Performance Management Project - Essay Example

Performance Management Executive Summary Performance Management has become an integral part of today’s competitive business environment. For business graduates, it has become essential to understand basic principles of Performance Management. In the report of Performance Management, an overall discussion will be done about the core concepts of performance management. After that, a distinction between performance management and performance appraisal will be done in a comprehensive manner. In today’s vast changing business environment, it is essential to acknowledge the importance of performance management, therefore the importance of Performance Management System (PMS) in today’s HR department will also be discussed. Performance management systems are not built out of the blue. In fact, there is always some basis of establishing the system of performance management. Policies of performance management comprise immensely on the internal structure of the organization. The entire formation of the policies of PMS is based upon the structure, requirements, position and condition of the organization and its employees. A performance management system is vital because it benefits the organization in ensuring that the day to day activities of the organization and its employees are aligned with the goals and objectives of the organization. Performance management system not only benefits the organization but it also benefits the employees by providing them with continuous feedback about their performance and also provides them with the opportunities to enhance their performance. The most critical aspect which had been overlooked is that not only achievement of goal is crucial but how the goals are attained is equally considerable as it reflects the element of Corporate Social Responsibility. The idea that implementation of PMS will immediately improve the employee’s performance is quite unrealistic. To obtain the full potential benefits of performance management system, the organizations needs to invest with resources so that managers and employee own that system, otherwise the system will be treated as obligatory activity and neither the organization nor the employees will enjoy the benefits of this system. Any PMS will cannot be complete or perfect and when the organizations evolve, their PMS must also evolve accordingly. This report will evaluate some common issues related to the system of performance management and will also provide recommendation about how the PMS can be implemented effectively. Introduction to Performance Management System Generally, performance management is the procedure to evaluate the past performance of the employees. If the performance of employees is worthwhile, then they are offered bonuses and pay rise, on the other hand if there results some issues with the performance of employees then they are assigned training plans and other initial requirements. PMS has much broader scope then general performance evaluation systems. It evaluates the performance of employees on continuous basis such as continual feedback. Certain characteristics of PMS include: Aligning the employees performance with the mission, vision, values and goals of the organization Providing employees with a clear view about how their performance can affect the organization’s objectives Continual feedback and review on organizational as well as individual performance After the review and assessment procedure, organizational and employee improvement plans are discussed and updated. These activities are aimed to align the activities of employees with the strategic and tactical goals of the organization. They also help in improving the performance of employees and thus ultimately, the performance of overall organization is improved. First of all, goals are developed at organizational level as well as individual level. After that, monthly reviews are conducted so as to acknowledge that implementation of goals is appropriately going on. Performance planning for the whole year is done by evaluating the performance of each employee. After the evaluation of performance is done, rewards and recognition are provided to the deserving employees as per their performance and determination. After the entire process has been done, it is not left abruptly. At the end, review of performance evaluation, rewards and recognition is done so as to assess that the decision of providing rewards and recognition is not wrong. Difference between Performance Management and Performance Appraisal Many authors have been using the two terminologies; performance management and performance appraisal interchangeably but in essence, they both are two different concepts. Performance management refers to the entire process of evaluating the performance of employees whereas performance appraisal includes rating the previous performance of employees and setting new standards for meeting performance objectives. In other words, performance appraisal is just a part of performance management. Importance of Performance Management According to Graham (2004), performance management system is vital for organization in the following ways: Benefits the organization in achieving its objectives and vision Facilitates in establishing a performance culture within the premises of organization Aligns the employees’ objectives with the strategic and tactical goals of organization Ensures that the employees have transparency about the performance standards and expectations Key Result Area (KRA) Key Result Area, also known as KRA, are set of those objectives, which when achieved by employees of an organization, results in the overall goal attainment of the organization. Key Result Area is that overall department where an organization wishes to improve its performance. Some important Key Result Areas of performance appraisal include: Quality of Work Job Tenure Job Knowledge Accidents & breakages Self-judgment Rate of work Absenteeism Peer judgment Supervisor comments Distinction between Managerial Jobs and Non-Managerial Jobs Managerial Jobs Typically, organizations are broken down into three basic categories of management. They include: upper/ top management, middle management and lower management. Top management is devised as that management which takes all the crucial decision for the organization. Middle management includes division or department management which communicates these decision to the lower management and lower management include supervisors and first line managers who are the bottom of the hierarchy of management. Non-Managerial Jobs Non managerial employees are categorized as per their type of function. Generally, non-managerial jobs include office work, administrative assistant, computer technician or payroll specialist. 1. Salaries Managerial employees earn higher wages than non-managerial employees. According to Bureau of Labor Statistics (BLS), an average managerial employee earns $73,250 annually whereas a non-managerial employee earns around $25,320 per year. 2. Perks Managerial employees earn perks and benefits along with their salary which include fuel, corporate credit card, annual vacations etc. A non-managerial employee earns these benefits only when he is top performer. 3. Responsibilities The reason of higher value of managerial job as compared to non-managerial job is due to number of responsibilities. Managerial employees have burden of huge responsibilities like making important decisions etc. while non-managerial do not possess huge responsibility. Their responsibility is limited to their own task. Academic Research of Performance Management Policies of Performance Management In order to be committed in fostering a high performance culture, HR departments needs to establish some policies. For achieving these standards, organizations need to provide each employee with clear performance objectives, professional development, continuous feedback and coaching as well as recognition and reward for their outstanding work. Some policies which are made for the implementation of effective performance management include: Develops shared responsibility between employee and the organization Aligns and clarifies performance objectives with the institutional values and unit goals Involves coaching and feedback related job performance Determines professional and training developmental needs Documents and measures performance Provides insights for decision concerning human resource (e.g. recognition, compensation, etc.) Purpose of Policies of Performance Management Generally, cabinet approves the corporate policy statement for helping managers to enhance the organizational and individual performance by keeping with the guidelines of the Treasury Board planning and general principles of management. Philosophy behind those policies The philosophy which guides the policies of performance management is that generally it is considered that people are the vital component when there is a concern of public service. This implies the viewpoint that effective management of the skills of people along with respect for each individual is essential. Every employee has right to develop their potential and utilize their abilities. They expect to be provided with the opportunities to do so along with the timely and fair feedback of their performance. Managers at every level can overcome this issue by addressing and implementing the above mentioned policy framework. Accountability of Performance Management There are several entities which possess the accountability for maintaining the performance management system. They include: i. Deputy Minister ii. Managers Responsibilities of Deputy Ministers include: Developing, communicating and clarifying the objectives and priorities of organization Reviewing the implementation process of system of performance management and assessing whether they are consistent with the department’s needs Ensuring the abilities of the managers for implementing the performance management system Monitoring the performance of each department and improving it, where required Assuring that the departments convey effective information for Civil Service Commission assessment Involving the HR department in performance management system of organization Managers at each hierarchical level are responsible for: Involving employees in the process of assessing and planning their performance Providing corrective action and problem solving measure to their subordinates Removing obstacles that impede the subordinates in achieving desired outcomes Setting standards and evaluating the performance on the basis of standards/ benchmarks Appropriately utilizing the confidential information Documenting yearly result oriented objectives for every worker individually (Performance Management System, 2007) Employee’s Responsibility in PMS Apart from the responsibilities of organization at large, there comes also some responsibility on the shoulders of employees in order to improve the performance management system. Employees are responsible for the following: Performing the type of work which is demanded from them Asking for help when required or in case of problem solving as well Informing the employer about obstacles that might appear in the way of achieving goals Taking and completing developmental or training programs Preparing for the discussion of performance management Participating in the planning of performance management Signing the review documents and freely providing comments (Performance Management, 1997) Recommendations Summary Organizations need to view the Performance Management System holistically. They must also encompass elements in the figure mentioned below which demonstrates that the first element is to include organizational culture as widespread phenomenon. Without this capability or desire, PMS will most likely become a liability or compliance and will lose its essence of adding value to the individual employees and organization as a whole. The second element is to ensure that employees portray required skills, competencies and behaviors that make it easier for them to understand PMS. The third element is the methodology and processes of performance management system which means that what PMS actually measures and how. The last element is the technology which enables to boost the benefits for both organization and individual. Setting goals and aligning goals The goals for employees are based upon two important inputs. First is the organizational goals which have been mentioned in the business plan, whose purpose is to ensure that individual’s goals are aligned with that of organizations’. Second input is the past performance of employees which highlights if any developmental need is required and ensures that new set of goals are consistent and realistic with the past performance of employees. For aligning goals, the employee’s goals should: Include elements from the scorecard, vision and mission of organization Be within the control of employees’ as well as measurable and observable for employees Be balanced so that domination of a single goals doesn’t occur Emphasize behavior rather than the consequence or outcome in this way, it will be ensured that desired behavior are rewarded and encouraged. In short, employees ’goals must be developed in such a way that it is coherent and aligned with the overall goals of organization and if employees accomplish a certain goal then it will result as the accomplishment of the organization as well. Importance of Feedbacks and Reviews In order to work the process of feedback and reviews, practitioners believe that it is a two way process, where both employee and managers have to take active part and is not a one way process where only managers have to take an active part. For performance feedback process, training is required for both employees and managers. In subsequent paragraphs, some guidelines are provided for making the performance feedback process effective. They are: Specifying particularly what behaviors are effective and what are not Providing feedback for development in a private location Asking for employee’s perspective and opinion for a certain situation Doing collaboration for planning steps to address the developmental needs Focusing on right and wrong act, not the personal characteristics of employee (Pulakos, 2004) Annual Performance Appraisal Annual performance appraisal generally held at the end of the year. In annual performance appraisal, managers provide feedback about the yearly performance of each employee. The rating system of annual performance appraisal must have minimum number of ratings. The final rating of employee must be done through a known formula rather than the gut feeling basis. In order to eradicate the biasness from the performance feedback, feedback must be obtained through as many sources as possible. Current industry practices of Performance Management The current practices of performance management which are prevailing in the industry include: Alignment and coherency of employee’s goals with organizational goals Regular and continuous meetings related to performance review between supervisor and individual Approach of balance scorecard for goal setting Performance Management System at Saudi Aramco Currently, the performance evaluation system at Saudi Aramco is considered as one of the best systems. Each year, the process of performance evaluation at Saudi Aramco starts in January. Each manager reviews the objectives of the company with the employees’ goals of his division. In this way, supervisor determines how the employees will participate in meeting the goals and objectives of their company. Employees contribute with their division’s supervisor and discuss about the performance expectation and work goal for the coming year. This facilitates the supervisor because the involvement of employees creates a sense of mutual understanding and also helps in building trust. This process also encourages a dialogue through which both management and employees can discuss about their perspectives and ideas. At the end of the year, or in December, all the information which has been obtained is gathered and subordinates are assessed on what has been achieved and how it has been achieved. The comments of employees and supervisors are documented in the performance evaluation forms. After the forms are signed by the supervisor and employees, they are forwarded to the Position Responsible and copy of each form is kept in the respective employee’s folder as well. (Corporate Contractors Saudization, 2010). Performance Management Template Form for Managerial Staff Name: ___________________________________ Department: _______________________ Supervisor: _______________________________ Designation: _______________________ Date of Review: __________________________ Date of Last review: __________________ 1. Employee’s job tenure: ______________________________________________________________________________ 2. Employee’s quality of work: ______________________________________________________________________________ 3. Employee’s knowledge regarding his/her job: ______________________________________________________________________________ 4. Attendance and punctuality: ______________________________________________________________________________ 5. Exercise of good decision making and judgment: ______________________________________________________________________________ 6. Participation in Team Efforts: 7. Responsiveness for managing and changing work place environment: ______________________________________________________________________________ 8. Interpersonal Relationships: ______________________________________________________________________________ 9. Ethical behavior: ______________________________________________________________________________ 10. Accidents and Breakages occurred: ______________________________________________________________________________ 11. Overall Rating of Performance: ______________________________________________________________________________ 12. Strengths: ______________________________________________________________________________Areas need to be improved: ______________________________________________________________________________ Employee’s Comments: ______________________________________________________________________________ Supervisor’s Comments: ______________________________________________________________________________ Employee’s Signature: ____________________ Supervisor’s Signature: ___________________ Performance Evaluation for Non-Managerial Employee Major Task Performance Standard Output Resources Required Actual End Result Evaluation Score Result Category 1 2 3 4 5 Total Score: Total Score: Works Cited Corporate Contractors Saudization. (2010). Saudization Guide for Contractor Companies: http://www.saudiaramco.com/content/dam/Publications/Saudization%20Guide_Contractor.pdf Graham, J. (2004). Developing a Performance-Based Culture. Journal for Quality & Grote, D. (2000, May). Secrets of Performance Appraisal. Retrieved from Across the Board Magazine: http://www.groteconsulting.com/resources/pdfs/Across-the-Board-Secrets-of-Performance-Appraisal.pdf Participation, (27), 4-8. Performance Management System. (2007, September). Retrieved from Performance Management : http://www.osp.state.nc.us/manuals/10_Performance%20Management/Performance%20Management%20System.pdf Performance Management. (1997, June). Retrieved from http://www.gov.mb.ca/csc/pdf/polpm.pdf Pulakos, E. D. (2004). SHRM Foundation. Retrieved from Performance Management: http://www.shrm.org/about/foundation/research/Documents/1104Pulakos.pdf Read More