Week_7

Organizational Leadership

John Bratton

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Part 3

Managing people and leadership

Performance management and leadership

Chapter 11

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Learning outcomes

After completing this chapter, you should be able to:

Understand the crucial link between leadership and performance management in organizations.

Explain the importance of context in the changing role of the leader and other stakeholders in the historical development of performance management processes and practices.

Examine innovative leadership influences on performance management activities in contribution to the achievement of contemporary organizational goals.

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Learning outcomes

Critically evaluate research on the leadership-performance relationship.

Explain some criticisms and paradoxes in relation to performance management.

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The nature and purpose of performance management

CIPD defines performance management as:

the activity and set of processes that aim to maintain and improve employee performance in line with an organisation’s objectives. It is strategic as well as operational, as its aim is to ensure that employees contribute positively to business objectives. Ideally, performance should be managed holistically, throughout the range of HR activities and processes (2018).

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The nature and purpose of performance management

Bratton and Gold define performance management as:

The set of interconnected practices designed to ensure that a person’s overall capabilities and potential are appraised, so that relevant goals can be set for work and development, and so that, through assessment, data on work behaviour and performance can be collected and reviewed (2017, p. 186).

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The nature and purpose of performance management

These definitions captures:

Managing the performance of employees is the essence of managing the employment relationship.

It is a ‘continuous process’ (Biron et al., 2011, p. 1295) that not only can determine reward to the employee but also involves training and developing employees in line with organizational strategy and goals (see Figure 13.1).

It yields measurements that can be used to close the ‘gap’ or space between what promised by an employee and what is realized in terms of work performance.

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The nature and purpose of performance management

Defining PM is not easy because it focuses not just on the task in hand but also on the effort (motivation, behaviour and competencies) involved for the parties in the process.

Techniques deployed in PM practice is vital in businesses these days and the effective management of the performance process is just as critical, but also complicated because it will involve an evolving consideration of four crucial factors for any organization according to Kenerley and Neely (2003): Process, People, Systems and Culture.

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The nature and purpose of performance management

The purpose of performance management: the integral and strategic element of HRM concerned with getting the best outputs and results for an organization in partnership with its individual talent in practice to achieve competitive advantage in changing global knowledge contexts.

Any performance management process has to therefore be continuous, strategically integrated and cyclical.

It must take cognizance of the context within which the organization operates and consider not only short to medium term goals, but also those in the longer time frame.

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The nature and purpose of performance management

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Determinants of employee and organizational performance

Competency of leader

Contextual factors

Good communication

Working conditions

Nature of the work

Reward systems

Development opportunities

Security

Co-workers

Recognition

Levels of autonomy

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Determinants of employee and organizational performance

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Historical milestones in performance management

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Industrialization & Capitalization

Frederick W. Taylor (1856-1915) – Theory of ‘Economy Man’

Henry Ford (1863-1947) – Fordism

Elton Mayo (1920’s) – the Hawthorne Experiments & ‘Social Man’

McGregor (1957) – there existed too unequal a balance of employer power which did not help either motivation or predicted performance output for either party.

Drucker (1955) – Management by Objectives (MBO)

Beer and Ruh (1976) – Performance Management

Human Resource Management (late 1980’s to early 1990’s)

Performance Management Systems (PMS)

Armstrong (2006, p. 12) – challenged the word ‘systems’ & advocated process approach to PM that involves Planning, Acting, Monitoring and Reviewing

Lowry (2002) – performance as a continuous cycle linking together performance with the various HRM processes and practices, which affect the employee life cycle with organisational values

De Nisi and Pritchard, 2006) – redefine PM as an interactive process as it is deemed to be fairer, leading to improve the overall effectiveness with employees

The performance management appraisal process

In practice, performance management typically involves the continuous process of identifying, measuring, and developing the performance of individuals and groups in organizations (Aguinis, 2015), and it involves providing both formal and informal performance‐related information to employees (Selden and Sowa, 2011).

In the form of a formal review meeting, normally scheduled annually or bi-annually.

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The performance management appraisal process

There are five main elements involved in the process according to the CIPD (2011):

Measurement

Feedback

Positive reinforcement

An exchange of views

Agreement

Criticism: Lack impact in some organizations due to how appraisals are perceived and presented, in that it has little value or meaning attached.

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Modelling leaders and performance

Contextual Push Factors for Leaders today:

Achieve business objectives

Meet demands of the growing knowledge economy and its associated challenges

Ability to navigate successfully through megatrends like:

The individual

The transition to flexibility

The demography (age)

The demography (gender)

The rapid social and economic change

The social responsibility and sustainability

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Modelling leaders and performance

How?

Leaders are expected to execute a role which is focused on expected behaviours (refer to Table 13.1) where the focus is heavily on the the individual to have the ability to employ complex intra-personal constructs in order to adapt leadership behaviours to the required contexts (Hannah, Woolfolk and Lord, 2009; Lord et al., 2011).

Leaders will require development and resilience planning to face the complexities of the ever-changing business landscape.

Leaders will need to have the required soft and hard skills.

Leaders must learn to lead themselves.

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Modelling leaders and performance

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Problems of methodology and theory

Often perceived that there is direct correlation between leadership effectiveness and performance outcomes in organizations.

Researchers trying too hard to put leaders in theoretical boxes based on specific schools of thought to align with theories.

Effective leadership involves a multi-faceted approach.

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Criticism and paradox in performance appraisal

PAS is far from neutral in intention and scope of use by leaders.

Lack of continuous attention provided by leaders on the on-going evaluation to ensure relevance and success of PAS.

The growth in usage of PAS has been fuelled by the rise of the HRM model, the decline in trade union membership and collective bargaining and changes in work and organizational design.

Gender issues in pay inequality will continue to be an issue as long as men dominate the higher earning strata in wage distribution.

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Criticism and paradox in performance appraisal

Disparities increase (across not only receipt of normal pay-roll equalities but also in the ability to access performance related pay) with the number of challenges faced by disadvantaged groups, gender being only one, with disability and ethnicity being the others.

PAS represents the essence of leader-follower power when related to pay, and in so doing weakens bonds of reciprocity, trust and commitment.

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