Theories of Performance Management System
Following are the theories of performance management system:
Table of Content
Goal Setting Theory
Goal setting theory is usually accepted as among the most valid and useful motivation theories in industrial and organizational psychology, human resource management, and organizational behavior. In 1960s, Edwin Locke put forward the Goal-setting theory of motivation.
This theory represents that goal setting is essentially linked to task performance. It indicates that specific and challenging goals along with appropriate feedback contribute to higher and better task performance. In other words, goals gives the right direction to an employee about what needs to be done and how much efforts are required to be put in.
Five Principles of Goal Setting To motivate, goals must have:
- Clarity: Clear goals are measurable and unambiguous. When a goal is clear and specific, with a definite time set for completion, there is less misunderstanding about what behaviors will be rewarded. Clear goals gives specific and measurable standards which leads to team’s performance and improves productivity of an organisation
Example: “Reduce job turnover by 15%” or “Respond to employee suggestions within 48 hours” are examples of clear goals.
- Challenge: One of the most vital characteristics of goals is the level of challenge. People are generally motivated by achievement, and they’ll judge a goal based on the significance of the anticipated accomplishment. When setting goals, construct each goal as a challenge.
On the other hand If there will be no challenge in the work then it become ambiguous and monotonous and also not viewed as very important. The more challenging the goal, the greater is the reward generally and the more is the passion for achieving it. - Commitment: Goals must be understood and agreed upon if they are to be effective. Goal setting theory assumes that the individual is committed to the goal and will not leave the goal. Employees are more likely to “buy into” a goal if they feel they were part of creating that goal.
- Feedback: Feedback provides opportunities to clarify expectations, adjust goal difficulty, and gain recognition. It’s important to provide benchmark opportunities or targets, so individuals can identify for themselves how they’re doing. These regular progress reports, which evaluate specific success along the way, are particularly important where it’s going to take a long time to reach a goal. In these cases, break down the goals into smaller chunks, and link feedback to these intermediate milestones.
- Task Complexity: The last factor in goal setting theory introduces two more requirements for success. For goals or assignments that are highly complex, take special care to ensure that the work doesn’t become too overwhelming. People who work in complicated and demanding roles probably have a high level of motivation.
Vroom’s Expectancy Theory
Vroom’s expectancy theory was propounded by Victor Vroom. This theory supposed that behavior results from conscious choices among alternatives whose aim is to maximize pleasure and minimize pain. Together with Edward Lawler and Lyman Porter, Victor Vroom suggested that the relationship between people’s behavior at work and their goals was not as simple as was first assumed by other philosophers.
Vroom realized that an employee’s performance is based on individual’s factors such as personality, skills, knowledge, experience and abilities.
Under Vroom’s Expectancy Theory an individual’s belief is influenced by the following factors:
- Valence: Valence indicates that the emotional orientations people hold with respect to outcomes (rewards). The need of an employee can be extrinsic (money, promotion, time-off, benefits) or intrinsic [(satisfaction) rewards or both.
- Expectancy: Expectancy is the belief that increased effort will lead to increased performance, i.e. if I work harder then this will be better. This is affected by such things as:
- Having the right resources available (e.g. raw materials, time)
- Having the right skills to do the job
- Having the necessary support to get the job done (e.g. supervisor support, or correct information on the job)
- Instrumentality: The perception of employees as to whether they will actually get what they desire even if it has been committed by a manager. Management must ensure that promises of rewards are fulfilled and that employees are aware of that.
Vroom suggests that an employee’s beliefs about Expectancy, Instrumentality, and Valence interact psychologically to create a motivational force such that the employee acts in ways that bring pleasure and avoid pain.
These 3 factors work together to create a motivational force for an employee to work towards pleasure and avoid pain.
The procedure for this force is: Valence of outcome × Expectancy act will be result in outcome (Instrumentality) = Motivation Force
Implications of Expectancy Theory
- Employees must belief a close link between effort and performance (requires careful selection, training, and job design)
- Employees must belief a close and consistent link between rewards and performance ( requires careful compensation design and administration, performance review, and communications)
Porter and Lawler Model of Motivation
Lyman W. Porter and Edward E. Lawler developed a more complete version of motivation depending upon expectancy theory.
Porter and Lawler categorised the reward as intrinsic and extrinsic. These rewards, along with the equity of individual leads to satisfaction. Therefore, satisfaction of the individual depends upon the fairness of the reward.
The Porter and Lawler model is shown in the above diagram. The process of model indicates that effort is dependent on value of reward and perceived effort-reward probability. Effort leads to performance, which is affected by the abilities and traits.
Intrinsic rewards are the positive feelings that the individual experiences from completing the task, e.g. satisfaction, sense of achievement while the Extrinsic rewards are rewards emanating from outside the individual such as bonus, commission and pay increases.
Performance, in turn, influences actual rewards—intrinsic or extrinsic—perceived equitable rewards, and exerts a long-term influence (feedback) on perceived effort-reward probability.
Equity Theory
As per the equity theory of J. Stacey Adams, people are motivated by their beliefs about the reward structure as being fair or unfair, relative to the inputs. People have a tendency to use subjective judgment to balance the outcomes and inputs in the relationship for comparisons between different individuals.
Accordingly:
If people feel that they are not equally rewarded they either reduce the quantity or quality of work or migrate to some other organization. However, if people perceive that they are rewarded for their actual work that is also equitable to other employees, they feel motivated to work harder.
