Fundamentals of Performance Measurement Systems and Ghana Commercial Bank - Assignment Example

Introduction The performance measurement system is a system by which a company manages its performance, in line with its objectives and strategies (Bititci, et al., 1997, p. 524). “It can play an important role in focusing people and resources on particular aspects of a business” (Waggoner et al., 1999, p. 54). The five main reasons that performance measurement systems are put into place are that organisational performance must be monitored; areas that need attention must be identified; motivation must be enhanced; and accountability needs to be strengthened (Waggoner et al., 1999, p. 54). There are a number of frameworks that can be used in developing a performance measurement system, and this paper explains a few of these frameworks. Also explained are the basics of performance measurement systems, how to evaluate performance measurement systems, some of the challenges facing performance measurement systems and a case study applying the fundamentals of performance measurement systems to the health care system in the United States. Fundamentals of Performance Measurement Systems A performance measurement system is comprised of key elements that include “1) a set of procedures for collecting and processing data; 2) timetables and protocols for distributing information about performance to users within and outside the organisation; 3) an organisational learning mechanism to identify what actions can be taken to further improve performance; and 4) a review process which ensures that the performance measurement system itself is regularly updated” (Waggoner et al., 1999, p. 55). The process provides a closed loop, where business strategies are delineated for all business processes and activities, and the performance measurement system provides feedback that enables management to make appropriate decisions (Bititci, et al., 1997, p. 524). In the process, the performance measurement system aids an organization in using various systems, such as “strategy development and review; management accounting; management by objectives; non-financial performance measures – informal; non-financial performance measures – formal; incentive/bonus scheme; and personnel appraisal and review (Bititci, et al., 1997, p. 524). Connecting the feedback with the organisational goals is the performance measurement system, which integrates “all relevant information from the relevant systems” (Bititci, et al., 1997, p. 524), and facilitates the tactical and strategic objectives of the company, along with providing “a structured framework to allow the relevant information to feed back to the appropriate points to facilitate the decision and control process” (Bititci, et. al., 1997, p. 525). The performance measurement system takes into account the companys goals, and relates them to environmental and strategic factors that are related to the business, as well as examining how the organisation is structured, along with its “processes, functions and their relationships” (Bititici, et al., 1997, p. 525). Since environmental and strategic factors are constantly changing, the performance measurement system must be dynamic. The factors that must be examined in terms of how dynamic the process is for a given organisation are “1) the factors that tend to encourage managers to introduce new performance measures; 2) the factors that tend to inhibit managers from introducing new performance measures; 3) the factors that tend to encourage managers to delete obsolete performance measures; 4) the factors that tend to encourage managers not to delete performance measures; and 5) the relationship, if one exists, between the aforementioned set of factors” (Waggoner et al., 1999, p. 55). 1.2 Sosland Publishing Group The Sosland Publishing Group is a publishing company in the Midwest who publishes industry guides for the milling, baking and grain directories in the region. 1.3 Job titles and reporting relationships of respondents Respondent 1: Job title: Proofreader Reporting Relationship: Reports to immediate supervisor. Respondent 2: Designer Reporting Relationship: Reports to managing editor. 2.0 Methodology The respondents who were selected were lower-level employees. Questionnaires were developed and given to the respondents. After filling out the questionnaires, a follow-up interview was scheduled with each respondent, so that the opinions about the company’s performance management system could be ascertained. The respondents were assured of total anonymity. 3.0 Performance management system of Sosland Publishing In this particular organization, the individuals at the lower levels are not provided job descriptions formally. Therefore, the following descriptions rely upon what the respondents state are their day to day tasks. 3.1 Job description of respondents Respondent 1 Position: Proofreader Activities: Work with immediate supervisor on various publications. Proofreading various publications for accuracy and spelling. If there is a question regarding a particular aspect of the publication, such as the spelling of a person’s name or the number of employees a particular organization has, then this person’s job is to call that company and find out the accurate information. Publication rough draft is compared to final product, proofreader makes sure that final product has no typos or other inaccuracies. Data entry. Respondent 2 Position: Designer Designs layouts for the publications, including typefaces, positioning, and graphics. Works with managing editor on these decisions. 3.2 The Performance Appraisal Process The employees go through a formal appraisal annually, and go through informal appraisals quarterly or as needed. Informal appraisal Informal appraisal consists of the immediate supervisor meeting with the individual to assess how things are going. It is basically an open forum where the supervisor can get feedback from the employee about any problems that employee is having, and brainstorm how to overcome these difficulties. At the same time, the employee gets feedback from the supervisor about his or her job performance, and what are the areas of weakness that might need to be addressed. The employees’ goals are discussed, as well as a plan to help the employee reach these objectives. If the employee has been on the job for less than one year, the appraisals occur quarterly, as newer employees are still on the learning curve and might be experiencing difficulties. More senior employees, or those on the job more than one year, have these appraisals on an as-needed basis. This evaluation can occur at either the request of the employee, if that employee needs assistance with some aspect of his or her job, or at the request of the supervisor, if the supervisor sees a weakness that should be addressed. For many employees, there are no informal evaluations, and the end of year evaluations are the only performance appraisal they get. Other employees go through informal evaluations once or twice a year. These informal meetings are generally for the lower-level employee, ie, the non-managerial employees. The follow-up on these informal meetings consists of both the supervisor and the employee filling out a form that indicates whether the problems have been resolved, and these forms are submitted to, and evaluated by, the manager who is directly above the supervisor and the employee. Formal appraisal This is a yearly evaluation that is formal and consists of a rating on 8 points, with a one to five scale. The form is filled out by the immediate supervisor, as this is the person who has the most day to day contact with the employee. Then the supervisor and the employee meet to discuss the ratings. Moreover, the appraisal goes both ways – the employee rates the supervisor. After meeting to talk about these appraisals, both forms are submitted to the manager who is charge of the team that the supervisor and employee are a part of. The factors that the supervisor rates the employee include: Work quality. Attendance. How well the person gets along with other members of the team. Knowledge of the job. Ability to communicate. Policy compliance. How quickly the person is in project turnarounds. Ability to meet deadlines. The second part of the evaluation concerns performance objectives. Specific objectives are outlined on the form, and the supervisor evaluates how well the employee is meeting these objectives. If the employee is having difficulty meeting the particular objective, then the employee and supervisor brainstorm on ways that the employee can be assisted so that he or she can meet the objective at hand. A follow-up is scheduled for three months hence to ascertain how the assistance is working in helping the employee meet the objective, and how the employee him or herself is doing in meeting the objective. The factors on which the employee rates the supervisor include: How well the supervisor communicates with employee about what is expected. How responsive the supervisor is to the employee when the employee has problems. How clear the supervisor is about the specific tasks that need to be done. How well of a leader the supervisor is. How well goals and objectives are transmitted to the employee. The employee evaluation on the usefulness of the different objectives. The employee’s evaluation on how the supervisor has helped the employee meet objectives. After both appraisal forms are filled out, and the supervisor and employee have a meeting about each other’s strengths and weaknesses, each individual is allowed to disagree or agree with each rating, then express why they either agree or disagree. The forms are then turned in to the manager of the team, with the employee and supervisor’s comments about whether they disagree or agree with each assessment. If further action is warranted, the form is also turned over the human resource department. 3.3 Research Findings 1. Job descriptions There are no job descriptions that given to the employees, per se, however, the job descriptions are obvious because of the day to day activities these employees do. Therefore, it is not a problem that there are no formal job descriptions for the employees. It only becomes a problem when something out of the ordinary is requested of the employee. For instance, the proofreader was once asked to pick up dry cleaning for one of the executives who did not have time to do this himself. However, the employee indicated that this task was actually a welcome break from the daily grind, so she did not mind this. Others might mind this, however, and this would be a problem because it is not a part of the usual routine of what these employees do, and if they had a job description they would know that running personal errands is not one of the things that is required of them. 2. Performance Objectives Performance objectives are both a part of the informal process and the formal process of evaluating. On the informal level, the supervisor meets with the employees to discuss goals. On the formal level, the supervisor and employee both put ratings to how well the objectives are being accomplished, how well they are communicated, how well assistance has been in helping the employee meet objectives, and how well the employee him or herself has met these objectives. The only weakness in this project is that the organization’s vision is not concretely shared with the employee and the supervisor. While both the employee and the supervisor are aware of the organization’s vision, as it is in the handbook that is passed out to the employees, the vision is not reinforced, so the employees basically forget about it. Therefore, it is difficult for the employees to tell if their objectives are in line with the company’s vision, therefore it is difficult to ascertain if they are helping the company in realizing its vision. The employees also seem not to realize that, while they may be cogs in a wheel, they are as important as any other employee in helping the company realize its vision, and they seem not to realize that their performance level on day to day tasks has an impact on the organization as a whole. 3. Performance Standards The performance standards are issued from the team leader for each member of the team. Included in these standards are the individual goals and objectives for each employee. Therefore, the standards are properly delineated and the employee can know what his or her weakness is in relation to the overall standard. 4. Merit Rating The problem with the system is that the employee is afraid to be honest about the supervisor when rating the supervisor, for obvious reasons. The supervisor is similarly afraid to be honest about the employee. If the employee and supervisor get along and are friendly, then a negative evaluation would have a negative impact on the relationships. If the two are at odds, then a negative evaluation on either or both sides will just add fuel to the fire. Moreover, the ratings are subjective, as they are the opinion of the party involved. 5. Feedback The system of feedback is excellent. The supervisor and the employee both get a chance to meet about their evaluations, and brainstorm for ideas about how to improve. The team manager only gets involved if there is a dispute between the supervisor and employee about the evaluations, and the team manager essentially is a mediator of the process, swearing to be objective and favor neither side. Therefore, most issues get worked out, as the supervisor is able to communicate with the employee about what is expected, and vice versa. The only issue is when there is some kind of strain on the relationship between the supervisor and employee. Perhaps one or both are not good at communicating, one or both are passive aggressive about evaluating the other, one or both are intimidated and do not tell the truth, etc. In these situations, the team leader must evaluate what is going on and make recommendations him or herself. 6. Performance Appraisal Process The employees indicate that they are grateful to have a voice in the process, as they not only get a chance to defend negative reviews, but they get to review the supervisor as well. They indicated that they previously worked for companies where this would not happen, and the evaluation was one-sided only. Therefore, if they had an unreasonable boss, there was no recourse and the boss would never know. This way, the boss knows what the employee thinks, and what needs to be improved. Beyond this, the employees indicate that they would like a mentor to help them navigate the difficulties of the job. Since part of navigating difficulties involves venting about the difficult parts of the job, the mentor should be objective and somebody not directly associated with the company. 7. Employee participation As indicated above, the employees feel grateful to have a voice in the appraisal. While it is not always easy to use this voice, for fear of reprisals, the fact that they have this platform is encouraging for the employees and makes the process more egalitarian. It also signals to the employee that the organization cares about his or her feelings, and that, just because they are a low level employee, they are important to the organization and their satisfaction is important. So, even if the employee feels intimidated and does not give an honest evaluation, they still appreciate the gesture. 8. Performance Rewards The employees do not indicate that there are any awards available, per se. They are aware that promotions are available, and that this organization generally hires from within when new positions become available. Therefore, this is an incentive. But there are no other rewards that are attached to these evaluations. The employees do indicate that they get a bonus once a year. The bonus is based upon how well the company did that year, and is generally a percentage of the person’s salary. For instance, on good years, the percentage is higher, and the bonus might be up to 7% of the person’s salary. On bad years, when the revenues are lower, the bonus is only 1-3% of the salary. However, these bonuses are not based upon merit or performance, but are, rather, an across the board bonus that each employee gets regardless of how well he or she does for that year. Therefore, the bonus cannot be considered to be an incentivizer. 4.0 Factors influencing performance 1. Interpersonal relationships – how well the supervisor and employee get along is crucial for how well the evaluation process goes. It also can negatively or positively affect the performance on both sides. 2. Corporate culture – the culture of this organization is healthy and encourages growth, as all employees feel that they are given a voice and a chance to succeed. The culture encourages innovation, moreover, as the every employee is given a chance to voice what needs improvement in the organization. These recommendations are not always implemented, but the employees have a chance to make them. 3. Skills and training- the employees indicate that the organization is interested in helping them hone their skills that are needed for the job. They are sent on retreats on a semi-annual basis, where an entire team goes on a team-building retreat at a hotel. Sometimes the hotel is located out of town, so that the retreat serves the dual purpose of being a reward and building the team. Other times the hotel is located within the city, but the employees generally enjoy these retreats all the same and indicate that they are very helpful in cohering the team together. Employees are also encouraged to seek additional training, at the company’s expense, and this training is also sometimes held out of town. 4. Bonuses not based upon merit – the employees do indicate that they would like the chance to earn more of a bonus if they do particularly well in meeting objectives. It is frustrating for them that people who do not work as hard as they get the same kind of bonus. 5. Lack of vision – the corporate vision is not instilled in the employees, therefore they do not know if their individual performances are contributing to the overall vision of the organization. 5.0 Recommendations There are many things that are right about this organization. The chief things is that it goes out of its way to insure that all employees feel important. The employees indicate that they appreciate the organization allowing them a voice in the evaluation process, even if they do not use it to the best advantage. So, this is an aspect that is definitely working. One area that is working is the leadership style that is fostered by the organization. It is clear that the leadership style encouraged by this organization is that of a democratic leader. A democratic leader facilitates conversations, and the staff is encouraged to share ideas and bring forth individual views and debate these ideas. Consensus building is a hallmark of this leadership, as solutions often come through consensus. All members talents are brought forth and encouraged. The team that is most advantageous to this type of leadership is a team that is composed of bright, talented, professional and motivated team members (Eagly & Johnson, 1990). One potential pitfall is that there is not a job description for the employees. This is that there is not a job description for the employees. While it is true that the employees know their jobs and what they entail, there still should be a job description, according to Armstrong (2006). Armstrong believes that a job description is essential for performance management. This is because the basis of performance management are role requirements (Armstrong, 2006, p. 4). If one does not have a good idea of ones role requirement, then it would be difficult to analyze performance management in a meaningful way. Therefore, the biggest recommendation would be to institute a job description for each employee, so that each employee knows his or her role requirement. Another potential pitfall is that the organizational vision is not instilled in the employees. It seems that the organizational vision is simply transmitted to employees and there is no effort to really get the employees on board. The employees should be encouraged to get on board and help create a shared vision. Creating a shared vision is important. A shared vision is one that the leader envisions, and every follower envisions the same thing. Each person in the organization has a picture in their heads about this vision, and this vision is in their hearts, a part of each and every person. Each person cares about this vision, and desire to be connected to everybody else in carrying out this vision. In other words, it is not just the leader conjuring up a vision for the organization, and transmitting the vision, essentially imposing his vision on others. It is the leader transmitting this vision in such a way that every member of the organization has the same vision, therefore will be truly committed to make the vision happen (Senge, 1990, p. 206). How this shared vision comes into being, along with ideas on making this happen that are the ideas of other researchers and writers, is the topic of this paper. Simply transmitting the vision to others does nothing to promote their own personal vision. Promoting the personal vision of the organizations members requires testing and inquiry. It also entails the leader asking for help from the members of his organization who are under him. This makes people invested in the vision, and feel like they own a piece of it (Senge, 1990, p. 213-214). It also enables organization members to give their ideas, that gives the potential to have vision bubbling up from the bottom up. Senge states that visions die prematurely because they never take root, due to growth limits. The vision spreads through reinforcement of communication, commitment, enthusiasm and clarity. The vision spreads through people talking, and, through talking, the vision becomes more clear and this helps enthusiasm spread as well. If this process is allowed to continue unfettered, it would result in the vision becoming clear to the organizations members, which fosters enthusiasm, and more clarity, until the whole organization has the same shared vision (Senge, 1990, p. 227). First and foremost, employees must be encouraged to give their ideas and feedback on the organization and the organization must let them know that their ideas are valuable. This may be in the form of management encouraging employees to speak their minds through employee meetings or suggestion boxes, or perhaps holding a contest for the best employee idea. This has two advantages – number one, the employees become invested in the organizations vision, because they are encouraged to give their ideas, and this will make them feel important and valued. Number two, it helps the organization, because one never knows where the next great idea might come from. An employee just might have an idea that will help with innovation or spurring the company into the right direction at the right time. Also, to understand organizational dynamics, group theory would be helpful. This is helpful because, in order to transmit shared vision, one must understand basic theory as to why people act the way that they do within the confines of the group. After understanding the basic concepts, the shared vision of the company can be transmitted by infecting each individual group with the shared vision, and letting the shared vision be transmitted group by group. Bruce Tuckman introduced group theory in 1965, stating that every group goes through four processes – forming, in which the group is oriented and formed; storming, in which intragroup conflict emerges; norming, in which the group settles in to form a cohesive whole; and performing, in which the group works on and completes the task around which the group was formed (Tuckman & Jensen, 1977, p. 419). There are theories as to how best to accomplish the performing element. One is a concept of group awareness, which states that individual group members must have information about one another, about their goals and about the development of the group in order to achieve peak efficiency (Oemig et al.). Another states that the similarity between group members aids in task efficiency, mainly because, the more similar people are, the more they think alike and the less likely there will be conflict that will slow down the task (Civettini, 2007, p. 264). There is also theories about accommodating new members of the group. According to Hingst (2006), it is most advantageous to introduce new members during the first three phases, as this represents the time when the group is coming together and would be most able to accommodate a new member. However, once the group gets to the performing stage, it would be more difficult to accommodate a new member because this would lead to a reduction of group cohesiveness (Hingst, 2006). Related to this theory is the theory put forth by Wright (2010), which states that there are phases that each group goes through, which marks how the members interact with one another through time. In the beginning, the group is marked by the individuals fears and anxiety about the group, which is related to Rothwells emotional group culture. These fears and anxieties are based upon the fear of rejection from other group members, and it is up to the leaders to facilitate each individual members entrance into the group. Individual members may feel that perhaps the group will not accept them, or accept their views; that perhaps they are not good enough at the given activity, and that others will be better than they are; and that there may be unwanted competition. These fears may be allayed by making sure that each group member works at the same competency, and that competitiveness, skill demand and instruction complexity are minimized (Wright, 2010, p. 211). The middle phase of the group is where the group settles in and becomes more comfortable with one another, and they become emotionally invested in the group. The individuals settle into status and roles within the group. Each member has a better idea of his or her place within the group, and each individual member feels more confident to individualize him or herself – whereas at the beginning of the group, the members felt a need to be similar to one another, in the middle, differences are celebrated. The individual group members bond by sharing personal information that they would not have shared before. Opinions are given more freely (Wright, 2010, p. 214). The last stage of the group is marked by a return of insecurities and fears, only now these insecurities and fears are coalesced around the feeling that the group is ending, and the ambivalence that is felt when this is at hand. It is also marked by openness in communication, presumably because the group is coming to an end, so the members may feel able to speak more freely. This openness may result in tension, regression and fights (Wright, 2010, p. 207). The ending of the group may be made more harmonious by emphasizing the fact that the members are free to express their ambivalence about the group ending, and to talk about how the group changed them (Wright, 2010, p. 221). Through understanding these dynamics, the organizational leader can better implement his plans for a shared vision for the organization. He has to understand that people often operate out of fear, which is what might make them less likely to accept the shared vision or might come off as non-compliant. Understanding this fear and tension is helpful in combating the problem and getting everybody on board. For instance, every small group within the organization should have one person who is designated to assuage fears and help all new member acclimate. This person should be somebody who is well-liked and personable, so that the person has a great deal of social status within the organization. He or she should take all new hires under his or her wing, and make sure that the new hires meet everybody and feel comfortable in their new surroundings. Also, because group awareness is important in achieving peak efficiency, the individual members of the small groups within the organization need to have certain information about one another – what the others goals are, as much personal information as they are willing to give to one another should also be encouraged. This can be accomplished by ensuring that the team meets once a month or so for some kind of team-building exercise. There is also some benefit to grouping like people together, in that they become more efficient, but this is less important in the context of shared vision building. , the leader must know how to facilitate and accommodate new people into each group, so that the group does not become disrupted and inharmonious. Different strategies for this should be developed. All of this is important in making sure that the groups within the organization come together as a cohesive unit. In this way, when groups become close and cohesive, shared vision can take root in each individual group. As each group becomes “infected” with the shared vision of the company, that group can transmit the shared vision to other groups. This can be facilitated by maybe transferring group members around to different groups so that these members can help the other groups get on board with the shared vision. The shared vision can then be transmitted, throughout the organization, group by group, team by team. At the same time, a cohesive group provides a platform for generating new ideas and visions that the individuals share that may become a part of the organizations visions as well. Groups need to encourage individual ideas, and they can hold a meeting once a week to ascertain new ideas and to reiterate what the overall company vision is. Cohesion will aid in this, as perhaps the group, as a whole, can come up with a new idea that can be incorporated into the shared vision of the organization. It is only after working with the group dynamics, and finding ways to overcome potential problems within a group can this even be possible. Sources Used Bititci, Umit and Trevor Turner. “Dynamics of Performance Measurement Systems.” International Journal of Operations and Production Management 20.6 (2000): 692-704. Bititci, Umit, Allan S. 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