Performance management effectiveness in SME’s – Evidence from Belgium
Machtelinckx, Jana Dewettinck, Koen
Machtelinckx, Jana
Dewettinck, Koen
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2023
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Abstract
Both academic research and practice have been highlighting the challenge to design and implement effective Performance Management (PM) in organisations, making it potentially one of the bigger zchallenges in Human Resources. In the present study the goal is to get a view on those factors that impact the effectiveness of performance management systems. We aimed at getting a better view on how organisations, more specifically Belgian SME’s (Small and medium-sized enterprises), currently shape performance management and we investigated how these characteristics explain the effectiveness of performance management.Existing research is not clear about the effect of frequency of an ppraisal talk. Recurring feedback can be helpful, but this doesn’t always need to take the form of a formal talk (Casas-Arce, Lourenco & Martinez-Jerez, 2017; Wood, Pichler & Beenen, 2017). In our study, we investigate if the frequency of an appraisal talk is linked to PM effectiveness. Furthermore, research suggests that the content of an appraisal is a determining factor for performance management. Researchers indicate that it should focus on skills and competencies, training needs and personal development in the company (Armstrong, 2006; Lawler & McDermott, 2003). Our research takes a closer look at topics that are discussed during an appraisal talk and their effect on performance management. These topics include skills, attitudes, company values, individual and team goals, salary, … Additionally, scholars argue that the supervisor plays a vital role in performance management and therefore they should get training and support in the performance management of their team members (Armstrong, 2006; Botha, Blom & Modipane, 2019; CIPD, 2022; Kondrasuk, 2011). We investigate if training and supporting supervisors in performance management is correlated with PM effectiveness. Other variables were included in our study as well: automatization, appraisal scoring, … (Armstrong, 2006). Data collection was done in the beginning of 2021 through an online survey directed towards Belgian SMEs. 156 organisations from different industries filled out the survey. Our regression analysis shows that supervisor training and content of performance conversation are important drivers of PM effectiveness than conversation frequency. More specifically, organisations that report to train their supervisors more heavily and that focus on skills development and training and development needs during the conversations report higher PM effectiveness. Together these variables explain 39% of performance effectiveness, as measured in our survey.Contributing to the UN Sustainable Development Goal ‘Decent work and economic growth’, our findings shed new and interesting light on how to make performance management effective in organizations where the main onclusion is that quality of performance nagement is more important than quantity. There are however a few limitations to our study. First, our survey includes cross-sectional data at an organisational level. Second, PM effectiveness is a self-reported measurement and gives an idea of how effective the performance management system is considered by the participants. Further research could use multi-source and longitudinal data on an employee level. Furthermore, it could look into the effect of performance management practices on the actual performance of mployees. During the EAWOP conference we want to present the findings from our study and give insights into how practitioners can improve the effectiveness of their performance management approach. We also want to inspire academics for future research
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Keywords
Performance Management, Effectiveness, Appraisal