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Performance Management Overview

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;

·         Enhanced individual as well as group productivity

·         Improved horizontal (among employees) and vertical (staff and managers) communication

·         Clarity of job responsibilities or expectations

·         Driven behavior which aligns the organization’s objectives, goals, strategies and core values

·         Developed employee potential and maximum capabilities via active coaching and feedback

·         Basis 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).

Why 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.

Pen 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.













Pulakos D,2004, ‘performance management’, society for human resource management, p. 1.

Hunter, E., Rodgers, R. (1991).‘Impact of management by objectives on organizational productivity,’.Journal of Applied Psychology, 76, 322-336.

Robie,c., Greguras, Goff, M., G., &Schleicher, D. (2003), ‘A field study of the effects of rating purpose on the quality of multi-source ratings’, Personnel Psychology,56, 1-21.

Creasy, T. (2007), ‘Defining change management’, change management learning center, p. 3-4



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