for its clarity of goals and expectations and the extent to which these were linked with their individual objectives of performance, development, and career enhancement. Their study also indicated strong linkages between PMSE and goal setting, control, and expectancy theories. They added the items of “employees’ work engagement” to determine PMSE including employees’ self-esteem, comfort, and most importantly employees’ realization of the fact that their performance adds value and contributes positively to the overall organizational performance. They included perception of fairness as a mediator in the study but did not consider it as a part of an effective PMS.

However, Sharma et al. (2016) adopted a slightly different approach to use these factors to ascertain PMSE. They defined PMSE as a combined effect of performance management system accuracy (PMSA) and performance management system perceived fairness (PMSF). They conceptualized PMSA as a set of effective goal setting, feedback and control, measurement and review, and reward system. PMSF was the extent to which all these practices were perceived just and equitable by the employees (Becker & Gerhart, 1996; Marr et al., 2004; Stokes, 2000). They also established the link between PMSE and theories of goal setting and equity. The current study uses the same premise by taking PMSA and PMSF as important dimensions of PMSE.

Teeroovengadum et al. (2019) investigate PMSE from three types of organizational purposes—strategic, development, and administrative. Similarly, in another study, Lappalainen et al. (2019) indicate that PMSE serves two main functions—judgmental and developmental. The first one is evaluative and helps make administrative decisions about employees, whereas the developmental part is related to its potential for high performance (McAfee & Champagne, 1993) leading to higher organizational outcomes (Kagaari et al., 2010). Research suggests that employee performance can be managed by effectively controlling its determinants and therefore should be explored from this perspective (Almatrooshi et al., 2016; Kang & Choi, 2019).

Work engagement (WE) is an effective antecedent of employee performance (Abraham, 2012; Macey & Schneider, 2008a). de Vries et al. (2016) define work engagement as “active investment of energy in domains of interest.” Smith and Bititci (2017) conduct an exploratory action research involving pilot and control groups from two departments of a U.K. bank to find out the interaction between performance management, work engagement, and performance.

An effective PMS is considered as a useful tool to achieve organizational effectiveness in the modern management literature and practice (Aguinis & Pierce, 2008; den Hartog et al., 2004; Lawler & McDermott, 2003). We conceptualize PMSE as a combined effect of PMSA and PMSF. PMSA has been defined by Sharma et al. (2016) as,

"Employee perception of the correctness of PMS through the alignment of the employees’ and organization’s goals; clarity about goals, performance standards and skills/behaviors required at different levels; clear linkage of goals with business needs (e.g., the market potential for sales); performance evaluation against planned standards; proper evaluation of employee strengths; regular feedback about performance; facilitation of employee development; and clear linkage between performance and performance management system outcomes (rewards and recognition, p. 231).”

References

Alarcon, G. M., Edwards, J. E. (2011). The relationship of engagement, job satisfaction and turnover intentions. Stress and Health, 27(3), 294–298.

Anitha, J. (2014). Determinants of employee engagement and their impact on employee performance. International Journal of Productivity and Performance Management, 63(3), 308–323.

Armstrong, M., Baron, A. (2004). Managing performance: Performance management in action. CIPD.

Buchner, T. W. (2007). Performance management theory: A look from the performer’s perspective with implications for HRD. Human Resource Development International, 10(1), 59–73

Gruman, J. A., Saks, A. M. (2011). Manage employee engagement to manage performance. Industrial and Organizational Psychology, 4(2), 204–207.

Lawler, E. E., McDermott, M. (2003). Current performance management practices. World at Work Journal, 12, 49–60

Ohemeng, K. L. F. (2009). Constraints in the implementation of performance management systems in developing countries: The Ghanaian case. International Journal of Cross-Cultural Management, 9(1), 109–132

Schleicher, D. J., Baumann, H. M., Sullivan, D. W., Yim, J. (2019). Evaluating the effectiveness of performance management: A 30-year integrative conceptual review. Journal of Applied Psychology, 104(7), 851–887