Performance management - articles
1
,1.1. DeNisi & Smith (2014)
“Performance appraisal, performance management, firm-level performance”
Goal
To review whether performance appraisal (PA) and performance management (PM)
practices at the individual level actually improve firm performance.
Answer: there is no simple direct link
→ improvement only occurs through bundles of HR practices aligned with strategic
goals.
Key Concepts
- Performance Appraisal (PA) = periodic, individual evaluation (often rating-based).
- Performance Management (PM) = continuous process of measuring, developing, and
aligning individual, team, and organizational performance.
→ PM > PA; PM integrates goal-setting, feedback, development, and rewards.
Why the Individual-to-Firm Link is Weak
Performance at higher levels depends on the work environment:
- Temporal pacing – timing and synchronization of tasks.
- Task dynamism – stability vs. change.
- Member linkages – degree of interdependence among employees.
- Workflow structure – pooled, sequential, reciprocal, intensive tasks.
→ Thus, performance must be aggregated across levels; team dynamics and organizational
systems shape the outcome.
Bridging HR Practices and Firm Performance
High-Performance Work Bundles of complementary HR practices (selection, training,
Systems (HPWS): appraisal, rewards, communication, etc.) that enhance skills,
motivation, and opportunity.
Contingency Approach: HR systems must fit firm strategy and context.
Resource-Based View Human capital is a unique competitive advantage if HR
(RBV): practices develop valuable, rare, inimitable resources.
Organizational Citizenship Discretionary behaviors supporting the social and
Behavior (OCB) psychological context of work.
Mechanism
Bundled HR practices create a performance climate and culture, which in turn change
individual attitudes and collective behaviors.
Effective PM:
- Integrates with other HR practices.
- Focuses on controllable behaviors linked to strategic goals
- Is fair, visible, consistent, and legitimate.
2
, Takeaways
- Improving individual ratings is not enough.
- Systemic, strategic PM, aligned with culture and HR bundles, is required.
- Fairness & perceived justice → motivation → improved performance → firm-level
results.
1.2. Biron et al. (2011)
“Performance Management Effectiveness: Lessons from World-Leading Firms”
Goal
To explain why PM systems show inconsistent effectiveness across firms. Using signaling
theory, they identify four key facilitators that signal management’s commitment to
performance.
Signaling Theory in PM
Employees infer what the organization values from observable actions. Formal practices act
as signals of underlying goals and priorities.
When PM practices send clear, consistent signals, employees align their behavior with
organizational goals.
The Four Facilitators
1. Strategic & Tactical Integration
- Strategic: aligns employee goals with long-term business objectives.
- Tactical: provides valid information for HR decisions (pay, promotion, training).
→ Balancing both ensures PM is not just administrative but strategic.
2. Senior Management Involvement
3
1
,1.1. DeNisi & Smith (2014)
“Performance appraisal, performance management, firm-level performance”
Goal
To review whether performance appraisal (PA) and performance management (PM)
practices at the individual level actually improve firm performance.
Answer: there is no simple direct link
→ improvement only occurs through bundles of HR practices aligned with strategic
goals.
Key Concepts
- Performance Appraisal (PA) = periodic, individual evaluation (often rating-based).
- Performance Management (PM) = continuous process of measuring, developing, and
aligning individual, team, and organizational performance.
→ PM > PA; PM integrates goal-setting, feedback, development, and rewards.
Why the Individual-to-Firm Link is Weak
Performance at higher levels depends on the work environment:
- Temporal pacing – timing and synchronization of tasks.
- Task dynamism – stability vs. change.
- Member linkages – degree of interdependence among employees.
- Workflow structure – pooled, sequential, reciprocal, intensive tasks.
→ Thus, performance must be aggregated across levels; team dynamics and organizational
systems shape the outcome.
Bridging HR Practices and Firm Performance
High-Performance Work Bundles of complementary HR practices (selection, training,
Systems (HPWS): appraisal, rewards, communication, etc.) that enhance skills,
motivation, and opportunity.
Contingency Approach: HR systems must fit firm strategy and context.
Resource-Based View Human capital is a unique competitive advantage if HR
(RBV): practices develop valuable, rare, inimitable resources.
Organizational Citizenship Discretionary behaviors supporting the social and
Behavior (OCB) psychological context of work.
Mechanism
Bundled HR practices create a performance climate and culture, which in turn change
individual attitudes and collective behaviors.
Effective PM:
- Integrates with other HR practices.
- Focuses on controllable behaviors linked to strategic goals
- Is fair, visible, consistent, and legitimate.
2
, Takeaways
- Improving individual ratings is not enough.
- Systemic, strategic PM, aligned with culture and HR bundles, is required.
- Fairness & perceived justice → motivation → improved performance → firm-level
results.
1.2. Biron et al. (2011)
“Performance Management Effectiveness: Lessons from World-Leading Firms”
Goal
To explain why PM systems show inconsistent effectiveness across firms. Using signaling
theory, they identify four key facilitators that signal management’s commitment to
performance.
Signaling Theory in PM
Employees infer what the organization values from observable actions. Formal practices act
as signals of underlying goals and priorities.
When PM practices send clear, consistent signals, employees align their behavior with
organizational goals.
The Four Facilitators
1. Strategic & Tactical Integration
- Strategic: aligns employee goals with long-term business objectives.
- Tactical: provides valid information for HR decisions (pay, promotion, training).
→ Balancing both ensures PM is not just administrative but strategic.
2. Senior Management Involvement
3
