Abstract
Orientation: Given the importance of employee job satisfaction to organisational success, job satisfaction is still a common element for any organisation to be successful.
Research purpose: To determine to what extent employee perceptions of performance management impact job satisfaction.
Motivation for the study: This study was motivated by the relative paucity of extant literature considering the relationship between employee job satisfaction and the implementation of performance management systems within telecommunications companies in South Africa.
Research approach/design and method: A survey-based quantitative approach was employed to collect data from 300 employees in a telecommunications company in South Africa. The survey instrument comprised items measuring perceptions of performance management and the performance management system and an adapted Minnesota Satisfaction Questionnaire (MSQ) that was used to evaluate job satisfaction. Survey items were accompanied by a five-point Likert-type scale. A nonprobability convenience sampling method was adopted.
Main findings: The results showed that perceived policy implementation and perceived fairness have a positive and significant effect on job satisfaction, with perceived fairness having a greater overall effect.
Practical/managerial implications: The implementation of a performance management system should be predicated on fairness and all due efforts to underline and communicate the fairness of the system, coupled with consistent policy implementation, can improve employee job satisfaction.
Contribution/value-add: This study more broadly illustrates the importance of perceived fairness and consistent policy application in the implementation of a performance management system to overall employee job satisfaction.
Keywords: performance management; performance management system; job satisfaction; performance appraisal; telecommunications company.
Introduction and background
Employees are central to the success of any organisation, as they are the key resource in ensuring that strategic activities are executed with a high degree of diligence and timing. To this end, performance management systems are tools and mechanisms that enable organisations to evaluate the performance of employees and which have the potential to impact employee job satisfaction (JS) in either a positive or a negative way, depending on the manner in which the system is implemented (Demartini, 2014). Within the South African telecommunications sector, strong growth over the past 5 years has given way to a substantially more competitive environment, especially considering the move from voice to data communication. As a result, the profit margins of established telecommunications companies are set to shrink in the near term through the reduction in data prices, which offsets potential gains in higher data volumes.
Efficiencies that can be gained through staff retention by reducing integration and training costs, as well as efficiencies related to improved performance, are both related to JS. Improving and maintaining levels of JS is thus of key importance for telecommunications companies as they seek to maintain profit margins. Furthermore, as Deloitte point out in their South African Telecommunications Sentiment Index 2020 (2019), telecoms is South Africa’s most negatively viewed industry, underlining the importance of systems aimed at tracking and increasing, or maintaining, JS levels with the industry.
Research purpose and objectives
The purpose of this study was to establish whether a performance management system has an influence on employee JS, focusing on a telecommunications company in South Africa. The objectives of this study were to:
- determine these employee perceptions of a performance management system
- determine their levels of JS
- determine whether there was a relationship between perceptions of the performance management system and levels of JS
- determine whether there were specific factors linked to the performance management system that had a greater or lesser influence on levels of JS.
Literature review
The purpose of a performance management system is, essentially, to ensure that employees deliver on what management expects of them. Demartini (2014) defines a performance management system as comprising evolving mechanisms that are both formal and informal and which are geared at both conveying objectives assigned by management and (more broadly) at aiding management through analysis and planning, as well as through performance review and through the facilitation of organisational learning and change. Singh (2010) underlines the concrete and participatory nature of performance management systems, concluding that an effective system is capable of increasing productivity and generating employee enthusiasm, thereby resulting in higher employee retention and improved client satisfaction.
The process of performance management consists, for Greve (2003), of the creation of objective, feasible, sustainable and credible measures, together with procedures and practices that ultimately allow for the measurement of employee performance and that can, through performance feedback, become an engine for organisational learning (Greve & Gaba, 2020). Typically, the performance management process includes four main stages, these being planning, mentoring and coaching, reviewing and rewarding. An effective performance management system not only drives improved performance in individual terms, but it also enables the communication of organisational objectives in broader terms, and it is furthermore seen by Greve (2003) as a means to achieve employee satisfaction through better understanding of common goals.
The factors that contribute to an effective performance management system include the communication of an understanding of organisational culture and strategy together with managerial expectations. The nature of performance management as a system that channels feedback between employees and management further implies that development planning, together with coaching and coupled with performance and development reviews, are essential elements of a successful performance management system (Barth & De Beer, 2017). Such a system, as underlined by Barth and De Beer (2017), aims at improving and reinforcing the ability and capacity of employees to fulfil managerial expectation. Finally, recognition and reward, in line with performance, and on both a formal and an informal basis, as well as respect and trust, are hallmarks of an effective performance management system, supporting and sustaining employees in their accomplishment of organisational objectives (Barth & De Beer, 2017).
Performance management systems can be seen as inherently linked to JS insofar as job satisfaction is predicated on an employee’s feeling of having accomplished a task that has importance and ‘value worth recognition’, as Wicker (2011) notes. Performance management systems reinforce this sense of accomplishment through the communication of objectives that are seen as valuable to the organisation and in the assessment of the accomplishments of employees. Abekah-Nkrumah and Atinga (2013) further elaborate on the question of trust, which, for them, stimulates JS and performance and is another hallmark of a successful performance management system. They underline the importance of management in the exercise of workplace justice and the powerful role that JS plays in influencing both outcomes and employee behaviour, with an absence of managerial fairness leading to employee turnover as a result of employee dissatisfaction. This point of view is reinforced by Selden and Sowa (2011), who found positive linkages between performance management and turnover, JS, job enjoyment and employee job commitment, emphasising the motivational role that a judiciously implemented performance management system can have.
Globally, the structure of a job – that is, the degree to which individual tasks have been clearly determined, coupled with the inclusion of employees, harnessing their creativity and innovation and thus empowering them, as well as the provision of opportunities for growth and appropriate levels of renumeration – are crucial to high levels of employee satisfaction (Jaksic & Jaksic, 2013). Viewed in this light, performance management systems are powerful tools that lay the framework for the structure of a given job, and when judiciously implemented, they achieve the aforementioned tasks of determination, inclusion and empowerment through feedback, communication and review. Jaksic and Jaksic (2013) further underline the necessary satisfaction of the key stakeholders (employees) in defining the mission, strategy and aims of a given organisation which, as Guest (2009) points out, is subject to changing expectations, which vary in both educational and in generational terms and in which a performance management system as a tool for feedback has an important role to play.
The relationship between good performance management and JS has been further illustrated by a number of studies (Howel & Avolio, 2013; Koech & Namusonge, 2012; Ololube, Dudafa, Uriah, & Agbor, 2013), with both Amanchukwu, Stanley and Olulube (2015) and Howel and Avolio (2013) concurring that the perception of fairness in performance management is a key trait. To this end, the present study seeks to validate these findings, considering the importance of perceived fairness in the application of a performance management system and the manner in which this affects JS.
Sharma, Sharma and Agarwal (2016), while focusing on the question of performance management perceptions within the context of the Indian subcontinent, raise interesting points regarding the necessity of establishing what the baseline perception of performance management is within various socio-economic and cultural climates. Insights garnered from further analyses centred on different contexts will allow for both the untangling of the complex relationship between performance management and organisational performance, as well as a better understanding of the manner in which various factors, including but not limited to accuracy and fairness, impact performance management more broadly. The present study thus seeks to consider employee perceptions of performance management on JS levels within the context of a South African telecommunications company, adding considerations specific to this context to the more global body of work.
The importance of JS, and performance management systems as a mediator and vehicle for JS, can also be read in terms of employee retention, as Pauwe (2004) notes. Performance management is a manner in which an organisation can identify those who have not been able to comply with the stated goals, allowing an organisation to retain only those employees who have proven themselves.
Lewis, Linganiso and Karodia (2015), in their study on perceptions of performance management in a Radiology Department at a hospital in Gauteng, South Africa, revealed several negative trends insofar as over 40% of employees canvassed expressed a lack of motivation following performance review. In the same study, 50% of participants were of the opinion that performance management did not function. Suggested improvements to the performance management system and the implementation thereof within the Radiology Department of the Gauteng hospital included the provision of nonfinancial rewards and improved opportunities for the development of interpersonal relations within the department. These improvements sought to improve JS through the reduction of what the study reported as dissatisfaction with the implementation of the performance management system. The present study seeks to consider whether the dissatisfaction regarding performance management and its consequent impact on JS, as reported by Lewis et al. (2015), is part of a general trend or whether it is site or industry specific.
Research methodology
Research approach, design and method
The study adopted a quantitative approach and a descriptive and correlational research design. This was deemed appropriate in a study that sought to collect data describing the perceptions of employees of performance management, performance management systems and levels of JS in order to generalise the findings to a broader population. Data were collected using the survey method in the form of a questionnaire administered to the respondents.
Population and sampling technique
The target population comprised approximately 500 employees employed in the business network unit of a South African telecommunications company. These employees held the position of line manager, specialist or ‘other’. An initial sample of 300 respondents was planned, with a sample size of 150 regarded as adequate for the study. A nonprobability convenience sampling method was adopted. A final sample of 236 respondents was obtained, thus indicating a response rate of 79%.
Measuring instrument
The survey questionnaire comprised three sections. Section A gathered demographic and other variables including gender, age, position held, years of service and level of education. Sections B and C contained items accompanied by a five-point Likert-type scale ranging from strongly disagree (1) to strongly agree (5) and measured respondents’ perceptions of performance management and the performance management process, and their levels of JS, respectively. Items linked to performance management were developed following a review of relevant literature. Items linked to JS were measured using an adapted version of the Minnesota Satisfaction Questionnaire (MSQ).
Data collection
After obtaining permission from a telecommunication company in South Africa to conduct the study, questionnaires (300) were distributed online to the employees through the SurveyMonkey platform. A covering letter was attached to each questionnaire that described the nature, purpose and objectives of the study and assured the respondents that their responses would be kept anonymous. Ethical clearance was granted for this study (reference number REC/2016/05/003).
Data analysis
The data retrieved from the questionnaires that were completed by the respondents were coded according to the variables and captured in Statistical Package for Social Sciences (SPSS) version 24.
Validity and reliability of the measuring instrument
The validity of the measuring instrument was established by making use of exploratory factor analysis. Four subscales emerged, these being labelled ‘policy implementation’ (P), ‘knowledge and training’ (KT), ‘fairness’ (F) and ‘job satisfaction’. All subscales demonstrated Cronbach’s alpha coefficients exceeding 0.70, with the exception of the ‘knowledge and training’ subscale that obtained a coefficient of 0.54. The Cronbach’s alpha coefficients are presented in Table 1.
| TABLE 1: Cronbach’s alpha coefficients for subscales. |
Ethical considerations
Ethical approval to conduct this study was obtained from the Tshwane University of Technology (ref. no. FREC2015/FR/10/005-MS).
Results
Demographic information
Descriptive analysis was carried out to obtain the frequency distributions of the demographic variables, which were gender, age, race, position at work, work experience and education level. The results of this analysis are illustrated in Table 2.
| TABLE 2: Demographic profile of respondents (n = 236). |
The majority of respondents were male (84%), with most falling in the age range of 36–45 years of age (43%). The majority of respondents (55%) were specialists, with most having between 6 and 19 years of experience (73%), and the majority held a diploma or 3-year degree (50%).
Mean scores and standard deviations for performance management or performance management system and job satisfaction
Table 3 presents the mean scores and standard deviations in relation to employee perception regarding performance management or the performance management system and their levels of JS, as measured for each of the 33 items. An aggregate mean score and standard deviation is provided for overall JS, as well as for each of the subscales that emerged for the performance management or performance management system scale of the questionnaire. In this study, a scale of 1.0–1.49 tended towards strongly disagree, 1.51–2.49 towards disagree, 2.51–3.49 towards neutral and 3.51–4.49 towards agree, with 4.51–5 being indicative of a response that tends towards strongly agree.
| TABLE 3: Mean scores and standard deviations for performance management and job satisfaction (n = 236). |
At a subdimensional level, the results show that employees had a neutral perception of performance management regarding policy implementation (P) and fairness (F), as evidenced by the mean values of 3.21, and 2.84, respectively. Job satisfaction, with a mean score of 2.91, also tended towards a neutral perception, whereas KT, with a score of 3.83, fell into the scale signalling agreement.
The results from the descriptive analysis furthermore show that employees had a neutral perception overall as concerns their level of JS, as evidenced by the mean value (2.91). This is also shown in Figure 1.
 |
FIGURE 1: Employee perception of performance management and job satisfaction at a subdimension level. |
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In this study, out of the 18 items assessing perceptions of performance management or the performance management system, most of the responses received expressed the neutral option. Respondents disagreed with the statement F6 (‘I receive praise for doing a good job’), with the result having a mean value of 2.33.
Relationship between performance management or performance management system and job satisfaction
In order to ascertain whether performance management contributes to JS, correlation and regression analyses were undertaken. When factor analysis, as a measure of validity prior to further inferential testing, was applied to the 33 items of performance management and JS subdimensions to test for construct validity, only 25 items were found to meet a minimum threshold of 0.4, as recommended by Field (2009). The items that could not meet the minimum requirement of 0.4 were P1, P2, KT1, KT2, KT3, KT4, KT5, KT6, F1, F2, F3 and F4, including the entire ‘knowledge and training’ subscale, and these items were removed from further inferential analysis.
Table 4 details the results of the correlation analysis and Table 5 the results of the regression analysis. The analysis in Table 5 contains both alpha and regression coefficients; β, which is the standardised beta coefficient; SEB, which is the standard error of the coefficient of determination; and R2, which is the coefficient of determination used to measure the explanatory power of predictor variables (subdimensions of performance management) against the dependent variable (that is, JS).
Given that policy implementation and fairness are the independent variables while JS is the dependent variable, it is clear that a positive and moderate relationship exists between the two performance management subdimensions (policy implementation and fairness), as well as between each of the performance management subdimensions and overall JS.
Thus, taking the results of the regression analysis into account, (p < 0.001, r = 0.54, β = 0.54), a positive relationship can be drawn between policy implementation and JS at the telecommunications company in South Africa (at a significance level of p < 0.001). Policy implementation can thus lead to overall JS, consistent with the findings of both Howell and Avolio (2013) and Koech and Namusonge (2012).
Furthermore, a positive relationship between fairness in performance management and JS (p < 0.001, r = 0.67, β = 0.67) can be accepted at a significance level of p < 0.001. Thus, fairness in performance management can lead to overall JS, which is in line with the conclusions that both Koech and Namusonge (2012) and Ololube et al. (2013) drew.
In conclusion, the results show that policy implementation and perceived fairness had a positive significance effect on overall JS. The results further show that perceived fairness has a greater effect on overall JS than policy implementation.
Discussion
The main objective of the study was to establish if a performance management system has an impact on the JS of employees. The findings of the study indicate that respondents gave neutral responses to the questions regarding policy implementation (average score of 3.21), fairness (2.73) and JS (3.15). A closer look at the results of the JS section of the questionnaire show that while the question ES1 (‘I get a feeling of accomplishment from my job’) elicited a mean response of 3.83 (agree), with a standard deviation of 0.83, question ES14 (‘there are opportunities for workplace advancement’) elicited a mean response of 1.74 (disagree), with a standard deviation of 0.91. This seeming contradiction in workplace satisfaction as arising out of a feeling of accomplishment in the absence of opportunities for advancement is further problematised by the result of question ES4, ‘there are opportunities for advancement within the company’ (mean score of 3.76 with a standard deviation of 0.99). While the standard deviation of the responses is relatively high, indicative of inconsistency, the responses nevertheless may reflect the perception of workplace advancement as taking place within the broader company (thus interdepartmental promotions) as opposed to within a given department (intradepartmental promotion). This contradiction warrants further investigation.
While the questions pertaining to KT did not pass the 0.4 threshold of factor analysis, the particularly high scores for KT2 (‘there is enough training regarding performance management’, mean score of 4.24, standard deviation of 0.78), KT3 (‘I understand what a performance management system is’, mean score of 3.96, with a standard deviation of 0.60) and KT4 (‘I can explain what a performance management system is about’, mean score of 4.24, with a standard deviation of 0.82) are noteworthy. These scores illustrate the positive communication that has been undertaken regarding performance management and the success with which the goals and processes of the performance management system have been conveyed.
Further analysis showed that both policy implementation (p < 0.001, r = 0.54, β = 0.54) and perceived fairness (p < 0.001, r = 0.67, β = 0.67) have an impact on JS, with fairness having a more significant overall impact.
While these findings concur with Amanchukwu et al. (2015) and Howel and Avolio (2013) in that the perception of fairness has a key role to play in performance management, it is only partially in line with the findings of Lewis et al. (2013), who underlined the demotivation that resulted from performance review at a public hospital in Gauteng. Lewis et al. (2013) amplify their results in considering the fact that feedback may only be given during reviews, and their article furthermore highlights what can be interpreted as a perceived lack of objectivity, where the majority of respondents to their study considered that ‘managers give the best score to everyone’ (2013, p. 18). While the questions directly addressing fairness in the study by Lewis et al. (‘assessments of my performance are consistently fair’) elicited responses of ‘strongly agree’ in 13.89% of cases and ‘agree’ in 44.44% of cases, with 25% of respondents disagreeing and 5.55% strongly disagreeing (2013, p. 16), the fairness score of 2.73 in the present study is indicative of a weaker perception of overall fairness as regards performance management. Furthermore, in the present study, the score of 2.33 related to the question of praise can be seen to concur with the lack of regular feedback outside the formal review process that Lewis et al. point to.
While the study undertaken by Lewis et al. (2013) did not specifically address the question of JS and the relation of performance management to JS, the question of objectivity and implementation was raised. For the health care workers who formed the basis of the study by Lewis et al., it was considered that their profession (together with vocational ideas of service related to healthcare) influenced their perception of remuneration, which elicited globally positive responses in contrast to the present study, where salary satisfaction was neutral (with an average score of 3.11).
Nevertheless, the present study has shown that there is a clearly positive relationship between performance management systems, more particularly the perceived fairness and implementation thereof, and JS. Although employees responded neutrally to the JS questionnaire overall, what did emerge was the importance of employees experiencing a sense of job accomplishment.
Practical implications
The practical implications of this study can be considered from a managerial point of view in terms of specific survey questions that elicited unsatisfactory responses and identifying remedies to the problems raised by the respondents; in this way, positive perceptions of performance management systems may be increased.
The question concerning the regularity of performance reviews (P2) scored a mean value of 2.70, which tends towards the ‘neutral’ response. While the standard deviation revealed some inconsistency of response (1.11), it is nonetheless recommended that line managers schedule regular performance review dates and communicate frequently about the importance of these reviews to ensure that these appointments are taken seriously and honoured.
The question regarding the professional demeanour of the managers (P4) scored a mean value of 2.67, with a standard deviation of 0.94, which indicates that the employees had a neutral response to the question as to whether line managers handle the performance management sessions (such as goal setting and reviews) in a manner that is, in their opinion, professional. Line managers should thus formalise performance management sessions and ensure that records of such meetings are accurately kept, with the necessary follow-ups regularly undertaken within the performance management circle. These findings are echoed by the question regarding the appropriate implementation of company policy (P5) with a score of 2.54 and standard deviation of 0.87, showing the neutrality and ambivalence felt by the respondents, reinforcing the need for better policy implementation.
Regarding the relationship between compensation and performance (F1), the mean value of 2.80 (standard deviation of 1.32) indicates that the employees responded neutrally to the statement that the compensation that they receive is linked to their own performance. This response can be regarded as subjective insofar as employees generally consider themselves to be performing at the highest level, and this subjectivity is reinforced by the high standard deviation that shows inconsistency in their overall perception. Further questions regarding the uniformity of application (F2) and whether only excellent workers are rewarded by performance management systems (F4) elicited an equally neutral response (2.80 and 2.52 respectively), with equally high standard deviations (1.33 and 1.16). This can be contrasted to the question regarding fair working conditions across departments (F5), which, while tending towards a neutral response (2.87), nevertheless has a much greater degree of consistency, with a standard deviation of 0.87. Line managers should thus be clear in their explanations during feedback sessions regarding the way compensation is matched to performance (in order to reduce the high variability in perception). Goals and the way they are measured must be clear in order for employees to understand the manner in which they are compensated according to their performance. The agreement regarding the response that tends towards neutral concerning fair working conditions across departments, as reflected in the low standard deviation, stands out and is indicative of a perceived inconsistency in the working conditions across departments and should be addressed by more rigorous cross-departmental application of company policy. Interdepartmental inconsistency is also underlined in the response to F2 (uniformity of performance management system application across departments), which had a response tending towards neutral with a high degree of variability, possibly indicative of varied perceptions across departments.
Regarding whether only excellent performers or hard workers are rewarded by performance management systems (F4), employee responses tend towards neutral, illustrating that they do not necessarily believe that the system rewards hard workers. Thus, human resource departments should play a central role in evaluating the portfolio of evidence that is provided by the employees together with line managers in order to ensure a more objective application of the policy, which will also address the high degree of variability in the response.
Respondents reported a mean value of 2.33 with a standard deviation of 1.04 concerning the praise they receive for good work (F6), indicating a response that tends towards neutral but again reflects a significant variability. As a remedy, line managers should make an effort to ensure that time is taken for consistent, deserving, positive feedback, thus avoiding the perception that feedback is only given in negative circumstances, and ensuring a more homogenous application of the policy in order to reduce variability.
Question ES6 illustrated a neutral opinion regarding managerial decision-making (mean value of 2.78 with a standard deviation of 0.93), and while the standard deviation shows some variability in the response, line managers should nevertheless invest more time in educating themselves with regards to the performance management system so as to be able to justify their decisions through their depth of understanding of the process, providing adequate answers to employee queries.
The application of company policies (ES12) similarly scored neutrally with a mean value of 2.54 and a standard deviation of 0.87, which indicates the ambivalence with which employees view the appropriate implementation of policy. Company policies should be clear and consistent; in areas where there is ambiguity, an effort should be made to review and update them accordingly. The challenge lies in the application of this by line managers, which is inconsistent.
Salary satisfaction, as measured against work undertaken (ES13), scored a mean value of 3.11 with a standard deviation of 0.94, which can be interpreted as a neutral response. Clear job descriptions should be provided with changes to the job description explained; an explanation that illustrates the replacement of previous tasks or goals with new ones will underline a view of progress and not of the mere addition of new tasks.
Limitations and recommendations for further research
The study was focused on a particular telecommunications company in South Africa and does not represent the broad spectrum of telecommunications companies in South Africa. This means that the generalisations and inferences that can be drawn from the study are limited and can be viewed as encouraging further intra-industry studies.
A further limitation arises insofar as the study was conducted using quantitative research methods; the questionnaire was thus structured and did not allow much room for free form comments. Further studies of a qualitative nature, including focus groups and other forms of interviews, could give a better idea of the industry-specific constraints of this fast-paced industry.
A common thread regarding employee perception of performance management that was raised in the course of the study was the consistently neutral opinion held by employees regarding managerial fairness in the application of performance management. Future research should thus more clearly focus on the question of management fairness in the application of performance management, allowing for a more granular understanding of the roots of the perception.
Conclusion
There is a clear link between performance management and employee JS, more specifically as this relates to the implementation of performance management systems and the perceived fairness thereof. While employees believe that performance management systems are both needed and important, they consistently report neutral sentiments regarding the manner in which the system is applied. They are neutral as concerns perceived managerial fairness in application; this neutrality in opinion runs counter to the very purpose of a performance management system, which is built to improve relations between management and employees. Furthermore, the high levels of standard deviation across all question responses are possibly indicative of the inconsistent application of the performance management system, insofar as a performance management system is geared at homogenising employee expectations and managerial experience in a consistent and procedurally understood manner. The high levels of variability in employee perception of performance management thus run contrary to the principles of a good performance management system and are indicative of poor implementation or coordination of the performance management system both across departments and in general.
One of the critical points raised by respondents is that performance reviews are not regularly undertaken, which can very well create problems leading to negative employee appraisal, given that the entire cycle is not taken into consideration.
Based on the above recommendations, the company should consider integrating performance management into the day-to-day routines of the department to avoid any pressure regarding the submission of appraisal ratings to management. The system should furthermore be a two-way structure, wherein the onus not only lies with the manager but also with the employee, who is empowered to prompt the manager regarding the fulfilment of performance management obligations in a consistent and clear manner.
More broadly, and of more general interest to the question of the relationship between performance management and JS, fairness, arising in no small part out of the consistent application of procedures, can be seen as key.
Acknowledgements
Competing interests
The authors have declared that no competing interest exists.
Authors’ contributions
L.M. initiated the project as part of his MBA degree. L.P.D. acted as supervisor and was therefore involved in the conceptualisation of the project. The authors wrote this article jointly as a team effort.
Funding information
This research received no specific grant from any funding agency in the public, commercial or not-for-profit sectors.
Data availability
The data that support the findings of this study are available from the corresponding author upon reasonable request.
Disclaimer
The views expressed in this article are those of the not an official position of the Tshwane University of Technology.
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