Performance management is a continuous
process of developing, measuring and identifying performance in organizations
by linking each employee’s objectives and performance to the organization’s
general mission and goals. It is an indispensable tool for exemplary
performance in organizations. It is also a crucial responsibility for managers (Pulakos
2004, p.1). Employee Performance management systems (EPMS) can be used to
support promotion decisions, reduction in force, employee development and pay
decisions. An effective performance management can yield the following;
individual as well as group productivity
horizontal (among employees) and vertical (staff and managers) communication
of job responsibilities or expectations
behavior which aligns the organization’s objectives, goals, strategies and core
employee potential and maximum capabilities via active coaching and feedback
for making decisions regarding production and operational human capital
Appraisal information is used as a basis
for promotions, assignments, pay increases, transfers and reduction in force or
any other human resource actions on occasions where performance management
systems are used in decision making. Appraisal information is also used to
propel job experiences, training, mentoring and other constructive activities that
the staff can participate so as to progress their capabilities when the
management uses performance management system for development.
An effective performance management
system has a well-articulated process that accomplishes evaluation activities,
with fully defined roles for both managers or supervisors and employees.
(Schleicher, et al. 2003, p. 1-21).
Freeport-McMoRan needed an EPMS and how it helped adjust its strategy
Initially, the price of copper was low,
and the management was reluctant on embracing an effective performance
management system. Their manpower was disorganized while their rival mining
company Phelps Dodge was bigger and also a threat. When the price of copper
sharply hiked from 75 cents to $4.50 a pound, McMoran realized it needed to tap
much more revenue from the abrupt increase by changing its strategy. It also
needed to bring the best out of its employees as fast as possible thus adopted
a new performance management system.
A new performance management system would
help McMoRan change its strategy and align the goals of everyone in the company
and get all of its various mines performing at top capacity despite its
decentralization and the structure of its different mines worldwide. It would
also make it possible to implement change since successful change management
and new performance management are intertwined (Creasy 2007, p.3). Performance
management system works based on changing objectives, goals, and individuals.
This flexibility allows for adjustments or changes in strategy in the future
without the need to change its performance management system again.
The new performance management system
would enable the company to implement quickly and monitor the changes needed,
while giving it the ability to change strategies again if or when the price of
copper dropped. It would also be an easy and the most convenient system to use
since not every employee in the copper field or the manpower in the newly
acquired oil and gas business would not require computers regularly. The software
proved to be a less costly system that would cater for its thousands of
employees worldwide and still be a success.
The web-based performance management
system helps keep everyone in McMoran focused on a company’s mission,
objectives, and goals, which has a substantial impact on the firm’s financial
performance. It also helps the company to identify performance and measure the
contributions of its employees so as to motivate, nurture and reward employees
based on their achievements. The software helps the management to connect each
employee’s performance, capability and objectives to what the company wants to
achieve generally. It's easy to accomplish Organizational goals if they are
clearly defined (Rodgers and Hunter, 1991, p. 322-336). McMoRan managers
realized they only needed to enable employees to understand their
organizational objectives and goals.
and Paper Performance Management System vs. Web-based EPMS
The electronic system or web-based
performance management system adopted by Freeport-McMoRan is way efficient than
pen and paper performance management system. McMoRan employs approximately
35,000 workers and mining operations that span five different continents,
therefore, pen and paper would turn out to be exorbitant and time-consuming to
gather, quantify, analyze and report data.
The electronic system is a cost saving
measure as it will save the company’s funds and time by collecting responses
quicker. Deploying the system will be more economical for McMoRan in the long
run because they will only need to hire a handful of people to gather data from
employees perform analysis and create reports. The software will help managers
acquire reliable real-time data by use of pragmatic e-tools to measure,
identify, analyze, and understand its manpower capability and what capability
is desired to compete in the future.
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Rodgers, R. (1991).‘Impact of management by objectives on organizational
productivity,’.Journal of Applied Psychology, 76, 322-336.
Greguras, Goff, M., G., &Schleicher, D. (2003), ‘A field study of the
effects of rating purpose on the quality of multi-source ratings’, Personnel
(2007), ‘Defining change management’, change management learning center, p. 3-4