The performance appraisal system currently in use within the Old Brown Cow and other district health

services has a number of limitations. This system is a management by objectives approach, which focuses on individual goals and objectives and does not necessarily relate these to corporate objectives, nor does it assess the skills and abilities required of the individual to perform their duties. The main outcome of this system is the determination of appropriateness of pay increments. Fisher et al.. (1997) advise that this is not an appropriate use of a performance appraisal system.

Performance management is an integrated process of defining, assessing, and reinforcing employee work behaviors and outcomes. Organizations with a well-developed performance management process often outperform those without this element of organization design. Performance management includes practices and methods for goal setting, performance appraisal, and reward systems. These practices jointly influence the performance of individuals and work groups. Goal setting specifies the kinds of performances that are desired; performance appraisal assesses those outcomes; reward systems provide the reinforces to ensure that desired outcomes are repeated. Because performance management occurs in a larger organizational context, at least three contextual factors determine how these practices affect work performance: business strategy, workplace technology, and employee involvement. High levels of work performance tend to occur when goal setting, performance appraisal, and reward systems are aligned jointly with these contextual factors.

According to Sumantra Ghoshal (1948-2004), the humanist management writer and academic, who believed that management should be above all else a force for good, got it right when he said: "A very different philosophy of management is arising. We are moving beyond strategy to purpose; beyond structure to process, and beyond systems to people.... Asshole management is not inevitable." Performance management is about people. Usually the aspects of performance that place the biggest demands on managers, and create the biggest challenges and problems, are those areas concerned with a 'failure' to perform to a certain standard or target or other requirement. Performance above standard rarely creates a management headache. It makes sense therefore to look first at managing performance at the level of basic standards and responsibilities. And just a quick note about performance appraisals and where they fit into performane management: Attending to below-standard performance needs to be handled at the time - do not wait to spring it on people several months later at the

dreaded performance appraisal. And also he says performance management more than just a once a year process it's a continuous activity.