Implementing a Performance Management System
Implementing a Performance Management System
Any organizations long term success in meeting its strategic objectives rests with its ability to manage employee performance and ensure that the performance measures are consistent with organizational needs. (Mello, 2015)
Any organizations long term success – to meet strategic objectives is based on its ability to mange employee performance and to ensure that the performance measures are consistent with organizational needs.
This chapter briefly reviews various aspects of performance management and feedback.
It is important to consider carefully who will do evaluations; specifically what they will evaluate; how the evaluation will de administered; and appropriate measures of evaluation.
Critical guidelines to effective performance systems suggest specific, immediate feedback based on clear, measurable goals delivered by a credible, trustworthy person are desirable.
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Performance Management & Feedback
Organizations performance measures to ensure
Performance deficiencies are addressed in timely using employee development programs
Employee behaviors are channeled in appropriate direction toward performance of specific objectives
Employees provided with appropriate & specific feedback to assist with career development
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Purposes of Performance Management Systems
Facilitate employee development
Determine specific training & development needs
Assess individual & team strengths & weaknesses
Determine appropriate rewards & compensation
Salary, promotion, retention, & bonus decisions
Employees must understand & accept performance feedback system
Enhance employee motivation
Employee acknowledgment & praise reinforces desirable behaviors & outcomes
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Purposes of Performance Management Systems
Facilitate legal compliance
Documentation is strong defense against charges of unlawful bias
Determines key performance objectives
based on business plan
Provides feedback on performance results
Aligns individuals roles, performance objectives and development with company objectives
Assists managers & employees in making career decisions
Facilitate HR planning process
Alert organization to deficiencies in overall level & focus of employee skills
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Performance Feedback vs Appraisal
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Performance Management Overview
Performance goals from senior leaders are cascaded throughout the organization to initiate the annual cycle
Employees draft annual goals based upon leader’s goals
Employees meet with their managers to review draft and reach agreement on final goals
Employee implements the agreed-to objectives.
The manager monitors performance and conducts frequent discussions with the employee to:
review results being achieved,
provide feedback,
explore changes that may have occurred in either circumstances or priorities, and, if necessary,
make modifications in the employee’s performance objectives and measures
Employee drafts an appraisal of performance results and ratings and prepares a development plan. This information is submitted to the manager and a meeting is scheduled.
Manager reviews the employee’s draft, adds his/her view of performance results and ratings, determines a reward recommendation, and prepares an analysis of development needs.
Manager may seek feedback regarding the employee’s performance and development needs from others
Prior to conducting the performance discussion with the employee, the manager gets one-over-one approval of the performance results and rewards recommendation from his/her manager and guidance from Human Resources
During the performance discussion, the manager and employee compare their drafts and review a final appraisal and development plan completed by the manager.
The plan is signed by both the manager and the employee
If no new information is surfaced during the discussion that would change the reward decision, the approved decision is communicated.
If information is surfaced that would modify the reward decision, the manager discusses the modification with his/her manager and Human Resources.
The final, approved decision is then communicated to the employee.
The output from the Performance Appraisal, Rewards & Development stage is forwarded to the Human Resources.
Data is checked for quality and compliance. Information is also incorporated into the organization’s training and human resources planning systems
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PMS as Project Management
Implementation of a Performance Management System is a project of its own… as every other project it needs serious approach towards all project elements and phases
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Strategies for Improving Performance Management System
Gain full commitment from senior managers
Involve managers in design of system
Hold managers accountable for performance & development of subordinates
Set clear expectations for performance
Set specific objectives for system
Tie performance measures to rewards
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Steps to Implement
What is the present situation?
What will be the PMS’ role?
Planning
Identifying people
Identifying resources
Managing stakeholders
Implementation
Monitoring & Making Adjustments
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Step 1 What is the present situation?
Is there a PMS in place?
If yes, what kind of a system is it?
When was it implemented?
Who is involved?
Is it linked to anything? (HR tools/applications or systems)
Are promotions/merit raises tied to PMS?
What is the organizational structure – lines of reporting? Who will people be replaced?
Corporate culture? Open to change?
What has bee the feedback/support for it?
How has the distribution been represented?
What are the lines of structure?
Legal issues
Take a survey or develop focus groups
What works or doesn’t work?
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Step 2 What will be the PMS’ role?
Will it be integrated with other systems?
If so, which ones?
Will it be tied to promotions, merit raises, succession planning, etc.?
Will their be a LMS included? How?
What will be measured?
traits
behaviors
competencies
results
What will be the measurement evaluation tools?
Graphic rating scales
Weighted checklists
Behaviorally anchored rating scales (BARS)
Behavioral observation scales (BOS)
Critical incident method
Management by objectives (MBO)
forced distribution
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Types of Evaluations
Trait-based
Behavior-based
Knowledge-skill based
Competency-based
Results-based
Trait based – assumption that certain traits drive performance – measure using personal characteristics or the incumbent
Behavior based – assumption that certain behaviors drive performance – measures what the incumbent does.
Knowledge-skill based – assumption that certain knowledge/skill drive performance. – measures what the incumbent knows applies.
Competency – when traits, behaviors skills, knowledge are linked to the organizational success expectations, they are sometimes called competencies
Results-based – assumptions that the achievements of objectives equals performance – measures the incumbent’s achievements
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What to Evaluate?
Traits measures
Assessment of how employee fits with organization’s culture, not what s/he actually does
Emphasizes what personality (perceptions)
Behavior-based measures
Focus on what employee does correctly & what employee should do differently
Specific to the work environment
Based on demonstrated activities
Helps employees understand their jobs
Time consuming to develop (must be observable)
Reinforces cultures/values
Does behavior actually produce results?
Employee evaluations can be made based on their traits (not recommended), their behaviors or the results or outcomes they achieve.
Behavior-based measures focus on what the employee does by examining specific behaviors, although observed necessary behaviors do not guarantee success or results.
Results-based measures focus on specific accomplishments or direct outcomes. However, not all jobs have measurable results; sometimes external events influence results; and results focus on the end and not the means, which may be very important.
Outcomes-based measures focus on specific accomplishments or direct outcomes of the employee’s work. While often most meaningful to organizations, these measures have some limitations as to their usefulness.
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What to Evaluate?
Results-based measures
Focus on accomplishments or outcomes that can be measured objectively
Problems occur when results measures are difficult to obtain, outside employee control, or ignore means by which results were obtained
Objectives tied to job and/or organizational goals
Emphasizes results tied to goals
Encourages dialogue and buy-in if goals are jointly established.
Limitations
Difficult to obtain results for certain job responsibilities
Results sometimes beyond employee’s control
Ignores means or processes
Time consuming
Fails to tap some critical performance areas
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Job Performance Competencies
Closely tied to organization’s strategic objectives
Can take tremendous amount of time to establish
Must be communicated clearly to employees
Must be tied in with organization’s reward structure
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Forced Ranking/Distribution
Arguments in favor of forced ranking
Best way to identify highest-performing employees
Data-driven bases for compensation decisions
Forces managers to make & justify tough decisions
Arguments critical of forced ranking
Can be arbitrary, unfair, & expose organization to lawsuits
Inherent subjectivity
Forced rankings tend to be more effective in organizations with high-pressure, results-driven culture
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Measures of Evaluation
Graphic rating scales
Weighted checklists
Behaviorally anchored rating scales (BARS)
Behavioral observation scales (BOS)
Critical incident method
Management by objectives (MBO)
Graphic rating scales – provide the evaluator with performance measures for traits, behaviors or results listed below the scale.
Weighted checklist – evaluator checks criteria that apply to the employee.
Behaviorally-anchored rating scales (BARS) – addresses the problem of inconsistent employee performance by measuring frequencies along a scale.
Behavioral observation scale (BOS) – notes frequencies of behaviors; useful when employee behaviors under BARS are inconsistent over time
Critical incident measures – specific examples of behaviors /outcomes recorded over the feedback/evaluation period
Objectives-based performance measures (MBO) – employee and supervisor jointly agree on work objectives that are consistent with organizational strategy; satisfy job requirements; and provide challenging work assignments consistent with employee career goals.
Three common oversights include setting objectives that are too vague; unrealistically difficult; or without clarifying measurement specifics.
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Step 3 Planning
Who are the key stakeholders? Will there be self-appraisals, 360, employee or customer feedback?
How will feedback be used?
Stakeholder Management Plan should keep them involved at every stage.
Feedback circles, focus groups, etc. to gather concerns, expectations, goals, ideas, timelines, etc.
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Who Evaluates?
Problems with immediate supervisors conducting performance evaluations
Lacking appropriate information to provide informed feedback on employee performance
Insufficient observation of employee’s day-to-day work to validly assess performance
Lack of knowledge about technical dimensions of subordinate’s work
Lack of training or appreciation for evaluation process
Perceptual errors by supervisors that create bias or lack of subjectivity in evaluations
Traditionally, performance evaluation was performed by the employees immediate supervisor.
Many managers have no true knowledge of the technical or other skills that a worker may have or the ability to observe the employee and the means by which the employee accomplishes work. Other individuals, such as peers, customers, subordinates, or others could provide insights into an employee’s performance. The employee her/himself could also provide self-assessment date. Multi-rater or 360 degree feedback uses some combination of assessments by various individuals. Example – Peer Assessment at Coffee & Power and Performance Management at Otis Elevator.
Supervisors might also intentionally inflate or deflate employee ratings. In addition supervisors and subordinates may agree on levels of performance but disagree on the reasons for such.
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Other Performance Feedback Sources
Peers
Only effective when political considerations & consequences are minimized, & employees have sense of trust
Subordinates
Insights into interpersonal & managerial styles
Excellent measures of individual leadership capabilities
Same political problems as peer evaluations
Customers
Feedback most free from bias
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Other Performance Feedback Sources
Self-evaluations
Allow employees to participate in critical employment decisions
More holistic assessment of performance
Multi-rater systems or 360-degree feedback systems
Can be very time-consuming
More performance data collected, greater overall facilitation of assessment & development of employee
Costly to collect & process
Consistent view of effective performance relative to strategy
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How to Evaluate?
Absolute measurement
Measured strictly by absolute performance requirements or standards of jobs
Relative assessment
Measured against other employees & ranked on distance from next higher to next lower performing employee
Ranking allows for comparison of employees but does not shed light on distribution of performance
Absolute or relative measures can be used to evaluate employees.
Absolute measures evaluate employees strictly according to performance requirements or job standards.
Relative measures evaluate employees in comparison to co-workers.
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Step 4 Stakeholder Issues
Is it aligned with organizational objectives?
What will be their role in the development (input or feedback?)
Communication and management plan
what are their expectations?
what goals do they want to achieve?
directions, framework, limitations, fears?
Merit based, behavior based, competency based
Roles defined
Timeline established
Who will be evaluators – 2nd levels?
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Step 5 Implementation
Make sure the senior leaders are 100% behind the initiative
Follow the plan and time table established
Hold people accountable
Make adjustments when needed
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Prepare the Framework for Senior Leaders
Is it aligned with organizational objectives
How will it be used
Identify the time table
Tell them about their roles
Identify connections to training, compensation, merit raises, bonuses, etc.
What will be measured
How will it benefit the organization
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Step 6 Monitor and Making Adjustments
Use software to run reports
completion rates by…
score distribution by…
Identify issues/problems
demographics
dangers
departments
Gather feedback data from multiple sources
engagement survey data
managers
executives
employees
Make changes – be sure to communicate!!!
Other Considerations
Ensure link between performance management, training & development, & compensation
Assignments & responsibilities
Traditional performance evaluation may need redesign due to changes in contemporary organizations
Degree of standardization or flexibility of performance management system
Standardization important to prevent job bias
Flexibility important differing levels of responsibility & accountability
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DEVELOPMENT
FEEDBACK
FEEDBACK
FEEDBACK
