Performance Management in Organisations - Essay Example

Performance Management in Organisations Performance Management – Objectives – Process – Goal setting – Performance standards – Performanceappraisal – Performance review – Communication – Training– Performance measures for a state secondary school – finance, customer service, product and service management - How, when, and by whom used – how applied – purpose and indicators – management priorities – Performance measures for a haulage firm. Introduction This paper attempts to understand performance management as an important tool for organisational success by taking up its application to two illustrative establishments, namely a state secondary school, and a haulage firm. Effort has also been made to develop suitable performance measures applicable to the finance, customer service, and product and service management wings of these two institutions. What is Performance Management System? An organisation essentially works with and through people to achieve preset goals by operating in a systematic manner according to a well-charted plan. Unplanned behaviour or effort can never lead an individual or organisation in the direction of success. It is the aggregate result of individual performance of assigned tasks by the personnel according to defined goals that achieves success for an organisation. Just as strategic plans are prepared for the organisation as a whole and operational or tactical plans are chalked out for different departments and sections, work objectives or targets need to be set for every staff member. Progress of implementation must be monitored periodically and mid-course corrections initiated in order to achieve the goals. Performance standards need to be first identified and communicated to every employee, and performance indicators established to evaluate individual performance in the assigned areas at the end of the appraisal period. Performance assessment is usually related to reward schemes in most organisations. The whole process is generally known as the Performance Management System (PMS). Objectives of PMS A performance management system primarily aims at developing a comprehensive mechanism that helps in integrating the objectives of individuals, teams, and the organisation itself with a view to monitoring the progress of implementation and achieving the short-term as well as long-term goals according to predetermined plans. It is the responsibility of the management to ensure that the PMS process is aligned to strategic plans and future success of the organisation. At the same time it is also the intention of senior managers to use the PMS tool to improve the individual performance and output of employees while building their capabilities and that of the team. “The overall aim of the appraisal scheme is to maximise individual effectiveness and potential so that employees’ efforts are targeted towards the achievement of company objectives” (CIPD, 2004, 2PM 7.1). Performance appraisal must be tailored as an important activity in an employee’s work life, especially after the period of probation on appointment. Other benefits of a suitable PMS include the following: Define goals and set performance standards and targets of achievement for each employee Enhance efficiency and performance levels of every employee Ensure employees’ job satisfaction and commitment Motivate them to improve their performance and achieve greater success Forge closer bonds between employees and management hierarchy Provide a forum for sharing employees’ concerns, suggestions, and causes of discontent, if any Facilitate identification of training needs and professional development areas for each employee Identify employees’ potential, strengths, and weaknesses, with a view to human resource development Provide incentives through performance-linked rewards and increments Enable better communication between management and staff, and show concern for each other Maintain and update employee profiles including skills, core competencies, potential, etc. Performance Management Process Performance management is a continuous and ongoing process although the appraisal exercise as such is usually conducted at the end of a stipulated review period (academic or financial year-end). A successful PMS will comprise of the following five stages of performance assessment activities: Establishing performance standards Goal setting or target identification Implementation of objectives and action plan Review of performance vis-à-vis objectives Effective communication at all these levels PMS Design Every organisation must design a suitable PMS that suits the job profiles, core competencies, and performance goals of different categories of its employees. Core competencies generally have relevance to the entire organisation while generic competencies apply to a collective group of similar tasks. As for an individual employee’s role, what needs to be assessed is his/her role-specific competencies. As recommended by CIPD (2004, 2PM 4), the design of an effective PMS process will also take into consideration the following essential steps: A comprehensive organisational review for adopting an ideal approach in performance evaluation that suits its nature, structure, work culture and technological profile Outline a policy statement on the objectives of the scheme Invite and embody strategic ideas from senior management staff Develop and deploy competency frameworks to act as a reference point for performance Specify the objectives, scope, process, and applicability of the appraisal scheme Incorporate the benefits of the scheme intended for individual employees and organisation Get managers, stakeholders, and employees involved in the process of designing and implementation of PMS Provide suitable forums for consultations and communication relating to key organisational objectives and employee performance standards Consider compliance and conformity issues on legal and regulatory provisions concerning work and performance in general and prevention of unfair or discriminatory practices in particular Develop, design, and disseminate a suitable PMS that enables employees to recognise and achieve their work targets, and managers to assess and review performance, and to give interim as well as formal feedback to employees De-link disciplinary procedures from the impacts of unsatisfactory performance to the extent possible, and advocate positive and motivational methods to improve performance Ensure that the performance appraisal process is fair, open, and consistent Incorporate a suitable procedure for appeals and review in case of complaints relating to poor performance Provide performance appraisal training to managers and staff, and give them simple guideline booklets Have the PMS process evaluated periodically to fine tune and remove anomalies, if any. Goal Setting It is essential to identify and agree upon objectives in consultation with the employee concerned. This would help ensure that the employee, being a co-partner in goal setting, willingly accepts the targets to be achieved, and thereby is fully committed to work towards attaining those objectives. Setting of goals must be earnestly taken up as a constructive exercise, and reviewed from time to time. What is more important is that the set objectives are specific, realistic and attainable. Targets must also be measurable in terms of quantity, quality, cost, value, or time. Goal setting is the starting point in a well-designed PMS. Performance Standards No measurement is possible unless the employee and supervisor are well aware of the performance standards expected of the employee. Performance standards are evolved from the basic job analysis and work specifications of an employee, and communicated in advance. Performance appraisal exercises evaluate an employee’s output and performance during the review period by matching it against the performance standards previously set for him/her. Ongoing and final appraisals help in identifying the strengths and weaknesses of an employee, and shortfalls in achieving objectives. Performance Appraisal Once performance standards have been identified and objectives set, managing of performance can be carried forward through a system of periodic appraisals. Appraisals can be either ongoing (conducted on-the-job at random intervals) or formal (done at the end of the review period, normally annual or half-yearly). Three main groups of appraisal schemes are usually applied in performance management schemes: performance reviews; potential reviews; and reward reviews (CIPD, 2004, 2PM 3.4). Performance reviews are done through a process of discussions between employees and supervisors concerning the progress of implementation, current performance, and the scope for improvement or correction. Potential reviews aim at exploring developmental needs, career progression avenues, and future work potential of employees. Reward reviews are better held separately at a later date. Performance Reviews Usually performance appraisal interviews are scheduled about a fortnight in advance, and the employee is given an assessment sheet that he fills in and returns prior to the meeting. The meeting should be held in a very informal and facilitating environment so that the employee feels at ease to share his views on difference performance areas. The reviewer also explains the rating definitions and together they discuss each item of performance on the appraisal sheet, and agree on ratings. In case of disagreement, the employee must be given cogent reasons along with clear examples so that he understands his shortfalls and scope for improvement. In consultation with the employee, goals may be redefined and summarised. Albrecht (2004, p. 41) suggests certain questions that can be asked during a performance appraisal interview: “How do you feel about the appraisal discussion?”; “What can I do to help you do your job better?” However, questions that should not be asked include: “You should. . .”; “If you could only . . .”; “I told you before”; “No one but you has this problem”; “I don’t have time”; “I can’t understand.” Performance Appraisal Schemes Modern day organisations are increasing using advanced performance management schemes that forge a closer link between employee objectives and organisational goals. As Kanter (1984, p. 57) observed, “new performance appraisal systems, with ratings that both supervisor and employee must sign, and with third party review (perhaps by a personnel staffer), protect the worker against an arbitrary exercise of hidden authority by the boss. And leave the boss who does not understand participative management out in left field.” This participative method of performance appraisal has eventually evolved into the 360-degree appraisal scheme, which is increasingly being touted as “an exciting development in the area of performance management” (CIPD, 2PM 3.4). The 360-degree performance appraisal scheme has uprooted the conventional top-down approach where a supervisor evaluates a subordinate staff, leaving much scope for subjective and unfair assessments. In the 360-degree process, various stakeholders including the employee’s manager, colleagues, team members, and even external clients, are given an opportunity to send in feedback evaluating the employee’s performance. It thereby becomes a wholesome and objective scheme that leaves little room for discriminatory assessments. As an improved appraisal scheme, this method also relies upon objective setting and competency frameworks for arriving at an objective assessment of performance. Competencies are of three kinds: core competencies that “apply to the organisation as a whole”; generic competencies that are “shared by a group of similar jobs”; and role-specific competencies that are “unique to a particular role.”(CIPD, 2 PM 3.4). Irrespective of the type of appraisal being adopted, the process would invariably involve a stage of preparation by both the employee and the supervisor, followed by discussion and sharing of feedback, and ending with a final review and redefining of objectives, performance parameters, and developmental needs. In particular, the appraisal discussion should look at past performance as well as ongoing and future performance. It must be noted that due consideration ought to be given to circumstances beyond the control of an employee that might have resulted in any shortfall in achieving predetermined targets of work. Sharing of constructive feedback by the supervisor is a key element that promotes objectivity and improved performance. This needs to become a part of the workaday schedules in order to make the PMS truly effective. Communication Effective and timely communication by all stakeholders (managers, employees, supervisors, clients, et al) holds the key to a successful performance management system. The management must first be convinced about the benefits and role of a PMS in the organisation, define the purpose of PMS, identify and set objectives in consultation with employees, establish policies and procedures, share information, and finally assess the quality of implementation. These processes need to be aligned with the business plan and goals of the organisation. Dissemination of information can be done through a variety of means such as meetings and interviews, brochures and pamphlets, excerpts in employee pay slips, team briefing sessions, training forums, and focus groups (CIPD, 2004, 2PM 3.1). Training Employees need to be trained in the purpose and process of performance management in order to appreciate its benefits as a developmental tool, and to willingly participate in the appraisal exercises. This would also help them to identify their strengths and weaknesses, and possible ways and means to improve their performance. Understanding of the appraisal scheme by employees can make the process much easier to implement and review. PMS in a State Secondary School The School A state secondary school is engaged in the pursuit of imparting education to a group of students. The institution’s primary mission and goal is to design, develop and deliver the curriculum in the most effective manner with a view to transforming the pupils into holistic personalities equipped with a variety of knowledge inputs to face the world with confidence and courage. The following assumptions are being made: The school has a number of staff in different areas of work that include teachers, administrative staff, and finance hands. As for customer services, there is one Customer Relations Associate who also acts as the receptionist. Performance measures need to be developed for the following personnel: Teachers Manager/ Administration Finance Associate Customer Relations Associate Application The Head Teacher is at the top of the school management structure. The Manager/Administration is the supervisor for Finance Associate, and Customer Relations Associate. The performance appraisal review period is annual, based on academic year, which coincides with the calendar year. Goal setting exercise is done in the month of January, and final appraisal review is done in December. A mid-term appraisal review is undertaken in end-June. The appraisal scheme is conventional, with the supervisor initiating the appraisal by filling in comments and rating, and reviewed by the Head Teacher. In the case of Manager/Administration, he writes a self-appraisal, and the Head Teacher reviews and endorses it. The process is through appraisal meeting and interview. It is fair and transparent. The rating scales are as under: 5 - Outstanding 4 - Good 3 - Average 2 - Below Standard 1 - Unsatisfactory Performance measures for Teachers Performance standards and competency framework for teachers mostly relate to their academic knowledge and communication skills, apart from ability to prepare their lesson plans and to deliver them. Behavioural attitudes, punctuality, quality of teaching, number of classes handled, etc., would be other parameters. A performance appraisal sheet is drawn up below, indicating all these performance measures. Performance Appraisal Form for Teachers S. No. Performance Field Description/Attributes 1 2 3 4 5 1 Knowledge Academic and professional knowledge, awareness 2 Communication skills Eloquence, carriage, language and interactive skills, question and answers, 3 Planning & preparation Quality of lesson plans, preparation, tying in and out 4 Cooperative attitude Ability to instil confidence and trust, helpful attitude 5 Quality of work Ability to produce accurate work with minimal errors 6 Volume of work Delivers substantial work in a given time-frame 7 Time Management Punctuality, scheduling, monitoring, and completion 8 Competence Completion of tasks pertaining to the job profile 9 Team Building Ability to coordinate and work in teams 10 Teaching Aids Keen to learn and adapt technology and innovation in teaching and training aids Performance measures for Manager/ Administration The job profile of the Manager/ Administration would mainly relate to managerial, operational, administrative, and decision-making skills, combined with a clear ability to effectively communicate and coordinate with various categories of people. Performance Appraisal Form for Manager/ Administration S. No. Performance Field Description/Attributes 1 2 3 4 5 1 Professional knowledge Professional knowledge, awareness, managerial skills 2 Communication Verbal and non-verbal communication skills, listening and interactive skills 3 Planning Planning activities, procurement, supplies, support services, etc. 4 Cost control Cost-effectiveness in operations and administration 5 Quality of work Ability to produce accurate work with minimal errors 6 Coordination Coordinates various operations involving different agencies and people 7 Time Management Punctuality, scheduling, monitoring, and completion 8 Competence Completion of tasks pertaining to the job profile 9 Team Building Ability to coordinate and work in teams 10 Decision making Ability to make correct and timely decisions both independently or in consultation with the Head Teacher Performance measures for Finance Associate The Finance Associate is required to assist the school management in planning, budgeting, accounting, and cost control apart from payment of salaries, settlement of taxes wherever applicable etc. He/she needs to perform tasks with meticulous precision and accuracy in accordance with long-term and short-term financial goals, and must properly advise the management in all financial matters. Performance Appraisal Form for Finance Associate S. No. Performance Field Description/Attributes 1 2 3 4 5 1 Professional Professional knowledge and skills relating to finance and accounting 2 Budgeting Preparation of budget in consultation with management and other stakeholders, review, and management of funds 3 Planning Planning and allocating budgetary support and funds for various activities of the school 4 Cost control Monitoring cost control and budget utilisation by different departments 5 Quality of work Ability to produce accurate work with minimal errors 6 Coordination Coordinates various financial operations involving different agencies and people 7 Time Management Punctuality, scheduling, monitoring, and review 8 Competence Completion of tasks pertaining to the job profile 9 Accounting Proper accounting and maintenance of books and records 10 Records & Auditing Accuracy in maintaining records, and facilitating proper audit of funds and accounts Performance measures for Customer Relationship Associate His/her job involves proper reception and response to parents, wards, customers and other clients or visitors who come to the school for various purposes. Pleasant manners, deportment, politeness, responsiveness, and excellent communication skills are essential performance indicators for this post. Performance Appraisal Form for Customer Relationship Associate S. No. Performance Field Description/Attributes 1 2 3 4 5 1 Communication Written and spoken language skills, effective communication, courtesy, interaction, phone answering 2 Responsiveness A helpful, positive, and responsive attitude 3 Awareness Knowledge and awareness about the school activities, curriculum, staff, history, and other facilities 4 Cooperation Team approach and ability to cooperate; ethical and professional dispensation 5 Quality of work Ability to produce accurate work with minimal errors Volume of work Delivers substantial work in a given time-frame 6 Coordination Coordinates with different agencies and people 7 Time Management Punctuality, scheduling, monitoring, and follow-up 8 Competence Completion of tasks pertaining to the job profile 9 Counselling Ability to correctly guide and counsel students, parents, wards, visitors, clients 10 Adaptability Flexible and adaptable to a variety of situations, events, and people PMS for a Haulage Firm It is assumed that this small haulage firm with a fleet of 50 large trucks is headed by a Chief Manager, and assisted by a Manager/Operations. The following personnel report to the Manager/Operations: Finance Associate Marketing Associate Customer Relationship Associate Drivers are outsourced from a contracting company; as such performance appraisal is not conducted for them. The application of the PMS is as it was done in the case of the secondary school. The Manager/Operations is responsible for supervising marketing, products, and customer services management. He is the supervisor for Finance Associate, Marketing Associate, and Customer Relationship Associate. The process and review period are similar to that of the secondary school. Performance Measurement Performance measurement for Manager/Administration, Finance Associate, and Customer Relationship Associate are the same as in the case of the secondary school, with minor changes with regard to the composition of the agencies and people with whom he/she interacts. For instance, in this firm, parents, students, and teachers do not figure. Instead, they will be replaced by customers and clients, consignees and consignors. As such the performance indicators applicable to the Marketing Associate alone is being developed below: Performance measurement for Marketing Associate S. No. Performance Field Description/Attributes 1 2 3 4 5 1 Communication Written and spoken language skills, effective communication, interaction, tact, relationship skills 2 Responsiveness A helpful, positive, and responsive attitude 3 Business aptitude A flair for marketing, booking orders, and follow-up 4 5 Quality of work Ability to produce sales figures as per monthly/annual targets, manage inventory, track consignments Volume of work Delivers substantial work in a given time-frame 6 Coordination Coordinates with different agencies and people 7 Time Management Punctuality, scheduling, monitoring, and follow-up 8 Competence Completion of tasks pertaining to the job profile 9 Cost Control Cost-effectiveness in marketing and sales operations 10 Flexibility Flexible and adaptable to a variety of situations, events, and people Conclusion In the age of the knowledge worker, as Pottruck and Pearce (2002, p. 167) suggested, there is a need to become proactive and innovative in order to enhance performance. “Until recently, performance measurement and compensation have been linked to produce results. Now, as cycle times for products shorten, and as the need for innovation grows, both measurement and compensation need to be reformulated to inspire commitment” (2001). An effective performance management system enables an organisation to set targets, monitor implementation, and evaluate the performance of its employees. It provides a platform to the management for communicating with employees in order to evolve ways and means to increase productivity and efficiency of the organisation as a whole. A success PMS facilitates effective dialogue between employee and supervisor to enhance individual performance. In particular, it gives managers and supervisors opportunities for giving positive reinforcement to employees. In order to be effective and acceptable, performance appraisals should be fair, open, and positive with developmental objectives. References CIPD. (2004). Performance management. CIPD Policies and procedures for People Managers. London: Chartered Institute of Personnel and Development. Albrecht, P.M., & Albrecht, R.C.E. (2004). Job analysis and performance standards. Fundamentals of Human Resources. American Management Association (e.approach). Kanter, R.M. (1984). The Change Masters. New York: Touchstone. Pottruck, D.S., & Pearce, T. (2001). Clicks and Mortar. San Francisco: Jossey-Bass. * * * * Read More