Chapter Two
1. Underpinning Theories of Performance Management
According to Buchner (2007), three specific theories form the foundation of
performance management:
Goal Theory (Locke & Latham, 1979): This theory emphasizes setting and
agreeing on objectives. It highlights four mechanisms that connect goals to
performance outcomes:
1. Directing attention to priorities.
2. Stimulating effort.
3. Challenging people to use their skills and knowledge to increase
success.
4. Encouraging people to draw on their full repertoire of skills for more
challenging goals.
Control Theory: This theory focuses on feedback as the primary tool for
shaping behavior. When individuals receive feedback, they notice the gap
(discrepancy) between their actual behavior and what is expected, prompting
them to take corrective action.
Social Cognitive Theory (Bandura, 1986): This is based on self-efficacy, which
is the belief in one's own ability to perform. What people believe they can or
cannot do powerfully impacts their actual performance, making the
development of positive self-belief a key objective.
2. Performance Management Values
Performance management should be built on ethical principles like respect, fairness,
and transparency. Key values include:
Joint Responsibility: Creating high performance is a shared duty between
managers and teams.
Respect for Individuals: People should be valued for who they are, not just
what they achieve.
Employee Rights: Individuals should have the right to express views on
objectives, understand performance measures, receive feedback, and appeal
decisions affecting them.
Developmental Focus: Priority should be given to developing performance
rather than just managing it.
3. Influences on Performance
Systems Theory
Formulated by Miller and Rice (1967), this theory views organizations as "open
systems" that transform inputs into outputs. This forms the basis of the input-
process-output-outcome model, assessing an individual's total contribution to the
system rather than just their final output.
Contextual Factors
Performance management operates within an organizational context influenced by:
Organizational Culture: Shared norms and management styles that shape
how things get done.
Employee Relations Climate: The quality of relationships between
management, employees, and unions.
Structure:
o Hierarchical: Supports directive, top-down objective setting.
o Flatter/Process-based: Encourages flexible, participative teamwork.
External Environment: Turbulent economic or political environments require
organizations to be flexible and adapt their goals rapidly.
4. Performance Management and Motivation
Several motivation theories explain how performance management influences
behavior:
Reinforcement Theory (Hull, 1951): Success in achieving goals acts as a
positive incentive. Positive feedback provides positive reinforcement,
encouraging the repetition of successful behaviors.
Expectancy Theory (Vroom, 1964): Motivation depends on three factors:
o Valency: The value placed on the outcome.
o Instrumentality: The belief that action leads to a specific outcome.
o Expectancy: The belief that effort will result in performance.
Social Learning Theory (Bandura, 1977): Combines reinforcement and
expectancy. It emphasizes internal psychological factors, particularly
expectations about the value of goals and one's ability to reach them.
Attribution Theory: Concerns how people explain their success or failure (e.g.,
ability, effort, luck). If success is attributed to effort, motivation increases. If
failure is attributed to bad luck or impossible tasks, motivation may drop.
5. The Psychological Contract
This refers to the unwritten, reciprocal expectations between employees and
employers. While implied rather than stated, performance management helps clarify
this contract by regularly agreeing upon and reviewing performance expectations.