Management refers to the art of coordinating the efforts of people toaccomplish goals and objectives using the available resources bothefficiently and effectively. Management is comprised of planning,organizing, staffing, directing and controlling an organization toaccomplish the desired goals. Performance management refers toactivities that ensure the organization goals are consistently beenattained while performance measurement refers to the process ofcollecting, recording, analyzing and reporting information regardingthe performance of an individual, group of people or an organization.In this study, performance measurement refers to the evaluation ofperformance of Transport for London ltd. Performance measurement isprimarily managing business productivity and one of its main purposesis to reduce or eliminate overall variation in the work, products orprocess. The goal is to arrive at sound decisions about actionsaffecting the product or process and its output.

Performance management systems, which typicallyinclude performance appraisal and employee development, are the mainobjectives of human resources management. Performance managementsystems often have flaws that make employees and managers regularlycomplain about their ineffectiveness. Done correctly, performancemanagement can result in numerous important outcomes for anorganization and its employees.

Theperformance management process

While research and experienced practitionershave identified several characteristics that are prerequisites foreffective performance management systems, however, there are alsomany decisions that need to be made to design a system ideally suitedfor a given organization’s needs. One such decision is whatpurpose(s) the system will serve. For instance, performancemanagement systems can support pay decisions, promotion decisions andemployee development and employee lay-offs. A performance managementsystem that attempts to achieve too many objectives is likely to dieof its own lack of focus and weight. The purposes for a givenperformance management system should be determined by consideringbusiness needs, organizational culture and the system’s integrationwith other human resource management systems. Performance managementsystem is used in decision making the appraisal information is usedas a basis for increasing salaries, promotion of staff, transfer ofemployees and resources, assignments, reductions in force or otheradministrative HR actions. Performance management system is used fordevelopment while the appraisal information is used to guide intraining of employees, evaluating the job experience of employees,mentoring employees and other developmental activities that employeeswill engage in to develop their capabilities.

Although it is theoretically possible to havea performance management system that serves both decision-making anddevelopment purposes well, this can be difficult to achieve inpractice. In addition, research has shown that the purpose of therating (decision-making versus development) affects the ratings thatare observed (Greguras et al., 2000). Ratings used fordecision-making tend to be lenient most employees receive ratingsthat are very high. Ratings used for developmental purposes tend tobe more variable These ratings reflect both the employee strengthsand the development needs for that employee. An example willillustrate why it can be difficult to emphasize equallydecision-making and development within the same system. The mayor ofLondon should use this method to evaluate the performance of specificemployees and then reward these employees so as to motivate them.

Managers then conduct review sessions withevery employee to discuss the employee’s performance, pay increasefor the employee and stock option grant for employees. Developmentalfeedback is supposed to be included in the meeting. However, therange of percentage rises and stock options is big, thereby allowingmanagers to link performance with rewards effectively. With so muchat stake, the meeting usually concentrates on justification by eachparty, rather than on how the employee can improve their skills. Theatmosphere in the meeting is not conducive to giving and receivingfeedback, and employees are often unwilling to discuss theirdevelopment needs for fear this will negatively impact their rewards.Even whee there is a strong performance-based culture of thisorganization, the decision- making aspect of performance is, givenmore emphasis.

Effective performance management systems have awell-articulated process for accomplishing the evaluation ofactivities. It has clear defined roles and timelines for bothmanagers and employees this is mostly where organizations useperformance management as a basis for pay and other HR decisions. Itis important to ensure that all employees are treated in a fair andequitable manner. Generally a performance management process entailsperformance planning, outgoing feedback, employee input, performanceevaluation and performance review.


It is the first step in performance management.It is important to review with employees their performanceexpectations, including the behaviors employees are expected toexhibit and the results they are expected to achieve during theupcoming rating cycle. We are all familiar with employees who mayachieve exceptional results but are extremely difficult to work with,unhelpful or exhibit maladaptive behaviors at work. Because suchbehaviors can be extremely disruptive, behavior is important toconsider in most work situations. On the other hand, an employee canbe extremely helpful, considerate and interpersonally effective, yetnever achieve any important results. Behavioral and resultsexpectations should be tied to the organization’s strategicdirection and corporate objectives (Hilgen et al, 2000).


During the performance planning process,managers should review and discuss these behavioral standards withemployees. It is necessary for managers to ensure sure employeesunderstand how the behavioral standards relate to their specificjobs.

1.)Results Expectations

The results to be achieved by employees shouldbe tied to the organization’s strategy and goals. The employee’sdevelopment needs should also be taken into account in the goalsetting process. Development goals care necessary to improvingcurrent job performance or preparing for career advancement. This canbe performance such as efficiency of the buses in arriving at theirdestination. Example goals for Transport for London might be:

  • Complete project and tasks in good time. Such as drivers completing their trips in time.

  • Increase sales by 10 percent. The transport for London should aim at improving its profit margins.

  • Successfully mentorship program for its staff.

Where performance is measured for activitiesthat are support in nature, management by objectives should be used.This way all support activities are measured based on the role theyplay in enabling the organization attain its main objectives (RodgersR. et al., 1990). While goals and expected results can be establishedfor the entire rating cycle, most employees are in jobs that arecharacterized by continual change. Due to this circumastance, it isnecessary to set short term goals in order to ensure that they aresufficiently specific and achievable. The following are some of theprincipals used when forming goals (Locke et al.).

  • Goals must clearly define the desired results. Such as aiming at transporting 12 million passengers every weekday by 2015.

  • Goals should have a direct link to organizational success factors. Aim at replacing old buses with modern and fuel efficient buses.

  • Goals should be difficult but also achievable so as to motivate performance.

  • Goals should be set in no more than three areas. This is because attempting to achieve too many different goals at once will impede success.

2.)Ongoing Feedback

During the performance planning process thebehavioral and results expectations should have been set. Performancein all of these areas should be discussed and feedback provided on anongoing basis throughout the rating period. Unfortunately, this doesnot happen to the extent that it should in organizations because manymanagers are not skilled to provide feedback. In fact, manager’soften avoid providing feedback because they do not know how todeliver it productively in ways that will minimize employeedefensiveness. For the feedback process to work well it must be atwo-way communication process and a joint responsibility of managersand employees, not just the managers (Wesley K.N., 1986). Thisrequires training both managers and employees about their roles andresponsibilities in the performance feedback process.

Managers’ responsibilities include providingfeedback in a constructive, candid and timely manner. Employees’responsibilities include seeking feedback to ensure they understandhow they are performing and reacting well to the feedback theyreceive. Research has shown that for feedback to have the most value,it needs to be given in close proximity to the event (Wesley K.N). .


Employee input has been used effectively inmany organizations. It sometimes takes the form of asking employeesto provide self-ratings on performance standards, which are thencompared with the manager’s ratings and discussed. Alternatively tocollecting employee input is to ask employees to prepare statementsof their key results or most meritorious accomplishments at the endof the rating period


1.)Evaluating Behaviors

Today, many organizations are using competencymodels as a basis for their performance management systems (Spenserl. and Spenser S., 1994). Competency models articulate the knowledge,skills and other characteristics that are deemed to be instrumentalfor achieving positive organizational outcomes. The benefit ofcompetency models is that they typically include the full array offactors associated with success—technical, leadership andinterpersonal. Competency models are especially useful because theynot only communicate what is important to an organization but alsoprovide a common foundation for developing integrated human resourcesystems such as employing, training, promotion, succession planningand performance management. Some competency models and performancestandards are developed at the organizational level to apply to alljobs. The unique technical aspects of different jobs can berepresented in a more generally defined technical competency, wherethe behavioral standards may reflect keeping current in technicalfield, applying technical knowledge and skill effectively.

Advantagesof Performance Standards

  • They indicate to the management the main performance factors and expectations.

  • Show distinctions in effectiveness levels that help supervisors explain why an employee was evaluated in a particular way.

  • Provide a job-relevant basis for evaluating the employees thus creating faireness.


Key results to be achieved will vary fordifferent employees, depending on the nature of the individual’sjob and assignments. A critical issue faced by organizations is howto measure and evaluate performance of each employee. Results can beevaluated by tracking various objectiveindicators of performance, such asvolume of sales, profitability and amount of product produced. Whileobjective indicators of performance can be useful, there are twopotential problems with them (Borman W.C). The first is that suchmeasures can be affected by differences in opportunities that areavailable to different employees.


Assuming that feedback has been provided on anongoing basis, the formal performance review session should simply bea recap of what has occurred throughout the rating period. In otherwords, there should be no surprises in the performance review. Duringthis meeting, managers should discuss with employees their ratings,narratives and rationale for the evaluation given (Wesley. K.N).


What really matters in any performancemanagement system is how effectively it is used and how seriouslymanagers and employees take it. This is why both the most challengingand the most important part of developing a Cornerstonesof Successful Implementation

  • Ensure alignment with other HR systems. Get organizational members on board.

  • Train employees and managers.

  • Communicate.

  • Evaluate and improve.

  • Automate the most effective performance management system and implement it.

  • Pilot test the project.

In the Transport for London, under theclassical economist theory it was assumed that the rules of demandand supply were the only factors affecting the price of goods. Underthis assumption an increase in transport service providers would leadto a decrease in price of transportation. This assumption is put intoquestion by the neoclassical economists who suggest that this modelis not absolutely true. In game theory, the price of goods isdetermined by the kind of game that the players decide to play. Theplayers can collude and form a cartel hence the prices of goods wouldnot fall even if the service providers are now many. In this modelplayers are aware that they depend on each other and are careful notto adjust the prevailing market prices in a manner that would bedetrimental to them.


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