Most every organization has some type of performance management system. However, not all systems are created equal and not all systems are used for the best advantage to the organization. Most performance systems are conducted only on an annual basis. Some organizations may perform as many as two performance appraisal annually. However, a true performance management should be an ongoing process. Moreover, performance management should be aligned with the organization’s strategic goals. Further, there are many reasons and avenues allowing for the effective use of a performance management system to move an organization forward. In order to help facilitate such a process, organizations should ask four questions about a performance program.
1. Why do we use performance management systems?
Performance management systems are useful for communicating performance initiatives, feedback, and expectations surrounding an employee’s performance. Basing promotion, termination, training, or transfer decisions on whether an employee has met the organization’s performance criteria is fairer. Data obtained from employee testing is often useful in human resource research. Desired behaviors or perhaps the lack of desired behaviors provides information for designing training programs. Managing performance can also aid in helping organizations maintain records of decisions and remain in compliance with legal issues.
Next, a similar list provides additional insight as to why organizations should use a true performance management system. This is because both knowledge of how one is performing and receiving recognition for performance provides the impetus to continue performing at a high level. Recognition also increases an employee’s self-esteem. Moreover, building relationships through performance management is a good management and leadership standard. Another good question organizations need to understand follows.
2. Why do performance management systems often fail?
Managers spend the greater part of a workday coaching employees. While coaching is a
good management strategy, most managers are inept at coaching. In fact, many organizations view the lack of good coaching skill as the biggest performance gap among managers. Poor coaching leads to mistrust and eventually the system fails. Managers play a key role in the success of a performance management system.
A performance management system must have the support of the CEO and management. Clear expectations should be provided to assist these leaders in implementing the program. Keep the system simple. Too much paperwork can kill a performance program. Managers spend more time pushing papers as opposed to spending time coaching or evaluating. Therefore, it is important to automate as much of the performance system as possible. A good idea is to run a pilot program in order to help reduce the risk of failure. The organization may need to tweak the program or implement a more effective program that better suits the organization’s needs.
3. Why type of performance management system is most effective? Why?
More than one factor makes a performance management system effective. Rather, it is a combination of factors and human resources working in tandem. A good performance system should include the following: goals, measurement, the ability to recognize the skills of employees, determine if they are adequate for the job, and if not, follow-up with a development program. Support from leadership as noted above is essential. An explanation of these elements follows.
Setting goals assists in directing behavior. If there is a strong relationship between an employee’s efforts and performance and performance and rewards, and rewards and satisfaction, then the employee will exert the effort to meet goals. Speaking of setting goals, this serves as a reminder to set SMART goals. SMART goals are goals that are specific, measureable, achievable, relevant, and time bound. The measurement part of this acronym leads to another element that should be part of a good performance system and that is measurement. It is important to measure how employees achieve results. The reason this is important is that it is related to the effectiveness of both the system and the organization. Measurement also applies to skills.
A good manager must have the ability to recognize his or her subordinate’s skills. This is important, as it is the only way to provide honest and accurate feedback. If the employee’s skills are found to be inadequate for the job, then employee development can follow. A development center would be an ideal tool for employee development. These centers would contribute to development through career planning, identifying first-level supervisors, and heightened self-knowledge. Not only will the efforts of employees need to be measured, but the system as a whole requires assessing as well.
4. What dimensions might be considered in assessing effective performance management systems?
Let’s examine seven dimensions for performance system assessment.
Dimension One: Effectiveness Performance programs need to satisfy team stakeholders as well as internal and external customers. Measurements would include, quality, quantity, cost, and time.
Dimension Two: Efficiency Here the degree the team processes results, team growth, and satisfaction of team members is assessed.
Dimension Three: Learning and Growth The question here is how well the team is able to learn new skills and improve performance over time.
Dimension Four: Team Member Satisfaction The question to ask is if the team members are satisfied with being a part of the team. In addition, perceptions of team members are measured as they relate to their personal well-being and growth.
Dimension Five: Employee Engagement The more engaged an employee is, the more productive the employee becomes. Furthermore, the more engaged an employee is, the more the employee holds the manager in high regard.
Dimension Six: Accountability The system should have accountability built in for both employees and managers.
Dimension Seven: The performance Review There should be two meetings for the performance review, one with the team and the other with the individual. The other assessment tool is performance renewal and recontracting. This assessment involves taking data gathered from the review period and using this data to tweak the performance program as needed.
All of this may seem daunting and time consuming. However, in order to get the most out of your performance system, it is necessary to ensure you have the right system in place. The performance system you use must meet your organization’s needs and match both short and long-term goals. This serves everyone in a fair manner, and in the end saves time and the bottom line.