PERFORMANCE MANAGEMENT SYSTEM AND EMPLOYEE PERFORMANCE IN NIGERIA BOTTLING COMPANY, EDO STATE

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PERFORMANCE MANAGEMENT SYSTEM AND EMPLOYEE PERFORMANCE IN NIGERIA BOTTLING COMPANY, EDO STATE

CHAPTER ONE

INTRODUCTION

BACKGROUND OF THE STUDY

The practice of appraisal is ancient; it starts in the early 20th century by Taylor. In the scale of things historical, it might well lay claim to being the world’s second oldest profession. Human ability to judge can create serious motivational, ethical and legal problems in the workplace. Without a structured management system, there is little chance of ensuring that the judgments made will be lawful, fair, defensible and accurate. Performance management systems began as simple methods of income justification. That is, appraisal was used to decide whether or not the salary or wage of an individual employee was justified. As a result, the traditional emphasis on reward outcomes was progressively rejected (Clardy, 2013).

While performance appraisal is an important part of performance management, in itself it is not performance management: rather, it is one of a range of tools that can be used to manage performance (Greenberg & Haviland, 2008). Performance management is a holistic process bringing together many activities that collectively contribute to the effective management of individuals and teams in order to achieve high levels of organizational performance. The process is strategic, in that it is about broader issues and long-term goals, and integrated in that it links various aspects of the business, people management, individuals and teams (Julnes, 2008)

Performance appraisal is a process for individual employees and those concerned with their performance, typically line managers, to engage in a dialogue about their performance and development and the support they need in their role. It is used to both assess recent performance and focus on future objectives, opportunities and resources needed.

Performance appraisal traditionally involved documentation and communication of performance between staff members and their supervisors (Foss, 2007). Informal approach was used and at times less record keeping. Currently, the process has been formalized and there is some seriousness that accompanies the procedures including record keeping for future reference.

A challenging component of Human Resource is performance appraisal. All involved parties supervisors, employees, and Human Resource administrators typically are dissatisfied with their organization’s performance management system and view the appraisal process as either a bureaucratic exercise or a destructive influence of the relationship between the employee and the supervisors.

For a management system to be effective, employees must believe that they have an opportunity for meaningful input into the appraisal process (Berry, 2004). They should have the freedom to challenge the evaluation they get especially when it’s contrary to how the appraise themselves. It is important to allow employees to share their opinion in order to encourage fairness in the appraisal procedure. When this is adhered to, staff members will agree with the management system that has been put in place as a legitimate and productive way of accessing their performance. As noted by (Cooper, 2005) without the perception of fairness, “a system that is designed to appraise, reward, motivate, and develop can actually the opposite effect and create frustration and resentment”.

Today’s organizations implement recognition programs to bring out cultural change. They create budgets for employee incentives in the attempt to win their loyalty. Performance management is a strategic approach to delivering successful results in organizations. This is done through improving performance and developing talents as well as building capacity of staff. Performance Management is supposed to be a continuous process between supervisors and employees. This is important as it helps to review the previous findings and encourage gradual improvement (Bruce, 2014).

Performance management system rewards excellence. It helps to align employee achievements with the organizations objectives. Others maintain that to encourage knowledge sharing, organizations should design reward and recognition systems that stimulate sharing of all kinds: goals, tasks, vision as well as knowledge. This will help to bring cohesiveness between team members. One factor that contributes to an effective performance management system entails ensuring that the system focuses on performance variables as opposed to personal traits (Lawrie, 2004). Whereas experts disagree about whether performance should be measured in terms of the results produced by employees (Garber, 2011) or in terms of work-related behaviors (Sparrow, 2012), they agree that personal traits has several drawbacks. The validity and reliability of trait-based performance appraisals is highly suspect because the rater’s perceptions of the traits being assessed are affected by their opinions, biases, and experiences that may have little to do with the particular employee (Varma et al, 2008).

Appraisals based on personal traits have little value for providing diagnostic feedback to employees or for designing training and development programs to ameliorate identified skill deficiencies (Trakoli, 2011). Furthermore, based on his review of the findings from several court cases involving performance appraisal, (Wellington, 2011) concluded that, to be legally sound, appraisals should be job-related and based on behaviors rather than traits.

Initial studies on performance management in the literature were pioneered by Warren (1972), when he defined the features of performance management.

Though performance management re-emerged in the United States as a new approach in the 1980s, it was not published until 1988 (Plachy & Plachy 1988). By the 1990s, performance management had entered the literature of human resources management in the United Kingdom as well as in the United States.

Gary Cokins, (2008) defined the multi dimensional organization structure in order to performance management. Our purpose of writing this article is to describe the linkage between employee’s performance management systems to achieve its strategic objectives.

According to Carter McNamara, (1997) Performance management is a complete process which throws light on the overall organization performance to the departments and at the employees’ level. It also tends to focus on the process to provide a products or services in the organization. Before that Alfred D. chandler, (1970) proposed the shift of Performance Management from organization structure to the employees for achieving better performance.

Employees Performance Management system is a complete process, which is based on the workforce performance and the fulfillment of organizational objectives at all levels. The basic philosophy behind the performance management system is to developing the alignment between the organizational objectives, with the employees’ skills and capabilities, moreover it emphasize on the Development and improvement of the overall system. People mostly misperceive the performance management to the performance appraisal; In actual performance appraisal is judging the past performance while performance management system is an ongoing process to measuring the fulfillment of objectives. Alan Nankervis, (2004) while doing his research in an Australian institute finds that there are very few organizations which shared their organizational objectives with their employees. Most of the organization use the performance appraisal as compared to the performance management in which the focus is made on the comparison between the performance standards being made by the organization and the actual performance of the employees while no one actually compares the performance against the organizational objectives. Performance management is the real theme while we work in the organization for quality control, in Quality based organization the objective of the performance is made on the achievement or fulfillment of the goals rather than established standards.

No doubt in performance management system which is actually the sub part of quality control having some performance standards but these performance standards are very much aligned with the organizational objectives.

There is a lot of research has been made in the performance appraisal but unfortunately it did not give any satisfactory results as Thomas B. Wilson, (1994) tends to describe the performance appraisal as it did no work for the employees as well as on for the organization except developing the dissatisfaction or expiation. Same Wendy K. Soo Hoo, (2004) concluded two of his researches that 90% of the employees found the performance appraisal as an ineffective. The reasons he deduced from his research are like the Managers avoid giving honest critiques because they don’t want any conflict. Often time’s managers dread the appraisal process as much as employees do, so they procrastinate and don’t prepare adequately. Employees can be demoralized by ratings and statistics from the research said that 80% of people see themselves in the top 25% of all performers. So 55% will be really demoralized by honest feedback about where they stand.

We come to know from all above discussion that performance appraisal is not doing something extra for the organization and the organization awarded employees based on the appraisal unable to get the required result. Reward does not change the performance of individuals who work exclusively for reward. Better remuneration system can never be a good option for the organization for achieving its objectives. On the counter part it can demotivate the employees due to unequal distribution of rewards on the basis of performance appraisal.

On the whole consequences of performance appraisal may lead to the decline of overall performance of the organization. On the other side, Performance management of the employees is the system which enable the organizations to achieve their goals by utilizing the fully skill level of their employees. It begins when an employee joins the organization and ends when he leaves your organization.

Glendinning, (2002) suggest that performance management is the system which is supposed to be the need of the hour for organizations and a replacement of old performance appraisal system. He further argued that an organization with out a performance management system has no vision for its future. Linda Gravette, (2006) with her research concluded that employees must be familiar with the performance management system, working in the organization and there should be a discussion with the employees about the scale and the measures you are using for the performance evaluation.

Performance management and getting the required behavior is one of the core issues which most of the organization fails to analyze in order to achieve the required goals, (Nicholas L. Weatherly; Richard W. Malott 2008). Organization behavior should be developed among the individual in such a way which is performance oriented and behavior should be analyze and then modified to develop the required behavior,(Hal J. Whiting; Theresa J.B. Kline; Lorne M. Sulsky 2008). The success of the system is correlated with employees’ expectations if the employees expectations fulfill with the appraisal system, then there exists positive relationship and vice versa. The other thing which must be kept in mind while developing the goals, that it should be in accord with the employees and organization capability, (Gary P. Latham; Laura Borgogni; Laura Petitta 2008). Individual should be accountable in promoting of a performance management system which actually promote the quality culture. Describing the same things by Nonna Turusbekova; Manda Broekhuis; Ben Emans; Eric Molleman (2007), describes the need of the quality management system in the organization to get the desire behaviors of workers because workers some time violate the rules and detract the quality processes.

André A. de Waal; Vincent Coevert (2007), conducted a research for knowing the effect on the performance of the newly implemented performance management system in two public and private banks. Results of the research was that in private sector it made a significant improvement while in public sector it did not play any significant role.

The reason behind this duality of result was implementation of the system in both of the bank and the management philosophy. In public bank management did not bother enough for the implementation of the newly developed system while in private bank the management tried to implement it with its real soul. So it is the management commitment towards the implementation that how committed the managers are in order to performance management.

The basic purpose of performance management system is to creating the alignment in between the organization objectives and its sub systems to achieve the organization objectives, Carter McNamara, (2008). In modern organization there should be a balanced performance management system to achieve the organization objectives. By strategically using the performance management system organizations can develop its performance standards, can develop the measures and then reports the finding for further improvement and in this a continuous process keep running (South Carolina, 2002). In TQM techniques Performance management system play an important role for developing as well as measuring and achieving the objectives. The approaches like balance score card, metrics, indexes should be match with the system in the quality process to the organizations, (Stivers, Bonnie P. Stivers, Bonnie P; Joyce, Teresa Joyce; Teresa, 2000). A balance performance management system initiative was taken by Kaplan; Norton, (1992) to achieve the organization’s vision strategically. Balance score card focusing on the four business prospective i.e. financial, customer satisfaction, business process and the organization learning and innovative culture.

The concept of ‘public service’ can be defined as an activity of state which involves interaction with citizens as customers. Public delivery of service is an institutional arrangement that government adopts to provide public goods and services to its citizens. Hence, the choice of institutional arrangements influences the performance of company performance

Basically, there are four broad types of company servicedelivery arrangements that governments everywhere have adopted: direct delivery of service, privatisation of service delivery, alternative service delivery (ASD) and decentralisation of service (Kettner & Martin 1995). In direct delivery of services, the central government brings out legislation, enforces it, hires staff, puts money, produces and distributes services, either directly operating from the headquarters or through deconcentrated line agencies. It assumes full responsibility and is accountable not only for provision but also for delivering services (Kettner & Martin 1995). In privatisation of service delivery, government transfers the delivery of public services to private companies. In such case, it assumes no responsibility, except monitoring corporations’ or agencies’ compliance to legal codes. For government agencies that are contracting out responsibilities for service delivery, this requires setting clear outcome-oriented objectives and defining appropriate performance measures to track success in attaining those objectives (Kettner & Martin 1995). The third form of company servicedelivery is using ASD through public–private partnership arrangement. It may be in the form of ‘build, own, operate and transfer (BOOT) or build, operate and transfer (BOT), or contracting out and so on’ (Eneanya 2015:542). The fourth type of company servicedelivery arrangement is decentralisation. In this form, decentralisation is based on subsidiary principles of governance rule, where provisioning, production and delivery of services are to be devolved to the lowest tier of government (state and local units), subject to economies of scale and capacity (Kettner & Martin 1995).

A recent survey determined that the companies use an average of 13 management tools at the corporate level. These tools are intended to help measure or monitor the performance of an organization, and within this the most popular performance related tool was the Balanced Scorecard (Rigby and Bilbo bead 2005). In the absence of a basic strategic context, managers found it hard to agree on an appropriate set of measures of organizational performance (Ahn, 2001). Balance scorecard is the platform for measuring the organization performance having coordinating with financial and non financial aspects of business (Irwin D, 2002).

Performance has also been defined by Bates and Holton (1995) as a multi-dimensional construct, the measurement of which varies depending on a variety of factors. They also state that it is important to determine whether the measurement objective is to assess performance outcomes or behaviour. As Fletcher (2001) mentions, contextual performance deals with attributes that go beyond task competence and fosters behaviours that enhance the climate and effectiveness of the organisation. They are concerned that performance should be defined as the outcomes of works because they provide the strongest linkage to the strategic goals of the organisation, customer satisfaction and economic contributions. Guest (1996) on his part believes that performance is about outcome but that the concept should be linked to the idea of balance the scorecard.

Performance management is a ‘means of getting better results from the organisation, teams and individuals within an agreed framework of planned goals, objectives and standards’ (Armstrong 2009:22). Performance management is ‘a range of practices an organisation engages in to enhance the performance of a target person or group with the ultimate purpose of improving organisational performance’ (DeNisi 2000, pp. 250-67). Performance management is about directing and supporting employees to work as efficiently as possible in line with the needs of the organisation (Walters 1995). Performance management is a systematic way of improving business and team performance to achieve business objectives (Strebler, Bevan & Robertson 2001). In their own contribution, DeNisi and Pritchard (2006) define performance management as a broad set of activities aimed at improving employee performance.

Performance management system, therefore, connotes (Armstrong 2009):

a strategy that relates to every activity of the organization set in the context of its human resource policies, cultures, styles and communication system. The nature of the strategy depends on the organizational context and can vary from organization to organization. (p. 22)

For the purpose of this article, the common denominators in these definitions of performance management that are adopted, include the following:

• subordinating individual objectives to corporate objectives and values;

• enabling performance expectations to be clearly defined and agreed in terms of role, responsibilities, accountabilities (expected to do), skills (expected to have) and behaviours (expected to be);

• providing opportunities for individuals to identify their own career goals and develop their skills and competencies;

• motivating people by recognising them and giving their opportunity to use their initiatives.

Other research studies examined the impact of performance management on the overall organisation’s performance or aspects of individual performance (Latham & Locke 2002; McDonald & Smith 1991; Wyatt 2008).

A field research showed that goal setting is an essential element in performance. A study in a logging company involving 292 supervisors established that those who set specific production goals achieved the highest performance. A further study of 892 supervisors produced the same result (Latham & Locke 2002). Research was also conducted by McDonald and Smith (1991) covering 437 publicly quoted US companies. The findings were that the 205 respondents with performance management as opposed to the others without performance management had higher profits, better cash flows, stronger stock performance, higher stock value and significant gains in financial performance and performance (McDonald & Smith 1991). Another research on the same issue found that ‘review process has more engaged employees (33% vs. 21%) and fewer disengaged employees (12% vs. 29%)’ (Risher 2005, pp. 18–26).

The result of these studies showed the benefits of performance management to organisations on the assumption that people are more likely to respond positively and are more likely to work to improve capabilities as they establish clear performance goals.

Statement of the problem

Lots of research has been made in the performance appraisal but unfortunately it did not give any satisfactory results as Thomas B. Wilson, (1994) tends to describe the performance appraisal as it did no work for the employees as well as on for the organization except developing the dissatisfaction or expiation. Same Wendy K. Soo Hoo, (2004) concluded two of his researches that 90% of the employees found the performance appraisal as an ineffective.

The reasons he deduced from his research are like the Managers avoid giving honest critiques because they don’t want any conflict. Often time’s managers dread the appraisal process as much as employees do, so they procrastinate and don’t prepare adequately. Employees can be demoralized by ratings and statistics from the research said that 80% of people see themselves in the top 25% of all performers. So 55% will be really demoralized by honest feedback about where they stand.

On the whole, consequences of performance appraisal may lead to the decline of overall performance of the organization. On the other side, Performance management of the employees is the system which enable the organizations to achieve their goals by utilizing the fully skill level of their employees. It begins when an employee joins the organization and ends when he leaves your organization. Glendinning, (2002) suggest that performance management is the system which is supposed to be the need of the hour for organizations and a replacement of old performance appraisal system. He further argued that an organization without a performance management system has no vision for its future.

It is on this background that this paper examines the impact of performance management on employees’ performance

1.3 Objectives of the study

1. To examine the performance management systems adopted for company performance

2. To identify and explain the impact, problems and challenges of performance management systems in company performance

3. To suggest solutions or the way forward to improve and sustain performance management systems and company performance in

4.To determine whether Performance management system application and enhancement to existing systems adequately support corporate goals and objectives.

5.To determine the real time in change in information policy affecting change in companies

6.To examine the corporate posture of the organization by the application of performance management system.

7.To examine the relationship between quality information and decision making

1.4 Research Questions

1. What is the performance management systems adopted for companies

2. What are the impact, problems and challenges of performance management systems in company performance

3. What are the solutions or the way forward to improve and sustain performance management systems and company performance.

4.How can we determine whether Performance management system application and enhancement to existing systems adequately support corporate goal.

5.How do we determine the real time in change in information policy affecting change in companies?

6.How do we examine the corporate posture of the organization by the application of performance management system.

7.How do we examine the relationship between quality information and decision making

1.5 Research Hypothesis

H01: There is no relationship between performance management system and performance of employees of Nigeria Bottling Company, Edo state

H1: There is a relationship between performance management system and performance of employees of Nigeria Bottling Company, Edo state

H02: Performance management system does not have a significant positive impact on performance of Nigeria Bottling Company, Edo state.

H1: Performance management system have a significant positive impact on performance of Nigeria Bottling Company, Edo state.

1.6 SIGNIFICANCE OF THE STUDY

The significance of this study are as follows;

The study will help educate management, workers and other connected persons who have stake their resources and livelihood on the organization as they would remain at information equilibrium.
The study will also be of great usefulness to students carrying out a further research on this topic or related field.
Information provided and stored concerning staff, customers, production, marketing, accounting and so on can easily be retrieved when needed through this study.
To various organizations, this study will serve as a form of review or appraised of the performance management system in business operations.
To the general public, the research is very useful to the extent that it will improve their understanding of the impact of performance management system on performance of employees of Nigeria Bottling Company, Edo state.
The shift from performance appraisal to performance management has been a recent topic in the Human Resource world as employee performance is of great importance and focus to organizations both public and private. As a result, this work would help the government and those entrusted with the role of overseeing performance management in the civil service (i.e. personnel management) on how to go about it. Private organizations also would benefit from understanding its area of lapse and make appropriate correction on the issue of performance management. This study will also help the government in achieving success in its present effort to increase performance of employees.
Lastly, it would also help or serve as a basis for further researcher and those who will want to undertake similar studies.

1.7 Scope of the study

The application of performance management system is practicable in both company serviceand manufacturing sector. However, for the purpose of this study we focus the study on Nigeria Bottling Company, Edo state.

1.8 Limitations of the study

The study limited to the data and information made available by companies. And this includes the following:

Time constraint with respect to gathering needed data for the research work.
The unwillingness of some staff to reveal some information due to fear of revealing to competitors is also a limitation.
Finance: Insufficient finance lead to challenges to effectiveness of this research work.

However, all these limitations are mot given as a plat form to reduce the intellectual acceptance and provisional guidance that the research offers.

1.9 Research Hypothesis

H0: Performance management system does not have a significant impact on employee performance in Nigeria bottling company

H0: There is no relationship between performance management system and employee performance in Nigeria bottling company

1.10 Definition of terms

Performance Management is defined by Armstrong, (2006) as “a means of getting better results from a whole organization by understanding and managing within an agreed framework, performance of planned goals, standards and competence requirements”.

Performance appraisal/evaluation

Performance evaluation is “a systematic process of measuring a person’s performance in the job, based on predetermined performance criteria” (Clake, 2011).

Performance measurement

A quantifiable indicator used to assess how well an organization or business is achieving its desired objectives. Many business managers routinely review various performance measure types to assess such things as results, production, demand and operating efficiency in order to get a more objective sense of how their business is operating and whether improvement is required (Liu, 2014)

Civil Service: According to Gladden (1967) Civil Service has a dual meaning, first as a government institution. That means the term is applied generally to the civilian officials of the central government. Secondly, it stands for a spirit of vocational service to the State, or dedication to the service of the community. In view of this study, civil service consists of all the Federal Government Ministries, and inter-ministerial departments.

Civil Servant: refers to only the employees of ministries and interministerial departments defined as the civil service.

Public Service: Company serviceconsists of both the civil service and other governmental agencies and parastatals. E.g. Nigerian Police, Customs Service, Armed Forces, various Federal Government Courts, Educational Institutions, Government owned companies, Radio, Nigerian Television Authority, Commissions or Authorities established by the Federal Government, and so on.

Morale: This refers to an employee’s attitude toward his work, the degree of satisfaction he obtains from it and his personal adjustment towards specific policy, actions or decisions in the public service. The absence of it is manifested by poor attitudes such as lateness and absenteeism, low quality of work, low performance, lack of respect for supervisory authority, etc.

Motivation: According to Cole (1988: 7), motivation is “a process in which people chose between alternative forms of behavior in order to achieve personal goals”. The goals sought by individuals can be relatively tangible, such as monetary reward or promotion or intangible such as self-esteem or job satisfaction. Motivation can therefore be defined as the set of process that energizes a person’s behaviour and direct it towards attaining some goals.

Measures/Procedures: This refers to plans that establish a required method of handling future activities. They are chronological sequences of required actions or inactions to ensure that something is done in a practice way.

They are guides to action. Than to thinking and they detail the exact manner in which certain activities must be accomplished. Disciplinary procedure refers to those established processes adopted in investigating and taking necessary action against any acts of misconduct by erring employee.

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