Future Implications of Abandoning Performance Management System

Question: What Are The Future Implications Of Abandoning Performance Management System? Answer: Introduction Human resource management is an approach that allows business organisations in ensuring proper management of their workforce and to optimise their performance levels. Human resource management was coined during the industrial revolution and has greatly evolved since then (Armstrong Taylor, 2014). Today, human resource management is considered to be one of the key functional areas of a business organisations and uses a number of strategies, such as training and development, recruitment and selection, performance management, career development, etc. to foster a better workplace environment and better relations between employers and employees(Hendry, 2012) Performance management is one of the most important core functions of a human resource management department. A system of performance management allows business organisations to plan, monitor and assess the performance levels of its workforce and to become more productive profitable by achieving an increase in the workforce performance levels (Dooren, Bouckaert, Halligan, 2015). The report is aimed at studying the case of Accenture and gaining a deeper insight into its decision to drop its system of performance reviews. Analysing Accentures decision to drop performance reviews The present day business world is complex and highly competitive. The spread of globalisation has raised the bar of competition even higher. The complexity of the modern day business world is forcing the business organisations to drop their traditional human resource management practices because of their inability to achieve what they are intended to. Some of the human resource management practices have become so invalid that they have been fostering negative behaviour in the workplace. Performance reviews is another human resource management practices that has lost some of its credibility to achieve a positive impact on the performance of the employees. According to one of the research conducted by the Harvard Business Review, almost one-third of the American business organisations, including some big multinational companies like IBM, Dell, Deloitte, etc., had already put an end to their performance review practices and are still being followed by many other organisations (Cappelli Tavis, 2016). The decision of Accenture to drop its performance review strategy can be attributed to the changing market trends and the complexity of the business world. In order to sustain in the market for a longer period of time, being competitive and innovative is the only possible way. Business organisations have to do away with all their inefficient operations and practices so that they can become more efficient and can stay in the market competition for a longer period of time. The decision taken by Accenture to abandon its performance review system is a calculated move that might be justified on the companys parts. According to the senior management of the company, its system of reviewing employee performance was designed a long time back and even though it was expensive and required a lot of resources, it was failing to achieve its sole objective of fostering a performance oriented environment in the workplace. Instead, the management has been identifying certain negative aspects of the performance management system as a system that was based on forced rankings and plotting the performance reviews on a curve to come to a conclusion was measuring too much and was increasing the level of job dissatisfaction amongst the employees (American Management Association, n.d.). In other words, the performance management system of the company was going in a negative direction and will pose some great threats to the overall performance of the company if it is continuo usly used in the future. Therefore, it is important that the company puts an end to its system of performance reviews and introduces some changes into it that would help it in achieving its objectives and fostering better performance levels amongst the employees. On the other hand, the management of the company has already planned a new performance management system that would allow the employees to receive a feedback for their performance levels and will empower them to manage their own performance levels, which will be a better proposition than the present system (Heathfield, 2017). Therefore, the decision of the company to put an end to its system of performance reviews is completely justified and will definitely have a positive impact on the performance of the company in the coming times. Future implications of abandoning performance management system Performance management system is one of the most important core functions of a human resource management department and companies are laying a great focus on designing and implementing performance management systems that can help them in outperforming their competitors. Though it is obviously important to put an end to all those performance management systems that are dysfunctional but removing all of the performance management systems without having a new performance management system in place is not a smart move either (Hansen, n.d.). Dropping all performance management systems and implementing none in place of the old ones can have a drastic effect on a company like Accenture that has a workforce of 330,000 employees. Some serious implications of abandoning all performance management systems are discussed below: A decline in performance levels one of the most important consequences, which the managers need to keep in mind before dropping all performance management systems, is a decline in the performance levels demonstrated by the employees. In the absence of performance management systems, it become difficult for the management to foster a competitive workplace environment. In absence of performance management systems, it also becomes difficult to make the job interesting for the employees and to keep them engaged, which ultimately has a direct impact on the performance level of the workforce (CEB HR, 2016). Implications for managers dropping all performance management systems can have some serious implications for the managers as well. In absence of performance management systems, it becomes very difficult for the managers to be aware of what the employees are doing and if they are meeting their performance objectives or not. In absence of performance data, managers become incapable of communicating with the employees because they lack sufficient information about their performance levels. As a result, the managers of a business organisation can become inefficient in carrying out their job duties and responsibilities in case all performance management systems are dropped by the management (Puckett, 2015). Reduced employee motivation Maslows need hierarchy theory is an exceptional theory that has been helpful in identifying certain needs of the employees that can have a motivational effect on them. In Maslows need hierarchy theory and also in some of the other need theories, it has been identified that challenging work, rewards and recognition are some important factors that can help a management in keeping its employees motivated and engaged. In case an organisation plans to drop all of its performance management systems, it will not be able to make the work more challenging for the employees and would also not be able to reward or recognize the efforts that the employees have put in for the achievement of organisational goals and objectives (Lauby, 2014). Thus, it will become difficult for a company to motivate its employees if there is no performance management system in the workplace. Training need assessment and succession planning one of the biggest advantages of having a performance management system is that it helps business organisations in analysing the performance gaps in the workforce and assessing the skills associated with it. Identifying performance and skill gaps allows business organisations in identifying the training needs of the employees and arranging for training and development programs that can help them in learning the skills that they lack and becoming more competitive (hr-survey.com, n.d.). Furthermore, performance management systems also allow business organisations to identify those employees who have the potential to take up higher job positions in the future. By identifying such employees, human resource managers can develop them to take up higher job positions and can offer them with new growth opportunities (APSCo, 2017). In absence of a performance management system in the workplace, an organisation will face difficulties in assessin g the training needs of the employees and in succession planning. Higher employee turnover rates employee turnover rate is defined as the percentage of employees that leave a company (Mayhew, n.d.). In absence of performance management systems, there will be less employee engagement, motivation, satisfaction and training and development programs. Overall, the growth opportunities for the employees will reduce and the employees might start to quit a company because of lack of growth opportunities. From the above information, it is clearly evident that there will be a great negative impact on the performance levels of the employees and other human resource management practices in case a company drops all of its performance management systems. Recommendations to improve performance management system From the above information, it is clear that a company like Accenture might lose its market share and competencies to the competitive firms if it completely abandons all of its performance management systems. Dropping performance reviews can be an option but dropping performance management systems altogether will have negative implications. Therefore, the company should try to improve its performance management system rather than dropping it altogether and some recommendations that can be useful for the company are discussed below: First of all, the company can select a 360-degree feedback approach along with an MBO approach, also known as Management by Objectives. In a 360-degree feedback approach, employees will receive multiple and anonymous feedback from people who are working around them, such as their peers, juniors, seniors, managers, etc. Using such a system, the employees will be able to assess their own performance levels and regulate their behaviour to achieve higher performance objectives (Heathfield, 360 Degree Feedback: The Good, the Bad and the Ugly , 2016). One of the greatest advantages of a 360-degree feedback approach is that it acts as a self-assessment and self-regulatory technique for the employees and the idea of multiple anonymous feedback increases the reliability and accuracy of the information received. In addition to a 360-degree feedback system, the company can also introduce a Management by objective system in the workplace. Under this system, the managers and the employees work co llectively to formulate performance goals that are acceptable to both the employer as well as the employees (Drucker, 2013). Secondly, the company needs to adopt a more future oriented approach rather than focusing more on the past. The company should use the information received through the performance management system to plan its future and pay less attention to what has happened in the past (MBAofficial, 2011). Last but not the least, Accenture should definitely design and implement a performance appraisal system along with its performance feedback system in order to maximise the positive impacts. A performance appraisal system will help the management in rewarding and recognizing those employees who will contribute more towards the achievement of organisational goals and objectives. Performance appraisal system will also allow the company to re-inforce positive behaviour amongst the employees and to keep them motivated and engaged. It will also offer growth opportunities to the employees and will help in bringing down the employee turnover rates (Bigelow, n.d.) Conclusion Performance management systems are one of the most important core functions of a human resource management department and have a crucial role to play in the overall performance and profitable levels of a company. Accentures decision to abandon its system of performance reviews is somewhat justified because of the failure of the system in meeting its desired objectives but the company should understand the importance of having a performance management system in the workplace and should introduce changes in it rather than dropping it completely. Accenture can look into the recommendations discussed above and can strengthen its performance management system, which will offer some added advantages to the company in the longer run References American Management Association. (n.d.). When Measurement Goes Bad. Retrieved May 23, 2017, from www.amanet.org: https://www.amanet.org/training/articles/when-measurement-goes-bad.aspx APSCo. (2017, March 9). The Importance of Succession Planning. Retrieved May 23, 2017, from www.apsco.org: https://www.apsco.org/article/the-importance-of-succession-planning-3069.aspx Armstrong, M., Taylor, S. (2014). Armstrong's handbook of human resource management practice. 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