SECTION A [100 MARKS] Read the case study below and answer the questions that follow. What is performance management? Performance management is a strategic approach to creating and sustaining improved perlormance in employees, leading to an increase in the effectiveness of companies. By focusing on the development of employees and the alignment of company goals with team and individual goals, managers can create a work environment that enables both employees and companies to thrive. Based on the definition of performance management, a system is built within an organization to measure and improve the performance of the people in that organization. In practice, performance management means that management is consistently working to develop their employees, establish clear goals, and offer consistent feedback throughout the year. In contrast to other systems of reviewing employee performance, such as yearty performance appraisals, employee performance management is a much more dynamic and inolved process with better outcomes. For the Human Resources department, performance management is an important system for onboarding, developing and retaining employees, as well as reviewing their performance. It is increasingly understood that a yearly performance appraisal system does not effectively engage employees, fails to consistenty set and meet company objectives, and does not result in a strong understanding of employee performance. The importance of performance management Talent management is an important part of every organization. Three of the main problems that organizations face are: 1. Keeping employees engaged Engagement of employees is a focus of any management team. In a yearly appraisal system, goals would be given at the beginning of the year and then revisited 12 months later to see if they had been met. This long stretch of time without feedback or check-in is an aimost certain engagement kiler. In fact, 94% of employees would prefer their manager gives them feedback and development opportunities in real-time, and 81% would prefer at least quarterly check-ins with their manager Studies show that employees do best with feedback on a monthly or quarterly basis, with regular check-ins serving as a zone to problem solve, adjust goals as necessary, and to refresh their focus on the goal. In fact, companies where employees meet to review goals quarterly or more frequently are almost 50% more likely to have above-average financial performance. When surveyed, employees had some negative feelings about a yearfy apprakal system: - 62% of employees feel that their performance review was incomplete. - 48% did not feel comfortable raising issues with their manager in between performance reviews. - 61% feel that the process is ouldated. - 74% feel that they would be more effective with more frequent feedback. - 68% of executives don't learn about employee concerns until the performance review. All of this adds up to a lot of missed opportunities to solve problems and increase employee performance and engagement. As employee engagement rises, nine key performance indicators show successful outcomes. Absenteeism, turnover, shrinkage, salety incidents, patient safety incidents and delects in quality are lessened by at least 25%, and oflen more, across the board. Customer experience, productivity and profitability all show positive outcomes. This study, by Gallup, was conducted across a broad range of industries, showing that employee engagement is a critical factor, no matter the industry. 2. Retaining talent Employees who have frequent meetings with management to discuss performance, solve problems and receive training are more likely to stay with the company. If employees see that their management team is putting in the work to develop them professionally, help them succeed with their goals, and reward performance on a consistent basis, then they are more incentivized to both stay with the company and work harder. 3. Developing leaders from within This consistent development and partnership between managers and employees allow for the development of leaders from within the company. Recruiting costs can be extremely high, as are costs for onboarding and training new employees. To be able to groom leaders from within the company means that there is already a proven culture fit with this individual and that training costs and resources spent developing this person into an asset are not lost. This leadership path also serves as a motivating force for employees, who can see that their hard work will be rewarded with promotions and other benefits. Performance management also creates a need for management to consistently focus on company objectives and goals, and to consider how best to achieve them. This continual revisiting of goals means that they are more likely to stay relevant, as goals will be adjusted in light of new technology, changes in the market, or other factors throughout the year. The purpose and goals of performance management The purpose of performance management is to give both managers and employees a clear and consistent system within which to work that, in turn, will lead to increased productivity. This system shows employees the pathway to success, allows for the measuring of performance coupled with feedback and offers training and development opportunities. Performance management allows management to understand what their employees are doing and track progress on company objectives while providing consistent feedback. There are five main objectives of performance management: - Develop clear role definitions, expectations and goals. - Increase employee engagement. - Develop managerial leadership and coaching skills. - Boost productivity through improved performance - Develop a performance reward program that incentivizes accomplishment. These performance management goals show a clear path from the developing of goals to the rewarding of increased accomplishment. If one of these performance management objectives is not done well, then the others will suffer as a result. The article has provided an assessment of performance management in an organisation, analyse the statement below: "Employees who have frequent meetings with management to discuss performance, solve problems and receive training are more likely to stay with the company. If employees see that their management team is putting in the work to develop them professionally, help them succeed with their goals, and reward performance on a consistent basis, then they are more incentivized to both stay with the company and work harder." Explain how training and the developing of employees will impact each element of the microenvironment. Provide benefits of training to each of the elements of the micro-environment. QUESTION 2 (20 Marks) After reading the article, explain ANY FIVE (5) functional areas (departments) that will be negatively affected if leaders are not developed from within. Provide examples of a challenge in each department that could arise due to improper performance management and suggest a solution