Literature Review On Performance Management

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This chapter provides the theoretical foundation for this research. This chapter introduces an overview of literature relevant to the research problem as stated in the previous chapter. It also provides the conceptual framework and a detailed outline of the underlying concepts and variables of performance management. This study mainly builds on the strategic HRM literature (Huselid 1995; Becker & Gerhart, 1996; Wright, Dunford & Snell, 2001) and employee performance management literature (Fletcher 2001; Armstrong & Baron 2002; Den Hartog, Boselie & Paauwe, 2004; DeNisi & Pritchard, 2006). In addition, this theoretical framework elaborates on the goal-setting theory (Locke & Latham 1990, 2002) and the social cognitive theory (Bandura, 1986).…show more content…
The foundation of performance management lies within the literature stream on performance appraisal. Performance appraisal has existed for many years and comprehends evaluation and review of performance against the objectives of an organization by managers and subordinates (Atkinso, Waterhouse, & Wells, 1997). It is often believed that performance appraisal is the same as performance management, but there are significant differences between them (Armstrong, 2006). Moreover, according to Mone and London (2010), many researchers engaged in this field continuously use the term ‘performance management’ interchangeably with ‘performance appraisal’ and other forms of performance assessment including performance evaluation, performance monitoring, and performance reporting (Halachmi, 2005; Pollitt, 2005; Wholey, 1999). However, performance management should not be confused with practices of performance appraisal and evaluation. According to Armstrong (2006), the basic distinction between them is that with performance appraisal and evaluation, managers usually assess and rate employees’ performance in an annual review meeting whereas performance management is a more comprehensive and continuous process of management. Over time, performance appraisal has become one dimension of more integrated systems of performance management (Guest, 2011). Therefore, the idea of performance management is a…show more content…
The term ‘system’ implies that all performance management activities belong to a larger set of practices forming an integrated process that links individual behaviour to the organizational objectives. Traditionally, performance management systems have been implemented as a means of managing and measuring the performance of individuals or teams by providing clear processes to evaluate performance (Otley, 1999; Ferreira & Otley, 2009). The objective is that such systems support the strategy and goals of the organization, and that by having a transparent system, all employees are encouraged to contribute, individually or in groups, to the strategic direction of the organization (Aguinis, 2009). Therefore, a performance management system can be defined as an integrated cycle for performance management. Accordingly, PMS has been defined as “an integrated set of planning and review procedures which cascade down through the organization to provide a link between each individual and the overall strategy of the organization” (Smith & Goddard 2002, p. 248). This definition will be adopted for this
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