Performance Management System Essay

Decent Essays
Organizations derive competitive advantage by outperforming rivals in the execution of activities required to ensure optimum operational effectiveness in providing products and services to customers (Porter, 1996). Operational effectiveness depends largely on the extent to which the organization’s performance management system (PM) is capable of developing the knowledge, skills, and abilities of its people (Allan, 1994). Thus, knowledge of developing and implementing an effective PM system plays an essential role in achieving competitive advantage. Using the table provided in Case Study 1-1 (Aguinis, 2009, pp. 24-25), this paper analyzes the content and efficacy of the PM system being used by Aeternus Life Insurance Corporation (renamed…show more content…
Organizational Context To assess the capability of the Aeternus PM system to aid in creating competitive advantage, this analysis necessarily takes into account the volatile nature of the dynamically competitive internal and external environments in which Aeternus operates. Most important, the constant restructuring of the organization through mergers, divestitures, reorganization, downsizing, and off shoring, creates ongoing instability and inconsistency in the performance management linchpins of operational strategy, culture, job designs, job descriptions, and performance standards. Consequently, Aeternus struggles to maintain relative consistency within and across the organization in the administration of its PM system. Thus, as the foregoing discussion indicates, the efficacy of the Aeternus PM system appears to be significantly compromised in terms of its capability for developing the organization’s employees.
Reality Check for the Aeternus PM System Given this context, of the 14 key characteristics thought to comprise an ideal PM system (Aguinis, 2009); approximately10 can be identified, at least to some degree, within the Aeternus PM system. Of these, the characteristics of strategic congruence with organizational goals, thoroughness of the appraisal process, functional practicality and ease of use of the system, and meaningfulness of the system, represent the
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