Performance Management – Are you equipped?
There are two main views of performance management. One is the traditional view of objective setting, development and measurement. The other is a more recent view questioning the purpose or worth of a performance management system. We’ll concentrate on the traditional view today and look at the alternative view in our next blog!
When I’ve been involved in performance management its main aim was to allow for the organisation to continually improve and develop its capacity for performance. Is this the same for you? Line managers and HR operated a traditional performance management system, including a backward looking annual appraisal. They looked back at the achievements of the previous twelve months. This system then evolved to be one of a continuous cycle, not an isolated event. Because performance management integrates various HR activities, an agreed format helped line managers to understand the whole process. This also ensured that the different parts of the process complemented each other.
Leaders used corporate strategic goals in performance management to determine business and departmental goals. The next stage was the agreement on individual performance and development priorities. Individuals and managers then agreed individual objectives, creating a plan and monitoring performance continuously. Managers gave feedback regularly and used formal performance reviews to support this at agreed points in the year. The plans by managers and employees also highlighted important organisation-wide processes. The processes supported performance, for example, leadership, internal communications, and others.
Beginning with objective setting, this allows an organisation to align its workforce to the business goals. It actively demonstrates how an employee’s contribution and role relates to wider organisational success. In many organisations, managers and employees set objectives in the first quarter of the year. At this time, they set SMART (Specific, Measurable, Agreed/Achievable, Realistic and Timebound) objectives for individuals. These objectives, whilst linking to organisational objectives, should also reflect the values and behaviours of an organisation. This helps the organisation to establish ‘what’ has been done and ‘how’ it has been achieved. A consideration of the ‘what’ and the ‘how’, help develop a culture where success is celebrated when it is achieved in an ethical way.
Performing and Developing
The performing and developing stage can take place both formally and informally. This would typically involve a review of progress made against the objectives. Managers and employees can identify and agree what is required in terms of additional support. This will help employees to achieve their goals. Additionally, it might be necessary for both parties to revise objectives to something that is more relevant and/or achievable. Agreement and understanding is key at the objective setting stage and by implementing regular reviews allows organisations to be flexible and responsive to changing demands. Changes to objectives may be needed to account for events that were not clear at the start of the performance management process. In particular, the fast-paced nature of change in some organisations means that being agile to change can allow the organisation to gain advantage over its competitors when circumstances change.
Measurement and Review
The final stage of the performance management cycle is a review of performance. This stage allows the employee and the line manager to review progress. At this time, you can celebrate successes, or alternatively understand why the employee has not achieved the objectives. At this point, it is common for organisations to apply a rating system for performance. This aids organisations to identify their key players when it comes to performance, and introduce suitable measures to reward success and challenge underperformance. Scoring systems need to be fair, especially as performance often links to pay.
Getting performance related pay wrong can be disastrous for an organisation. It can negatively impact morale, performance, and the perception of fairness – key ingredients when managing engagement. Pay is a significant motivator and can incentivise performance. Performance related pay schemes also have the ability to demotivate, reduce teamwork, and erode trust as open and constructive conversations about performance become more difficult to have (CIPD, 2016). One challenge of performance review is therefore ensuring objectivity as far as possible from the person responsible for scoring.
Equipping individuals and Line Managers
An individual’s own development and some personal objectives are often included within performance management. Whilst matched to the organisation’s objectives they can also aid the individual’s career prospects. This helps to build trust and commitment between the employee and the organisation, and more specifically the line manager. The line manager is most-often the individual responsible for implementing performance management across a team and is therefore critical to its success. The opportunity to provide regular, consistent feedback and to ensure open two-way communication channels exist, places an emphasis upon line management. Managers need to listen, engage, and provide the necessary support for their teams. In addition to this, they must provide clarity on objectives and explain how to achieve them.
The process alone is not enough……
The CIPD found that a performance management process was simply not enough to ensure engagement with the system, and rather that it is most effective when conducted by a good line manager (CIPD, 2016). Management teams should be equipped with the skills to listen and engage with their team. They should demonstrate the correct behaviours and values associated with the organisation, to develop confidence amongst their teams to provide the impetus for them to listen and respond to the challenges provided. How equipped are you?
The elements of performance management may be similar across different organisations, but there is no single best approach. Suited to your specific business or desired organisational culture, your organisation should develop relevant practices. There should also be flexibility within the system itself to account for the different ways teams or functions operate within your organisation. This may mean that your organisation has decided to move away from this traditional process and adopt something different. If so, it would be great to hear about what you do. We’ll look at some different views in the next blog.
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