Performance Management -- What Is It?
Some believe a performance management system is another name for performance appraisal. Others think it is monitoring the product or service produced by a department or team. A performance management system includes both of these but is also much more. At a minimum, a performance management systems integrates the four key managerial activities of clarifying expectations, giving and receiving feedback, coaching and performance appraisal into a coherent whole aimed at one outcome -- continuously improving employee performance. None of these activities alone have a significant effect on employee performance. It is only by combining them through a performance management system that sustained performance improvement is produced.
- Clarifying Expectations answers the age-old question asked by every employee: “What exactly is expected of me around here?”
- Feedback answers the question: “Gee boss, how am I doing?”
- Coaching answers the question: “How can this situation be improved?”
- Performance Appraisal answers the question: “How'd I do, boss?”
In many ways! First, a performance management system aligns your company's vision, mission, values, strategic initiatives and goals with individual performance. This alignment enables managers and employees to see the bigger picture and understand how their contribution helps the company realize its strategic objectives. It also encourages managers and employees to channel their time, effort and energy toward achieving strategically important accomplishments and results.
Second, a performance management system enables your managers and supervisors to clearly distinguished top performers from average performers so that they can be rewarded differently. Because the measures used to assess performance are tied to your company's vision, mission, values, strategic initiatives and goals, it is easier to determine what part each individual plays in overall company success.
Third, it bonds all your company's human resource programs, practices and processes into a single, coherent purpose -- improving employee performance.
Fourth, several recent research studies show that organizations with effective performance management systems are more financially successful than organizations without them.
Consulting Case Study
This summary of a recent performance management consulting assignment illustrates the unique and effective Phillips Associates approach.
The client, a medium sized printing plant, wanted to revise and update its performance appraisal system. Prior to Phillips Associates involvement, an internal task force had been formed and had held several meetings to address the question of how to improve the organization's performance appraisal system. Like many organizations who undertake performance appraisal change initiatives, the task force focused on the organization's appraisal form and was overlooking the “big picture.” Specifically, the task force neglected to consider these key facts:
- the appraisal form is part of the performance appraisal system;
- the appraisal system is part of performance management; and
- performance management is interconnected with all the organization's human resource systems and processes as well as its vision, mission, values, strategic initiatives and goals.
Phillips Associates was brought in at this point to provide the task force with feedback about the direction of their change effort. During this meeting, the above Performance Appraisal Design Model was introduced to the task force. Through dialogue, Phillips Associates helped clarify for the task force that in order to be successful, their change initiative needed to address more than just the existing appraisal form. After gaining the task force's support for this “big picture” view of performance appraisal, a three-day off-site meeting was held to consider each of the rings in the Performance Appraisal Design Model. All critical system design decisions were made during this meeting, which was facilitated by Phillips Associates. Following the meeting, sub-teams put the final touches on the appraisal form, and briefing meetings were held with groups of employees to explain the new appraisal system. In addition, all supervisors and managers attended a two-day performance appraisal training program presented by Phillips Associates. Among the topics covered during the training were how to develop “good” individual performance objectives, and how to conduct effective two-way performance appraisal discussions.
The result was a “state-of-the-art” performance appraisal system that linked together individual employee performance with the company's vision, mission, values, strategic initiatives and goals. Specifically, the task of individual and team objective setting was positioned to follow immediately after the senior management team established its strategic initiatives and goals for the year. Moreover, the company's values were included on the appraisal form, and part of every employee's evaluation under the new process focused on how well they adhered to these values while performing their jobs. Achieving such alignment is essential for becoming and maintaining a high performance organization.
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