1

THE IMPACT OF PERFORMANCE MANAGEMENT PRACTICES ON EMPLOYEE’S

ENGAGEMENT

By

Shazia Ali

2015-KIU-0087

MBA (Regular)

2015-2018

Department of Business Management

Karakoram International University Gilgit Baltistan

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Table of Contents
INTRODUCTION ............................................................................................................................................. 2
1.1 Background of the study ..................................................................................................................... 2
1.2 Rationale of the study ......................................................................................................................... 4
1.3 Broad and specific problem area ...................................................................................................... 4
1.4 Research objectives........................................................................................................................... 5
1.5 Research questions ........................................................................................................................... 5
1.6 Delimitations of the study................................................................................................................... 5
LITERATURE REVIEW ..................................................................................................................................... 6
2.1 CONCEPTS AND DEFINITIONS ............................................................................................................. 6
2.1.1 Performance management .......................................................................................................... 6
2.1.2 Performance management practices........................................................................................... 6
2.1. 3 Developing and planning performance ..................................................................................... 6
2.1.4 Managing and reviewing performance ........................................................................................ 6
2.1.5 ASSESSING AND REWARDING PERFORMANCE .......................................................................... 7
2.1.5.1 Assessing ................................................................................................................................... 7
2.1.6 Employee Engagement............................................................................................................... 8
2.2 THEORETICAL REFLECTIONS ................................................................................................................ 9
2.2.1 Developing and planning performance impact on employee engagement .................................... 9
2.4 Theoretical Framework ..................................................................................................................... 10
Figure # 2.1: Theoretical Framework ...................................................................................................... 10
2.5 Hypotheses ....................................................................................................................................... 11
2.6 literatures Gap .................................................................................................................................. 11
RESEARCH METHODOLOGY ........................................................................................................................ 12
3.1 Population frame .............................................................................................................................. 12
3.2 Sample selection ............................................................................................................................... 12
3.3 Unit of analysis .................................................................................................................................. 12
3.4 Type of study..................................................................................................................................... 12
3.5 Instrument development/selection .................................................................................................. 13
3.6 Data collection procedures ............................................................................................................... 13
3.7 Data analysis techniques................................................................................................................... 13
4. Limitations of the study .......................................................................................................................... 14
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References .................................................................................................................................................. 15
Appendix ..................................................................................................................................................... 16
Survey Questionnaire.................................................................................................................................. 16
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INTRODUCTION

1.1 Background of the study

Today all organizations wants to become best while getting competitive advantage

through committed and trained employees, the success of any organization depends on the

quality and characteristics of its employees, so they become a significant factor since they are the

heart of a company. Company uses their resources (money, time, energy, information, etc.) for

permanent training and advancement of their employees, they utilize new ideas, knowledge,

technologies, equipment to produce products and services in order to achieve their goals and

objectives but without loyal and committed employees, organizations cannot use these resources

effectively and efficiently.

Now organizations are working in a competitive global environment giving more

attention on employees as most precious/valuable assets (kagaari, 2011). In the period 2007-2008

the global financial crisis occurred which forced companies to increase abilities to survive in the

market place. Therefore, employee engagement become an important topic among top

management in this period, since it is an important element for business survival, growth and

development (Choo, Mat, & Omar, 2013).

There are a lot of Researches conducted on this topic in different organizations or

countries. The aim and objective to conduct this research is to investigate that how performance

management (PM) practices influence employee engagement in non-governmental organizations

(NGOs) in Gilgit. The NGOs are nonprofit oriented; they work for the welfare of a region. These

organizations have played an important role in social and economic development of Gilgit
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Baltistan, due to this reason the researcher has selected non-governmental organization to

conduct this research study.

Performance management (PM) is a necessary part of human resource management, it is

an important strategic tool, and it helps to establish an organization’s sustainable competitive

advantage. It also adds value to the firm and finally high performance work practices lead to both

high individual and high organizational performance.

According to Armstrong ( Kagaari, Munene, & Ntayi, 2010), performance management

(PM) is a way or method of accomplishing better results from the entire organization or teams or

individuals within it, by understanding and managing performance in accordance to planned

goals, standards and expertise requirements within an agreed framework.

It is a system through which employees are motivated to achieve organizational goals. It

helps organization to improve their employee’s engagement. An engaged employee is the one

who is aware of business environment and situation, he/she employ and express themselves

physically, cognitively and emotionally, and works with associates to improve performance for

the benefit of the organization, to develop and raise engagement, organizations must work hard,

which requires a two-way relationship between employer and employee (Rana, 2015).

According to Kagaari (2011) today every organization are facing competition and in

order to achieve competitive advantage or their goals organizations implement performance

management (PM) practices. The general assumption is that those organizations that pay more

attention to mutual goal setting, proper feedback, coaching, communication, training and

development and rewards will be more successful in employee’s engagement.

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1.2 Rationale of the study

This study is significant to the researcher in a sense that it will be helpful to develop a

broad knowledge about the impact of performance management practices (developing and

planning performance, managing and reviewing performance, assessing and rewarding

performance) on employee’s engagement, organizations like governmental and non-

governmental can get help as how best they can adapt the practices to improve employees

engagement in the organizations i.e. goal setting, feedback, coaching, training and rewarding.

The recommendations (which will be presented after data analysis) will be fruitful to

solve the challenges and problems organizations faces. It would also prove to be helpful in the

way that by practicing it in real situations will result in improving employee’s engagement in

long run.

This research will be also helpful to every individual to improve their skills, knowledge,

commitment, motivation.

1.3 Broad and specific problem area

Now a day every organization either organization is large or small faces global

competition. In this situation the success of any organization is depend upon the talented,

skillful, committed, loyal employees. Employee’s performance as well as employees

commitment and loyalty can be enhance through proper implementation of PM practices such as

mutual goal setting which has great impact on employees loyalty, proper evaluation practice

identifies employees weaknesses and strengths, different types of trainings are helpful for skill

development and reward system which is helpful to boost employees commitment towards

organization. The aim of this study is to explore a link between PM practices and its impact on

employee’s engagement.
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1.4 Research objectives

I. To measure the impact of PM practices on employee’s engagement.

II. To determine the effect of mutual goal setting on employee’s engagement.

III. To ascertain the role of evaluation on employee’s engagement.

1.5 Research questions

Is there any impact of performance management practices (developing and planning,

managing and reviewing, assessing and rewarding) on the work engagement of employee’s

working in Non-Governmental Organizations (NGOs) situated in Gilgit-Baltistan?

1.6 Delimitations of the study

This research has several delimitations.

1. The study could include the overall NGOs of Gilgit but due to financial issues this study

will includes few NGOs of Gilgit so the sample size is small which can be increase.

2. The effectiveness of the PM practices on employee’s engagement can also be examined

in other organizations such as governmental organizations, private firms and small

businesses.

3. Due to financial issues and time limitation this research aims to highlight few

Performance management practices which can b increase for further research.

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LITERATURE REVIEW

2.1 CONCEPTS AND DEFINITIONS

2.1.1 Performance management

Performance management is a process of developing strategies, vision, mission, objectives of an

organization and to develop a plan for action to implement these strategies (Bititci, Cocca, &

Ates, 2016).

2.1.2 Performance management practices

According to Armstrong (2009) establishing goals and objectives, evaluating

performance, organizing employee development programs, and providing proper feedback to

enhance performance is known as Performance management practices.

2.1. 3 Developing and planning performance

According to Armstrong (2009) performance planning is the first step of performance

management, it is a process during which supervisor and employee mutually discuss the targets

they have to achieve and want to achieve, they discuss ways to develop the skills and perform

their tasks which helps employees to fulfill their duties.

2.1.4 Managing and reviewing performance

Performance review is best practice of performance management, it helps to identify the

strength and weakness of employees, employees are encourage to identify their own performance
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and improve their performance, it also helps managers and employees to work for bright future

and guide managers to handle problems, (Armstrong, 2006).

2.1.4.1 Seeking feedback

Feedback is part of reviewing performance and it is the ongoing process of providing

information and guidance to employees, therefore feedback consists of two way communication

between employees and supervisor (Armstrong, 2006).

2.1.4.2 Communication

According to Armstrong (2009) performance management is ongoing process, therefore

it provides an opportunity of communication between employees and employer; it is a two way

interaction between employer and employees. Employees have opportunity to provide feedback

to supervisor about their performance.

2.1.5 ASSESSING AND REWARDING PERFORMANCE

2.1.5.1 Assessing

Assessment is ongoing process of employees learning. It is two-way process to obtain

knowledge; get skills, review, and use of information about employees performance, it focuses

on learning of employees and its implementation in organization (Ark, 2013).

2.1.5.2 Reward

On the basis of employee performance reward is given, it may be tangible (cash bonuses,

salary increase) or intangible which is helpful for employee’s encouragement and to enhance
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employee’s motivation. Rewards play vital role to increase employee’s morale as well as

organizational performance (Furtado, Aquino, & Meira, 2007).

2.1.6 Employee Engagement

According to Rana (2015) employee who works for his organization loyally and

enthusiastically is called employee engagement, it is employee’s willingness to attach with

organization happily, he employs and express himself physically and emotionally, he feels

committed, loving and fully involve with their job and shows attachment towards his/her job.

2.1.6.1 Loyalty

Employees Performance is depend on their loyalty, the better performance means high

loyalty which indirectly impacts organization performance, due to this reason organization invest

huge resources as well as efforts for attracting and retaining talented employees (Falasi,

Employee loyalty and engagement in UAE public sector",, 2014).

2.1.6.2 Job Satisfaction

According to Javed, Balouch, and Hassan (2014) employee satisfaction means how

employee thinks, feels about organization, therefore Success of any organization depends

on employees so when they enjoy their work and are properly rewarded on the basis of

their performance, they feel them self as valuable asset for the organization.
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2.1.6.3 Organizational Commitment

(Camp 1994) defines that Organizational commitment means an employee wish to stay

with the organization.

2.2 THEORETICAL REFLECTIONS

2.2.1 Developing and planning performance impact on employee engagement

Performance planning is helpful to encourage employees towards organization

commitment and it creates link between employees work with organizational objectives and

goals (Schneier et al., 1987).

Previous research found that employee’s participation in goal setting has positive impact

on employee’s commitment towards the organization, due to this employees feel them self like a

part of organization (Brown, Landau, & Mitchell, 2008).

2.2.2 Managing and reviewing performance impact on employees engagement

Managing performance throughout the year with proper communication, coaching,

guiding, motivating and rewarding employees have great impact on employee’s royalty towards

organization. These are helpful to improve employee’s performance which indirectly improves

organization performance and finally employees become loyal towards organization (Armstrong,

2006).

2.2.3 Assessing and rewarding impact on employee’s engagement

Performance assessment is important practice of performance management which is

helpful for employer to identify the actual performance of employees therefore in organization
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assessment is made on daily bases, through this employer identifies strengths and weaknesses of

employees (Bititci, Cocca, & Ates, 2016).

According to Ark (2009) performance evaluation practice is helpful to identify the needs

of employees i.e. training and development which are fruitful for career development of

employees. When organization initiate and facilitates such practices than employees become

committed towards their organization and do hard work.

2.4 Theoretical Framework

Performance Management Practices

Developing and planning

 Setting goals
+ve
 Setting objectives

Managing and reviewing

+ve
 Seeking feedback Employee
 Communication Engagement

+ve
Assessing and rewarding

 Evaluation

Figure # 2.1: Theoretical Framework

Source: Adapted from Rana (2015)

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2.5 Hypotheses

On the basis of literature review following hypothesis are developed in order to find out

the impact of performance management practices on employees engagement in organization.

H1: Developing and planning performance has positive impact on enhancing employee’s

engagement.

H2: Managing and reviewing performance has positive impact on employee’s engagement.

H3: Assessing and rewarding performance has positive impact on employee’s engagement.

2.6 literatures Gap

The researchers (Victor, Haines & St-Onge, 2012) in the article “Performance

management effectiveness: practices or context?” mentioned some limitations like data were

collected at one point in and respondents are of Canada from where sample was taken, so further

research can be conducted in another organization which may be located in another country.

The study Rana (2015) on High-involvement work practices and employee engagement

suggested that future research can investigate the effectiveness of the performance management

practices on engagement in different organizations like NGO’s, private organizations,

government organizations.
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RESEARCH METHODOLOGY

3.1 Population frame

The population of this research is employees working in NGOs situated in Gilgit

Baltistan.

3.2 Sample selection

Researcher selected the general rule of thumb for selection of using this methodology is

minimum 3 respondents per item of the instrument. This study collect data from more than 54

respondents referring to the items of the instrument of the study i.e.18.researcher used

convenient sampling method for select 100 employees of NGOs so researcher meet rule of

thumb. Questionnaire will be collected from Aga Khan Rural Support Program (AKRSP), Aga

Khan Cultural Services Pakistan (AKCSP), Aga Khan Education Services Pakistan (AKESP),

Professional development Center, North (PDCN) and Aga Khan Health Services Pakistan

(AKHSP).

3.3 Unit of analysis

Individual employees of non -governmental organizations are unit of analysis.

3.4 Type of study

This is causal study in nature that will try to find out the impact of performance

management practices (independent variable) on employee’s engagement (dependent variable).

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3.5 Instrument development/selection

The impact of performance management practices on employees engagement questionnaire

consist of 100 questionnaires and from each NGOs researcher will collect twenty five

questionnaires from employees of NGOs. On the research questionnaires researcher used five

point likert scales ranging from 1) strongly disagree (SD), 2) disagree (D), 3) neither agree nor

disagree(N), 4) agree(A), 5) strongly agree(SA).

3.6 Data collection procedures

The main purpose of this research is to find out “The impact of PM Practices on

employees engagement NGOs of Gilgit”. This research is quantitative based and the data will be

collected through questionnaires which consist of eighteen close ended questions. Convenience

sampling method will be used to collect the data from the NGOs. Hundred and twenty five

questionnaires will be distributed in various NGOs in Gilgit, to each organization Twenty five

questionnaires will be distributed.

3.7 Data analysis techniques

Data will be analyzed through statistical software SPSS, correlation and regression

technique will be applied to obtain accurate results.

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4. Limitations of the study

This research has several limitations:

1. Organizations do not share accurate data comfortably, specifically data related to the goal

setting, feedback and performance assessment, rewards, training and development etc.

Therefore, I may face difficulty in getting the actual data during survey.

2. Quality of any research activity is highly dependent upon the time which is the basic

element in any research. Having limited time, there might be a certain deviation from the

purpose I am going to find out.

3. NGO’s have a busy schedule regarding their daily work related activities, so these

organizations sometimes fail to respond accurately. Therefore, it may also affect to

finding out the true outcomes of a research.

4. The resources required are limited in numbers.

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References

Ark, V. T. (2013). Performance Management. MIND Research and Dreambox are Getting Smart Advocacy
Partners .

Armstrong, M. (2006). Performance Management. (3rd, Ed.) United States: Kogan page limited.

Armstrong, M. (2009). Handbook of Human Resource Management Practice. United Kingdom: India by
Replika Press Pvt Ltd.

Bititci, U., Cocca, P., & Ates, A. (2016). Impact of visual performance management systems on the
performance management practices of organisations. International Journal of Production
Research, 54, 1571-1593.

Brown, M., Landau, I., & Mitchell, R. (2008). Why Do Employees Participate in Employee Share Plans?A
Conceptual Framework. Labour & Industry: a journal of the social and economic relations of
work, 45-72.

Camp, S. (1994). Assessing the effects of organizational commitment and job satisfaction on turnover.
An event history analysis approach, 74, 295-524.

Falasi, M. I. (2014). Employee loyalty and engagement in UAE public sector",. Employee Relations, 36(5),
562 - 582.

Furtado, F., Aquino, G., & Meira, S. (2007). Improving Organizational Performance Through Reward
Systems . Business Dynamics in the 21st Century .

javed, M., Balouch, R., & Hassan, F. (2014). Determinants of Job Satisfaction and its Impact on Employee
Performance and Turnover Intentions. International Journal of Learning & Development, 4, 2.

kagaari, J. R. (2011). Performance management practices and managed performance: the moderating
influence of organisational culture and. Measuring Business Excellence, 15(4), 36-49.

Mone, E., Eisinger, C., Guggenheim, K., Price, B., & Stine, C. (2011). Performance Management at the
Wheel: Driving Employee Engagement in Organizations. J Bus Psychol, 205-212.

Rana, S. (2015). High-involvement work practices and employee engagement. Human Resource
Development International, 308-316.

Redman, J. (2011). A development program to improve leadership capability and employee

engagement. Strategic HR Review, 10(6), 11-18.

schneier, C., Beatty, R., & Baird, L. (1987). Performance Appraisal Sourcebook. Amberst press

Victor, Haines, & St-Onge, S. (2012). Performance management effectiveness: practices or context? The
International Journal of Human Resource Management, 23(6), 1158-1175.
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Appendix

Survey Questionnaire

Dear Respondent,

Thank you for agreeing to participate in this survey. I am a student of MBA (Regular) at KIU

and conducting a survey on “The impact of Performance Management Practices on Employee’s

Engagement”. Please feel free to contact me regarding any queries you may have.

(The information provided in this questionnaire will be kept confidential and shall only be used

for academic purposes).

Regards,

Shazia Ali

Personal Information

a. Name (Optional):__________________________________________
b. Age: Less than 30 31-40 41 -50 51 and above
c. Gender: Male Female
d. Education: Bachelors Masters M.Phil. / MS. Ph.D.
Any Other (Please specify)___________________________
e. Name of Organization (Optional):______________________________________________________
f. District/ Location of organization: _____________________________________________________
g. Experience (years): _________________
h. Designation: _________________
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(Mone, Eisinger, Guggenheim,2011) SD D N A SA

DP 1 I know how my work contributes to the achievement of my 1 2 3 4 5

department’s goals.

DP 2 I have opportunities to provide input into decisions that 1 2 3 4 5

affect my work efficiency.

DP 3 My organization is providing me the resources and decision- 1 2 3 4 5

making authority to perform effectively.

DP 4 I am involved in the decisions that impact my work. 1 2 3 4 5

MR 5 I am satisfied with the quality of supervision I receive. 1 2 3 4 5

MR 6 My supervisors give me feedback when I perform poorly. 1 2 3 4 5

MR 7 My manager provides me ongoing feedback that helps me 1 2 3 4 5

improve my performance.

MR 8 The company communicates me to understand strategy, 1 2 3 4 5

vision and direction.

MR9 I am satisfied with opportunities for career progression and 1 2 3 4 5

promotion.

AR10 I think employee development practices increase my 1 2 3 4 5

motivational level to perform my task efficiently.

AR11 The organization provides me job related training. 1 2 3 4 5

AR12 I am encouraged to look for ways to improve my work 1 2 3 4 5

processes and productivity.

AR13 Organization providing sufficient opportunities for training. 1 2 3 4 5

EE14 I want to continue my work in the same organization. 1 2 3 4 5

EE15 When somebody speak ill of my organization, I defend it 1 2 3 4 5

immediately

EE16 I would like to advise my friends to do work in this 1 2 3 4 5

organization.

EE17 The work I do is appreciated. 1 2 3 4 5

EE18 I am satisfied with my chances for salary increases. 1 2 3 4 5

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