Understanding Performance Management Essay Example for Free

Understanding Performance Management Essay The mandate to operate at an optimal performance level and meet financial and organizational expectations are transforming the way organizations do business. This evolution is driving higher standards of competence in day-to-day operations and adding new pressure to increase stakeholder value. In today’s rapid-paced business climate, the agility with which a company manages performance can determine market position and company profitability. Defining Performance Management Performance management is the integrated process of defining, assessing, and reinforcing employee work behaviors and outcomes (Cummings and Worley 2005). Performance management focuses on understanding, optimizing, and aligning action and decisions and ensuring the collaboration and empowerment of all individuals across the business network. It includes practices and methods for goal setting, performance appraisal, coaching, employee development and reward systems. More than ever, organizations need broader measures of employee performance to ensure that (1) deficiencies are address in a timely manner through employee development programs that meet the needs of the organisation and its market, (2) employee behaviours are being directed toward performance of specific objectives that are consistent with the work unit and the organization strategy, and (3) employees are provided with proper and timely feed back to assist with their career development. These practices jointly influence the performance of individuals and work group, and enables them to work across strategic, tactical, and operational levels to align actions to ensure optimal performance. In order for effective performance management to take place, the process must utilize information from three time periods to do so. It makes use of data from the past in order to gather information form past performance. This information is then utilized in the present for the establishment of work plans, goals and the setting of development opportunities. These objectives therefore allow for high levels of performance in the future. The Purpose of the Performance Management System The main purpose of performance management is to make sure that employee goals, employee behaviours used to achieve these goals and feedback information about employee performance are all linked to the corporate strategy. However there is no one way to manage performance. What ever system is adopted needs to be congruent with the culture and principles that pervade the organization. Most systems of performance management has three purposes- Strategic, Administrative, and Developmental. The strategic purpose- Defining Performance One of the ways in which strategies are implemented is by management defining the desired results, behaviours and employee characteristics necessary for carrying out strategy. They can then develop measurement and feedback mechanisms which will show hoe effectively results are being achieved and what to do to produce results. The organization can achieve this strategic purpose if it is flexible and amendable to changes in the goals and strategies which can occur, and also to recognise that if such changes occur, then there needs to be change in results, behaviours and characteristics of the employees, which must of necessity change to correspond with such organizational changes. The Administrative Purpose-Measuring Performance Performance appraisal information is one of the main instruments used by organizations for making administrative decisions, for example, salary administration, in terms of pay raises; promotions, retention or termination, recognition of individual performance and identification of poor performance. The Developmental Purpose- Feedback and coaching This aspect of performance management seeks to develop further, employees who are good at their jobs. In instances where employees are not performing up to standard, performance management also seeks to improve their performance through coaching. The feedback from the performance evaluation process indicates or identifies the areas of strengths and weakness in the employee performance. It is therefore critical to businesses that they recognise and fulfill the purpose of an effective performance management system as this is central to gaining a competitive advantage through the management of human resources. They also need to develop the measures by which performance can be evaluated. The discussion now turns to the development of the performance management system. It describes the major strategic decisions that must be put in place if the task force is to effectively design a performance management system. In order for a successful performance management to be established, the process must utilize five strategic decisions. 1. How the system will be used be used? 2. Who does the evaluation? 3. What areas are to be evaluated? 4. How should the evaluation be done? 5. What are the ways in which the evaluation can be done? How will the system be used Planned employee development should be one of the basic concepts of any organization’s performance management system. This is an attempt to state a broad policy which removes any option about people development by stipulating that developing people is a pillar of whatever system of management the organization espouses. This people development should be planned, not given mere lip service or expected to happen by itself. Adoption of this policy would guard against the simplistic way in which some supervisors consider themselves to be results oriented as opposed to people oriented, thus absolving themselves from people development. The major thrust of employee development will be to emphasize that the development of people as the best means available to achieve results for the organization. Three new thoughts are intended in this policy rec ¬ommendation. First, because development is different for everyone, there should be individual development plans. While there may always be areas of growth or development common to many at the same time, these ought not to be the sum total of the people develop ¬ing process taking place. It is often an easy excuse for supervisors point to plant–wide or company–wide â€Å"people† programs as a way of absolving themselves of their people developing responsibility. The second operable word in this policy state ¬ment is review. The supervisor is required to follow up on the people development plans. They are not to be spoken of enthusiastically for a brief period and then forgotten. If documented on company forms, they ought not to be forwarded to some staff office as though float ¬ing off into never–never land. They require monitoring so that progress can be checked periodically. Third, individual plans should be reviewed at least annually. This is an attempt to offer some time frame for periodic review, so as not to make the task too time–consuming. Furthermore, a lot can happen in twelve months, so that this time span is not too soon for considering new situations that might warrant chang ¬ing or updating the plan. Many practicing managers indicate a twelve month time frame as a practical one, especially when the development plan is discussed in the context of the annual performance evaluation. Each of my subordinates should work out a specific plan of personal development. Two thoughts are contained in this policy statement. First, each subordinate is to have a development plan. Again, we speak of the universality of develop ¬ment. This isn’t only for the weak, or only for those identified as shinning stars, or only for any select lucky or unlucky few. Everyone has developmental needs in order to help achieve the mission of the organization. Second, there is the question of who works out this plan for development. Some may immediately think of some subordinates who do not appear capable of working out their own personal development, hence this may prompt a negative vote (or â€Å"false† mark) on this state ¬ment. Clearly there will be some individuals less qualified than others to work out such a plan. But the intent is not to expect people to do it alone – quite the contrary. The real point of this statement is to fix on the subordinate a sharing of the development responsibility for which the supervisor is accountable. It becomes then a shared responsibility between the supervisor and the subordinate. I should require individual development plans from each of my subordinates Again many mangers can point to individuals who might state, or have stated, they are not interested in development. We’ve all encountered people like that. They readily assert that they have no interest in getting promoted; they know their job, they do it well, they simply want to work 9 to 5 and leave the jockeying for positions to someone else. This is precisely why the uni ¬versality of the need for development needs reinforcing. It ought not to be an option. The organization cannot afford to let people maintain that attitude. It is not what we want to people to think of promotion or becoming managers or anything they truly do not want to become, but in order to continue to perform well in the present areas of responsibility, people must keep pace with develop ¬ments in their field. Because no job stays the same, no jobholder can stay the same. â€Å"Future shock† is a concept with which we are all familiar. So much happens in the work developments around us that no job remains the same very long. Hence, if a worker is doing the job the same way he or she did a year ago, that person is less effective, if not completely wrong. Periodic on–the–job coaching is a major part of an individual’s development. The hope here is that the supervisor will feel at home with the statement and its implications. Periodic instruction or assistance on the job is an everyday occurrence. No one will deny the need for giving instruction or assistance on the job to those who need it, and some need it more that others. If we can begin to see this part of the warp and weft of individual development, then the universal change envisioned in these statements will not be so threatening to some. Who evaluates Performance appraisal of the employee should be done by immediate supervisor. The supervisor is the one who is usually in the best position to observe and evaluate his or her subordinates’ performance and he or she is responsible for that person’s performance. References I/O psych text Another approach that can be used is peer appraisals. According to kane and Lawler(1978), three techniques are usually used : (1) Peer nomination- each person nomoinates a specified number of group members as being highest in particular dimension of performance. (2) Peer rating- each group member rates the others on a set of performance dimensions using several kinds of rating scales. 3) Peer ranking- each member ranks all others from the best to worst on one or more performance dimensions. The Appraisal of an employee by his or her peers can be effective in predicting future management success. One problem however is log rolling; that is all the peers simply get together to rate each other highly. Also many group members donot like to evaluate one another, so part of the method hinges on impressing participants with its values. There is also the rating committee which is usually composed of the employees’ immediate supervisors and three or four other supervisors. This type of rating is useful and advantageous because while there may be discrepancies in the rating s made by individual supervisors, the composite ratings tend to be more reliable, fair and valid. Another advantage is that several raters can cancel out problems like bias and the halo effect on the part of the individual rater. Employee evaluation can also be done by employees assessing their own behaviour. This is known as the self assessment technique. The basic problem with this is that employees usually rate themselves higher than they are rated by their supervisors or their peers. Meyer(1980) reorted a study in which engineers rated their own performance against their views of the performance of other engineers in the company. On average, each engineer thought he or she was performing better than 75% of the rest of the engineers in the study. Statically, it is quite a trick to have a 100% of the workforce be in the top 25%b of job performers. This underscores the biggest problem with self- assessment: positive leniency. Most people have higher opinions of their own performance than others do. There is also the other form of appraisal which is appraisal by subordinates, otherwise known as upward feedback. In this situation, subordinates are anonymously asked to evaluate their supervisor’s performance. When this type of appraisal is conducted throughout the firm it really helps the top managers to diagnose management styles, identify potential people problems and take corrective action with individual managers as required. Appraisal may also be conducted through performance feedback from all the persons with whom the employee has to interact; this interaction is referred to as 360-degrwee feedback. The appraisal can take place between coworkers, subordinates, and internal and external customers. The Performance Appraisal Interview and the Coaching Process The appraisal interview is one in which the supervisor and subordinate review the appraisal and make plans to remedy deficiencies and reinforce strengths. For many supervisors the formal performance appraisal interview is one of the most dreaded activities of the role. Of course, supervisors often have no problem evaluating the outstanding performer. The problem is with everyone else. They are put in the position of providing information to a subordinate that often runs contrary to the subordinates own self-evaluation or self-image. This can lead to a number of outcomes that many managers would prefer avoiding. In conducting appraisal interviews effectively there are four major things that supervisors must do in preparation for interview: 1. Spend a lot of time preparing; go over the subordinates performance, your own interactions, the history of the employee; if the employee reports to a number of supervisors, make sure you have input from all relevant sources 2. They must assemble data, study the person’s job description, compare the employee’s performance standards that would be evaluated against, and review the files of the employee’s previous appraisals. 3. Supervisors should also prepare employees, that is , give them at least a week notice to review their work, read over job description, analyze problems and gather their questions and comments so that the interview can be a two-way conversation. 4. A mutually agreeable time should be choosen ofr the interview. Enough time time should also be scheduled for the intertview. Having prepared for the interview there are four important things that supervisors need to cognizant of: ? Supervisors should attempt to be direct and specific all times. They should speak in terms of objective work data such as absences, tardiness, qulit records, inspection reports, productivity records and cost reduction. This is done so that employee is aware of all the areas that he or she is being appraised on. ?The supervisor should also encourage the appraisee to talk. Stop and listen to what the person is saying. The supervisor should ask opened questions such as â€Å" what do you think we can do to improve the situation ? ? Do not get personal. Supervisors should try to compare employees’ performance to given standards and not to othe performance of other people. This can help to avoid confrontation or misunderstanding between the appraiser and appraisee. This also ensures that the person know what they are doing wrong and what they are doing right. The supervisor s hould ensure the persons understands , and get agreement before he or she leaves on how things will be improved and by a give n date . An action plan shoud also be developed showing steps and expected results. Coaching: Some General Guidelines be as specific as possible take advantage of critical incidents-for example after a major project, sit down and reflect with your subordinate about lessons learned identify specific developmental agendas identify resources available to subordinates adapt your coaching style to the individual Link to compensation Many people may argue that a performance appraisal is little more than a tool for managers to use in wringing as much work as possible from individuals without adequately rewarding them. This perception is difficult to deny if you have ever been the victim of such exploitation. Indeed, it must be recognized that a dishonest and secretive performance appraisal system will only exacerbate poor employee relations. However, if employees believe that the system can assist them in furthering their own careers and economic prospects, performance appraisals can actually boost employee morale. Performance appraisals are particularly useful in facilitating equitable decisions about salary if the agency uses a merit pay system as the basis for salary progression. A merit pay system requires a method for translating judgments about work quality into appropriate salary actions. Pay increases of varying sizes must be rationally explained if a merit pay system is not to seem arbitrary. If an organization has an automatic pay system, with scheduled salary increases, performance appraisals will help identify (and justify the termination of) unsatisfactory employees who demoralize others, since they receive the same salary increases as good workers. Recent research (Bannister Balkin, 1990) has reported that appraisees seem to have greater acceptance of the appraisal process, and feel more satisfied with it, when the process is directly linked to rewards. Such findings are a serious challenge to those who feel that appraisal results and reward outcomes must be strictly isolated from each other. Methods for performance appraisal