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THE EFFECT OF PERFORMANCE MANAGEMENT ON PRODUCTIVITY

CHAPTER ONE

INTRODUCTION

BACKGROUND TO THE STUDY

Organizations are run and steered by people. It is through people that goals are set and objectives are accomplished. The performance of an organization is thus dependent upon the sum total of performance of its members. The success of an organization will therefore depend on its ability to measure accurately the performance of its members and use it objectively to optimize them as a vital resource (Biswajeet, 2009). In the present highly competitive environment, organizations have to ensure peak performance of their employees continuously in order to compete and survive at the market place effectively (Prasad, 2005). Performance of an individual can be defined as the record of outcomes produced as specified job functions or activities during a specified performance period (Bernardin, 2007). It can also be seen as a set of outcomes achieved during a certain period of performance and does not refer to the traits, personal characteristics, or competencies of the performer.

Performance management on the other hand can be defined as a systematic process for improving organizational performance by developing the performance of individuals and teams (Armstrong, 2012). According to Briscoe and Claus (2008) performance management is the system through which organizations set work goals, determine performance standards, assign and evaluate work, provide performance feedback, determine training and development needs and distribute rewards. Performance management is a process involving performance planning, performance managing, performance Management, performance rewarding and performance development (Deb, 2009). Performance Management can be defined as the formal assessment and rating of individuals by their managers (Armstrong, 2012). Performance Management as an element of performance management is often carried out to reveal individual employee’s contribution to the overall organizational objectives. To drive this notion home Biswajeet (2009) asserted that people do not learn unless they are given feedback on the results of their actions. For corrective actions to take place feedback must be provided regularly and it should register both successes and failures.

Performance Management System is a useful tool for managing staff’s performance and for facilitating its development. Effectively used it can increase productivity, improve communications and have many others positive side-effects for individual staff members and for the entire organization. A well-designed Performance Management System improves not only the Human Resources Management but the performance of the organization as a whole. Performance Management involves an interlocking set of policies and practices which have as their focus, the enhanced achievement of organizational objectives through a concentration on individual performance (Storey and Sisson, 2003).

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