International Human Resource Management-MJ Version

TABLE 12.1

existence under their own names, e.g. performance appraisal’ (author’s italics).
Broadly, performance management could be considered to comprise any HRM
activity, or bundle of HRM activities, designed to improve employee perfor-
mance, consequently it has been variously defined by writers and researchers.
Differences have resulted in a lack of consensus as to the precise nature of
performance management. There is however, agreement that performance man-
agement in contemporary organizations comprises a bundle of HRM activities
with performance appraisal as the core, or central activity. Most narrowly, per-
formance management would involve performance appraisal linked to reward
decisions (Bernthal, 1996). At the optimum level, that of its strategic integration
with other management systems, performance management involves:

1 links to organizational strategy

2 setting individual performance goals

3 providing regular feedback on progress towards those goals

4 providing opportunities for improving; and

5 linking results and rewards. (Armstrong, 1994)

The direct links of these characteristics to specific HRM functions within the
MNC are shown in Table 12.1.
Performance management emphasizes employee development and
rewards as outcomes of performance evaluation or appraisal. From an organi-
zational behaviour perspective, Expectancy theory and Goal Setting theory
have been identified as particularly relevant when discussing performance
management (Clark, 1995). Expectancy theory hypothesizes that employees
alter their behaviour due to their anticipated satisfaction of valued goals. Goal

318 International Human Resource Management

Characteristics of integrated performance management and their links to HRM functions

Performance management HR functions

Links to MNC strategy clearly HR planning; job design and analysis

communicated to all employees (job descriptions)

Setting individual performance Job analysis (job descriptions);

goals performance appraisal

Providing regular feedback towards Performance appraisal

those goals

Providing opportunities for Performance appraisal; training and

improving performance development

Links between results and rewards Performance appraisal; compensation