Introduction
The changes in the corporate sector due to the ever increasing globalization have specially affected the employment relations in the business organizations. The employment relations refer to the interaction between all the parties who are linked to the relationship in the employment. Armstrong (2009) states that the employee relations includes all the areas within the human resource management that have direct link with the employees; even managing the terms and conditions of employment and resolving any kind of issues are included in it. The general belief is that the criteria for measuring the performance of the organization include assessing the productivity, profitability, and customer satisfaction and employee morale (Armstrong & Armstrong, 2009). But in the modern era, the organizations invest in their employees; it means that they seek to develop, encourage, expand their competencies and enhances the performance of the employees by different means. Performance management is s highly influential on the performance of the employees as well as the organization. Performance management system plays a key role in aligning the human resource with the organizational strategies (Gruman & Saks, 2011). This study focuses on analyzing and exploring the impact of performance management system on the performance of the employees and also evaluates whether it really is beneficial to the employers as well as the employees. The PMS is analyzed from unitary as well as pluralist perspectives of employee relations and explores the concept in detail.
Unitarism and Pluralism
The Unitarists based their theory on the assumption that the relation between the employees and the managers does not involve anything like a workplace conflict. Conflict arising at the workplace is believed to be an abnormality because this relationship is based upon complete cooperation. The perspective is based upon the notion that both employees and the managers have common interests for the survival of the business. So, in this approach the only authority lies with the organization and any other form like the trade unions are completely eliminated (Abbott, 2006). Scientific management theory by Frederick Taylor also makes use of the Unitarism approach; it believes that employees need to be treated impersonally because they have limited horizons and self-centered aspirations so they require rigid control by the management. Yet, another theory of human resource management supports the approach but from a different perspective. It believes that all the tensions between the two parties can be resolved and it is the duty of the management to nurture the employees and to work in collaboration with them for the benefit for the whole organization. In order to develop a unifying culture, certain collaborative practices by the management can be helpful like the development of teams in workplace, performance appraisals, and even performance related pay (Brudan, 2010).
The Pluralists base their assumption on the inevitability of the conflict at the workplace. They belief that an organization comprises of different groups with completely different interests; the employees and the management are two groups who subscribe to completely distinct values and objectives due to the nature of the system. So, there is a potential of conflict but this is a healthy stance as the enterprise benefits from this conflict when innovative methods are explored to resolve it (Chuang & Church et al., 2004). In addition, there also exist competing sources of authority like the trade unions within the organizations that work to benefit the employees and to minimize the potential conflict. The most important affect of this is that it encourages the management to be fairer with the employees and also counter-balances their power in the negotiations during the contracts (Bacon & Blyton, 2007). The pluralists generally believe that it is the right of the employees to bargain in a collective manner and for this purpose, the trade unions act on their behalf (Ross & Bamber, 2009). With the advent of technology and with the increased globalization, although the union memberships have declined, the new values and strategies devised by the human resource and the management have laid more emphasis on cooperation in the workplace, information sharing, and implementing performance incentive schemes.
Performance Management System
Performance management system integrates the activities of the human resource management with the objectives of the business organization. The management and the activities of the human resource work in integration to influence the behavior of the employees such that the strategy of the organization is supported. The basic aim of the system is to focus on continuous improvement of the performance of organization which is mainly dependent upon the performance of the employees (Varma & Budhwar et al., 2008). The system makes sure that: organizational goals are achieved through individual performance; employees clearly understand the work expected from them; employees are given continuous feedback on their performance; the opportunities for the development of employees are identified; any increase in the salary or reward is based solely on the performance of the employees; and any issue of declining employee performance is being fully addressed (Ferreira & Otley, 2009).
Discussion
The most significant aspect of the performance management or appraisal is that it provides both the employer and the employee an opportunity to sit and discuss the performance together. There is no danger of influential personality because the discussion is on the accomplished behavior of the employee. Though the Unitarists consider appraisal as a form of removing any conflicting goals; it is actually the pluralist approach which is being used in the modern business organizations (Waiganjo & Others, 2012). By sitting together and discussing the performance, any potential tensions can be identified and resolution can be achieved. Further, the relation between employer and the employee is strengthened and a rapport is build. When a relation is build, the communication becomes more open; and the appraisals also tend to serve the purpose of motivating the employees.
Earlier, the management when using the Unitarists approach, dealt with the problems by identifying the deviant behavior of the employees which could also result in bias. Kimberly-Clark implemented performance management globally and saw that employees were more motivated; 90% of the employees said that there was a clear communication and that the goals were better aligned; 67% of employees believed that appraisal was more accurate now; there was better integration in the teams (Aguinis, 2009). The employee along with managers identifies and removes any obstacles that hinder the achievement of the established goals. This is what the pluralists also believe: conflicts can and should be managed properly (Selden & Sowa, 2011).
The performance management also tends to target the weaknesses of the employees that need to be remediated; it helps the company in identifying the areas which require training. Further, the progress of the individuals are recorded and measured; this record is valuable when making decision for the increase in salary, promotions and even terminations (Ferreira & Otley, 2009). Microsoft Corporation implements the philosophy of pay-for-performance which recognizes that the highest value is provided by the top performer to the firm. Before 2000, stock options were major constituents of the employee’ pay; in 2006, a flexible reward system was introduced which provided annual bonus and increase in pay with merit (Shaw, 2004) but this was also very confusing; in 2011, an integrated approach was used where a single rating was linked to the rewards. The rating was decided based upon prior record, goal achievements, feedback from peers and managers, capabilities of the employee and the performance record (Miller, 2012). The employees, managers and even the employers found that quality of the discussion had risen and pay satisfaction increased while everyone was clearer on their goals (Brustein, 2013).
Performance appraisal or performance management is also being used by Infosys, India; the company uses three tracks in the system where first of all the performance is reviewed based on the feedback and the personal competencies of the employee; this also helps in identifying if a need for training arises (Venkateswara Rao, 2004). Secondly, the senior management fills a self appraisal form annually which is then sent to the discussion panel that reviews the performance and decides any promotions for the managers (Khan & Jain, 2007). The third track consists of 360 degree appraisal which involves gaining feedback from all the people who are linked to the employee (Brink, 2011).
Conclusion
Analyzing all the aspects from the above discussion, it can clearly be concluded that performance management system is an inevitable tool for the success of the organizations. Although it seemed to originate with the Unitarists perspective, but it has become the need of today to consider it from the pluralist perspective where the conflict is inevitable between the different groups and is actually good for the health of the corporation in general. With the performance management in place, the employees tend to get clear goals, direct communication, and also get motivated; this in turn leads to better performance at work and more commitment and loyalty by the employees. With high level of motivation and better commitment, the productivity of the employees increases which leads to benefitting the organization and the employers indirectly. By aligning the goals of the organization with the individual goals and by identifying the conflicting points as well as the weaknesses of the individuals, the employers gain loyalty of the employees and also develop an inclusive culture where employees are considered to be an asset of the organization. So, performance management system tends to benefit both the employees and the employers; where employees gain rewards and develop their competencies while the employers gain wealth, commitment, loyalty, more productivity and achievement of organizational goals.
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