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Saudi Journal of Business and Management Studies (SJBMS)Scholars Middle East PublishersDubai, United Arab EmiratesWebsite: http://scholarsmepub.com/ISSN 2415-6663 (Print)ISSN 2415-6671 (Online)Strategic Performance Management System- A Deep InsightDr. Qamrul Islam*Assistant Professor, College of Business Administration, Jazan University, Al Maarefah Rd, Jizan, Saudi Arabia*Corresponding authorDr. Qamrul IslamArticle HistoryReceived: 02.11.2018Accepted: 06.11.2018Published: 30.11.2018DOI:10.21276/sjbms.2018.3.11.2Abstract: The idea behind this study is to emphasize the significance of strategicperformance management systems that assist managers to build up a properperformance management process in their respective organizations. It examines thepurpose of how strategic Performance system can employ to strengthen the differenthuman resource strategies of an organization. In a nutshell, the paper takes a deepinsight into the aspects of Strategic Performance Management System (SPMS).Thefindings obtained from the intense reviews exhibit the main purpose, process andcomponents that the system should execute at its managerial levels for betterperformance.Keywords: Strategic Performance Management System, Strategic Performancemeasures, Strategic management.INTRODUCTIONOrganizations of Today’s Era rely on human capital for the creation of thevaluable organization. As a result the Performance management at the employee levelis vital. It has been a big task to execute a system to determine and a best strategy toassess the employee’s performance. A strong performance management system resultsin increased performance and reduced turnover rates.Increasing global competition, rapid changes in the technology and increaseduse of MIS, the Internet, increased concerned towards corporate strategic planning,employee involvement and altogether changing demographics are resulting in forcingthe companies on having the sustainable development.Companies are now days being required tosearch for innovative management ideas for progressiveprogression of a company so that it can compact withpresent methods of development. The current paperemphasizes upon unfolding the ways to help theorganization to execute a well versed Strategicperformance management system. Managing theperformance is said as the crucial part of anyorganization as it plays an essential role in the humanresources structure of any organization. It deals with thetwo basic functions of the HR namely, Retention andTraining and development. These two functions have aclear payback from handling person an employee andmember of performing team to attain the organizationalobjectives.The reason of a well-made strategicperformance management system is to kindle themanagers to layout a best plan, lay down self-motivatedtargets and watch the performance minutely. In one goit can be said that SPMS results in the activities thathelps to attain strategic objectives and as a result getsustained value creation.Available Online: http://scholarsmepub.com/sjbms/ApproachDiscussed theoretical built in this paper isbased upon the reviews of various literatures. Thesystem of performance Management is studied in theframework of performance evaluation in differentorganizations based on the literature review.Research limitationsThe framework given in this research paper istheoretical in its nature and is developed based on thereviews of existing research, though the theoreticalconstruct shows a common insight for the articulatedmain concepts.LITERATURE REVIEWFlapper et al., opined that in new era’smanagement literature, performance indicators andperformance measurement are sought after themes [1].They introduced a concrete method for establishing aconsistent set of performance indicators creating thebasis of a consistent performance management system,where due attention is paid to the relations betweenperformance indicators.1201
Qamrul Islam., Saudi J. Bus. Manag. Stud., Vol-3, Iss-11 (Nov, 2018): 1201-1205Sumlin stated that performance managementsystems directly affect five critical outcomes of theorganization i.e. productivity, quality, customersatisfaction, financial performance and employee jobsatisfaction [2]. Firms are more likely to recognizeenhancement in these five critical areas whenperformance management systems are linked tostrategic goals with flexibility.Waal found in regard to execution of strategicperformance management development cycle that theorganization's overall efficiency is improved resultingin growth and development of the organization [3].Schlafke et al., identified that the domain ofperformance management can be potentially extendedby business analytics resulting in improved perceivingof business dynamics which ultimately leads to a betterdecision making [4]. The study describes the possibleimplementation spheres of business analytics and theirmerits within the ambience of performancemanagement.According to Muda, Rafiki & Harahapnowadays the organizations strive to accomplish certainstandards by enhancing their performance to meet thedemands, contemplating the unpredictable businessenvironment [5]. This performance pertaining to theorganization stresses the individuals’ performancewhich concludes that the human element is becomingthe most determining factor to achieve theorganization’s goals.Strategic Performance Management System ConceptStrategic performance Management system(SPMS) has been seen in HR profile from the currentyears as a way of delivering a more incorporated,incessant way for managing in comparison to the earliersecluded and frequently insufficient merit based ratingsor other performance assessment schemes. StrategicPerformance Management system has its footing basedon the philosophy of Management by Agreement ratherthan Management by commend. It gives emphasis onthe incorporation of an individual with organizationalobjectives with the commencement of self motivatedlearning and development programs.AspertheAmericanManagementAssociation, “Strategic Performance Management is aproactive partnership between employees andmanagement that helps employees perform at their bestand align their contributions with the goals, values, andinitiatives of the organization” –“Performance Management is a strategic andintegrated approach to delivering sustained success toorganizations by improving the performance of thepeople who work in them and by developing theAvailable Online: http://scholarsmepub.com/sjbms/capabilities of teams and individual contributors [6].” Armstrong & Baron"StrategicPerformanceManagementencompasses methodologies, frameworks and indicatorsthat help organizations in the formulation of theirstrategy and enables employees to gain strategicinsights which allow them to challenge strategicassumptions, refine strategic thinking and informstrategic decision-making and learning [7]." - BernardMarrStrategic Performance Management is a bigbusiness task which makes the owners and managersdevelop activities or tasks to measure the by and largeeffectiveness and efficiency of the company. Thisprocess is a complete set of tasks of looking at thecompany and setting precise goals or objectives fordivisions, departments, managers, and employees. Theprocess starts with the setting the goals or objectives forbusiness activities, collecting the information regardingmeasuring the performance and making appropriatechanges to correct the issues or recover the company’sperformance.Purpose of the Strategic Performance ManagementSystem (SPMS)Organizations must link their performancemanagement approach with the purpose they mainlywant to achieve. As per the Dr. Rose Mueller-Hanson7 Dr. Elaine D. Pulakos the purpose behind the SPMS isto not only to provide informal feedback but also ithelps in setting clear expectation and workingcollectively [8]. The underscoring purpose ultimatelyends in the betterment of the organization as well as theemployees also. The purpose can be of two typesnamely administrative and individual based and bothwork together for the organization performance.Administrative purpose deals with the seniormanagement in deciding the pay, promotion or otherpersonnel action, finding poor performance and takingcorrective action and to list the legal document to avoidany legal claims based on employee discrimination.Performance Appraisal on the other hand also works foran individual in development and growth, improvedcommunication between the management and helpsthem to adjust their performance as per theorganization's goal.According to Grigore Ana-Maria, Bâgu&Radu Cătălina the strategy to manage the performancein an organization seeks to give the resources, so thatenhanced results can be attained for and from theorganization, work teams and individual [9]. These allare done by significant management of the performancewithin a pre-determined outline of planned goals,principles and ability necessities. It also comprises ofthe developing a process for creating mutual1202
Qamrul Islam., Saudi J. Bus. Manag. Stud., Vol-3, Iss-11 (Nov, 2018): 1201-1205understanding to find an way out to manage anddevelop employee in a manner that it results in theincreased productivity and better performance [10].Process of the SPMSThe focus of the Performance managementstrategy process lies in developing a flexible andcontinuous process. It basically involves managers andother acting partners within a framework. The SPSMprocess is made up of different subordinate phase’slike- strategy development, budgeting, performancemeasurement parameters, deciding target employees,provides a rough draft on which the performance is tobe measured.Fig-1: Process of Strategic performance Management SystemEach sub process in this phase is decided itskey parameters like- means, key value drivers, strategicgoals to be achieved. These sub-processes all togethercreate the performance oriented behavior targeting atthe aims decided earlier. Performance Appraisal andReviews do the actual screening of the employees basedon the pre-decided key value drivers. The act ofpolishing the short comings and the patchwork in thegaps are done with the help of Feedback and counselingto get the potential appraisal in future. Rewarding goodperformance and preparing the improvement plans isthe essential task of this system to get the prospectiveassessment in the future. Strategic development - It aims to lay down lucidstrategic goals and a plan to get the measurableperformance. They are goals oriented and basedupon the key value drivers, critical issues and thepre determined targets. This main focus of thisphase is on cautiously scheming future economicoutcomes instead of value creation planning. Budgeting/target- Budget setting at this stage setsthe clear operational plans for better utilizing themain drivers with committed resources. This phasealso helps in setting financial targets for the nextyear. Forecasting - This process helps the members ofthe organization to perform the activities leading tothe desired results. Regular forecasting helps inpredicting the organization the track on which it’sleading. It tells that whether remedial and/orAvailable Online: http://scholarsmepub.com/sjbms/ prognostic measures are actually needed to resolvethe issue or not.Performance measurement -This process links allthe sub process by collecting, processing anddistributing the data to allow a successfulimplementation of the other subordinate. Theinformation is depicted as the Critical SuccessFactors for Key Performance Indicators.Performance review - This phase contains theperiodical reviews of actual performance, aims, andpredictions to make sure that the company is ontrack. The result of the performance reviewsdecided the need of the corrective or preventivemeasures.Compensation Incentive - The phases link theoperational and strategic plans in a fair mannerwith remunerative action and reimbursementpolicies. This phase is an end result for anemployee seeking the reward of his performance.The compensation may motivate the employee forthe better results or may result in low performance.Components of Strategic Performance ManagementSystemsComponents of the SPMS include the six basicvariables. Performance Planning is the basic tool of thisprocess providing the base for appraisal. Performanceappraisal and review appraise the performance inquantifying measure to facilitate the management andemployee to find the performance gaps. Feedback andcounseling help an employee in acquiring alertness1203
Qamrul Islam., Saudi J. Bus. Manag. Stud., Vol-3, Iss-11 (Nov, 2018): 1201-1205about the key areas of the improvement from theappraiser. It facilitates the top management with therequired information about the employees' contributionup the expected level.Fig-2: Components of SPMSSource- Author's illustrationRewarding the performance is a sensitive issuefor any employee as involves the direct effect on its selfesteem and ego. Any action plan, suitablyacknowledged by the management facilitates theemployees in dealing with the failure properly andassures the management’s motive of Employeeimprovement. These plans Communicate the new goalsand the areas of improvement. Here employees’ arelikely to do improvement and a pre decided time limit isalso allocated to which the employee must demonstratethis enhancement.Potential Appraisal provides both creative andupright association of employees. It employs capabilitymeasurement and a variety of appraisal techniques, so apotential appraisal is done.Companies CredentialCoca- cola was established in 1993, is thelargest beverage company of the world. It contain fourtop world’s selling soft drink brand out of five. It entersre enters into India through 100% owned subsidiary,under the name HCCBL. Coca-Cola has large no of theemployee 27 Company Owned Bottling Operations(COBO), 17 Franchisee Owned Bottling Operations(FOBO) and a network of 29Contract Packersfacilitating the manufacturing process of a range ofproducts for the
Strategic Performance Management System- A Deep Insight Dr. Qamrul Islam* Assistant Professor, College of Business Administration, Jazan University, Al Maarefah Rd, Jizan, Saudi Arabia *Corresponding author Dr. Qamrul Islam Article History Received: 02.11.2018 Accepted: 06.11.2018 Published: 30.11.2018 DOI: 10.21276/sjbms.2018.3.11.2 Abstract: The idea behind this study is to
