Introduction To Performance Management System

Published Date: 02 Nov 2017

Performance Management System (PMS) is a process of formulating a working environment to build up individual accountability in achieving the mission and goals of the organization is a continuous process and is used to be aware of the current performance of employees, what is planned, how the employee is performing and contributing to the organization targets (Dessler, 2011). The whole process is encouraged by the continuous giving and receiving of feedback. From their responses, five common areas emerged, as shown in the graphic below.

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Source: Society for Human Resource Management

There is a wide range of methodologies available in terms of how to assess and measure the performance of employees, such as graphic rating scale, management by objectives and behavioral anchored rating scale and mixed standard scales (Danielle and Ronald, 1998).

The aim of this study is to analyze the performance management strategies that have been adopted by NHS Shetland and Biogen Idec meaningfully assess the similarities and differences between the strategies of the organizations and it has been suggested that we explain the reasons for the similarities and differences. This involves identifying potential weaknesses of the strategies being implemented and to emphasize that the potential for future challenges.

Performance management system has a number of advantages and disadvantages for the organization. It benefits from the organization in terms of reducing costs (Neely et al., 1995), employee retention loyalty and creates a closer relationship and greater information and knowledge exchange between organizational division (Kald and Nilsson, 2000).

However, the disadvantages of the practice of PMS on the other hand are, makes the threat of domestic competition (Papalexandris et al., 2004), favoritism amongst employees, and managers dilemma amongst others (NirupamaA, 2012)

2.0 Organization Background

2.1 Background NHS Shetland

NHS Shetland is a national health council which provides services. NHS Shetland is subject to the need for training and the provision of health centers in the nation of Scotland. The service usually obtained based on a general hospital and local community services offered to everyone. In Scotland, currently about 14 territorial health councils are in service (NHS Shetland, 2010).

Shetland NHS is a public organization with ethical responsibility to provide exceptional services to the community it serves. Based on the case study, the main objective is that Shetland center "Health Improvement, efficient service, access to services, treatment to people" (HEAT) aims to "improve the health of people in Scotland so as to improve life expectancy and health, (NHS Shetland, 2010).

2.2 Biogen Idec background

Biogen Idec is a world leader in biotechnology, specializing in the medical needs in dermatology, rheumatology, neurological, and oncology. The organization was formed by the union of Biogen Inc and Idec Pharmaceutical Corporation in November 2003. It consists of 4,300 employees, including 500 of its international operations and its global headquarters are in Zug, Switzerland (Biogen Case Study, 2011).

Biogen Idec is a private organization that tries to meet the unmet needs of patients through the rich duct of biotech drugs. Its main products Avonex are popular for their best selling drug in multiple sclerosis treatments, and Rituxan which has occurred for treatments of ‘non-Hodgkin lymphoma’ (Biogen Case Study, 2011).

3.0 Analysis of NHS Shetland and Biogen Idec PMS

3.1 NHS Shetland

Performance management systems adapted as a key focus on the overall performance of NHS Shetland significantly helps the organization to plan, monitor and manage so as to ensure continuous improvement of Shetland quality performance.

In order to meet its ongoing service quality, NHS Shetland has adopted and applied the balance score card (BSC) approach based on the heat kernel set to measure and review the results of the Boards (NHS Shetland, 2011) .

BSC is a strategic management tool and an inclusive approach that are aligned towards achieving the objectives of the organization. Kaplan and Norton (1996), briefly defined BSC as a management framework 'translates the mission and strategy of an organization in a broad set of performance measures that provides the framework for a strategic measurement and management. "

In addition, for the BSC strategy and most successful goal, apply the acronym SMART Shetland ensure the goals are achievable when you have to be specific, measurable, agreed, realistic and time-related and key performance indicators used to check the measurement achievement (NHS Shetland Case, 2011).

In particular, these approaches are suitable for Shetland as to predict the success or failure of your health center from determining just financial measures are inadequate. It also helps produce balanced view of overall performance in the organization.

Biogen Idec

Biogen Idec emphasized that the performance management system is the cornerstone for the development of the most qualified employees and added value for the continuous growth of the organization.

Biogen has been practicing the classification, management by objectives (MBO) and online performance, planning and evaluation tools (PPA), which includes both classification and MBO approach as an integrated system to evaluate the employee's operation in achieving the goals of the organization (Biogen Case Study, 2011).

Biogen will make comparisons between the two employees from highest to lowest levels; this generally takes less time to evaluate.

According to George Odiorne, MBO is "a process whereby the superior and subordinate managers of an organization jointly define their common goals, define each individual's major areas of responsibility in terms of the results expected of him and use these measures as guides for operating the unit and assessing the contribution of each of its members."

Furthermore, in order to meet the diverse needs of employees; performance, planning, and assessment tool (PPA) through the online system is also designed to accommodate all levels of the review process employee performance through Biogen’s worldwide business (Biogen Case study, 2011).

4.0 Similarities and Differences between NHS Shetland and Biogen Idec

4.1 Similarities between NHS Shetland and Biogen Idec PMS

The basic similarities between these two PMS of the organizations are the two had recognized the importance of performance management process by placing greater importance on the value of the organization and leadership skills for individual development to improved implementation of its strategy and continued success (NHS Shetland Case Study, 2011 and Biogen Case Study, 2011).

Shetland and Biogen have adopted a framework of strategic performance management to ensure the increase in performance and productivity. As stated by Johnsen (2001), people have insisted that BSC theoretically originated from MBO. Shetland and Biogen use similar approaches for both BSC and MBO are directing the activities of the organization toward achieving their SMART objectives. Both approaches put importance on incorporating this guidance in the performance management process (Johnsen, 2001).

Both are using the online system to accommodate all performance review processes for employees. There is an active involvement of the top management of both organizations for its continued success. A scheduled interim review was performed to assess the progress of employee performance (NHS Shetland Case, 2011 and Biogen Case Study, 2011).

4.2 Differences between Shetland NHS PMS and Biogen Idec

The most significant differences between the two organizations is that they are both using different performance management systems to evaluate the performance of their employees, in NHS Shetland, Balance Scorecard (BSC) is being used and management by objectives (MBO) in Biogen Idec. NHS Shetland’s services are focused on patient care and services, while Biogen Idec is focused on the base product that does research and development of pharmaceuticals (NHS Shetland Case, 2011 and Biogen Case Study, 2011).

In addition, NHS Shetland is a goal-oriented organization regarding its setting organizational goals and employees towards achieving it, while Biogen Idec is a work-oriented organization highlighted in the output of the product (NHS Shetland Case, 2011 and Biogen Case Study, 2011).

4.3 Reasons for the similarities and differences

4.3.1 Reasons for Similarities

NHS Shetland and Biogen Idec are both trying to align the objectives set by both MBO and BSC approaches to organizational change. BSC is the same theory of MBO (Johnsen, 2001). The adoption of these approaches in organizations has greatly increased reception and contributions of employees and management, approaches that enhance the commitment of both organizations.

4.3.2 Reasons for the differences

NHS Shetland is a government based organization that provides health services to a large population of Shetland. Health care providers are entities using BSC in its industry in which their main goal is quality customer service and meeting their needs. Furthermore, in order to fulfill its long-term objectives, BSC will result in the direction of what has to be done and how to do it.

Biogen is a private organization based using the classification method for evaluating the employee's performance, as it has only a small number of employees currently 4,300 which make up the Biogen team. Biogen recognized that this approach fits completely with its performance measurement because it is simple, low-cost to use, rapidly deployed too.

5.0 Weaknesses of the Current PMS

5.1 NHS Shetland

There are some weaknesses that can be seen in the method practiced as performance and employee motivation, Shetland NHS employees could leave due to the fact that the BSC has a great effect on the whole organization.

Another disadvantage is that it is definitely not cost effective as the treatment or exercise of the BSC is very slow and expensive since you need experienced consultants help to improve the effectiveness of their performance (Den, F. 2010).

5.2 Biogen Idec

Biogen Idec Practices a five-point rating scale, as it is the most straightforward method of evaluating the performance of employees. But however, this method has its own disadvantages because it can trigger rivalry within its employees that could negatively disturb the entire work environment. In addition, the motivation of employees can be dented under a negative interpreter will be marked as a loser.

According to Dessler, G (2000), the supervisor compares and judges each employee with others instead of working standards, the supervisor is asked to remember the "working together", literally, and classify jobs only. This is practically impossible for a range of jobs and regular jobs at Biogen changing. This will surely lead to a different aspect of the comparison between supervisors when defining the classification factors as highly subjective and superficial.

Moreover, Biogen’s MBO approach has some weaknesses that management sets short term goals, which is usually not more than a year. This is a negative risk of carrying out short-term goals, perhaps at the expense of longer term goals (Hahn, M. 2007).

In addition, it will result in time consumption to develop goals for Biogen, thus leaving the management and employees less time to accomplish their tasks.

6.0 Possible future Challenges of the PMS

Shetland NHS and Biogen Idec approaches to performance are perfectly suitable for the establishment of goals and objectives without any challenges. But nevertheless, some of the future challenges have been addressed here:

6.1 NHS Shetland’s PMS

NHS Shetland has only explored internal aspects and the assessment tool and discards the external factor which could benefit or hurt your business. This is unfortunate, because organizations that are actively exploring both the internal and external environment scan performed less efficiently than is done.

The main challenges Shetland NHS could face is that it will be time consuming in the analysis and reporting of general measures of organizations to make a change, respectively, towards the achievement of its objectives.

6.2 Biogen Idec’s PMS

MBO

Biogen Idec tends constantly to raise targets for achieving the goals of the organization, but if the goals are too high or rising, some employees may refuse to take responsibility and goals highlighted to them could lead the frustration of employees and affect their overall performance.

Moreover, despite Biogen emphasis on participation of employees to their goals, never specify the actions necessary to achieve it. This could be challenges, especially for new employees who need more guidance. This can be resolved by identifying what they need to carry out and provide them with action steps that are actually beneficial for Biogen Idec.

Classification

Recently, this method was not in good use as the following challenges such as; limitation of stern where Biogen Idec is not diagnostic to indicate the specific measurements of weaknesses employees or strength. This can cause poor performance and not meet set goals.

7.0 Conclusion

The main objective of implementing a performance management system is to develop the overall performance of the organization in order to serve its customers, shareholders and employees.

The business world has become increasingly competitive with the development of technology, new trends and new strategies have surfaced that organizations derive from the way in developing efficient systems performance.

Therefore, organizations must obtain an overview of its performance management system with good goals objectives aligned with strategic plans and performance management process to support best practices in performance. Hopefully, successful organizations tend to discover the secret of this and while not perfect, but always continuing struggle to improve the measures taken to achieve the goals of the organization.