News
Performance management as a business imperative
10.03.2010
Does your company have a performance culture? Are all employees delivering against the company strategy? Are people managers capable of having objective conversations with employees about performance? Do employees know in detail what the performance standards and expectations are for their roles?
Introduction
Managing the performance of people within an organisation has over the years become a business imperative. The collective focus and effort towards achieving desired goals, and the ability to deliver and manage required performance, is necessary to drive business results on an ongoing basis. However, although organisations may understand the concept and need, the implementation of performance management sometimes falls short of intentions and requirements.
Performance management needs to look beyond just a process or a system, and focus on a more holistic view including people strategy, integration into other Human Resource, business initiatives and change management. It is this broader and integrated view of performance management that assists organisations in delivering performance and building a performance culture.
Environment and Business Challenges
Increasing levels of globalisation and new and foreign market entrants are forcing companies to focus more on the quality of their products and services, as well as the efficiencies of their operations, to remain competitive. Within this ever changing operating environment, effective management of work and performance will help ensure this quality and efficiency, and maintain a clear line of sight between organisational priorities and performance achieved.
When referring to performance, ultimately it is people who deliver, drive, maintain and manage it, and so the appropriate processes and technology available to assist with this can be seen as a critical factor to the success of any organisation.
Managing People’s Performance
Before we look broader at a performance culture, let us recap on the process briefly. Although many definitions of performance management exist, a generic understanding of the term can be seen as ‘a continuous process for an organisation to define, drive; measure and manage individual and team performance and behaviour to achieve business objectives’. Although this may seem like ‘common sense’ and nothing new to some, actually getting it right sometimes proves more difficult.
Like with the definition, a number of approaches to performance management exist, and it is up to each individual organisation to develop a process that matches their unique situation and requirements.
One such approach is outlined below:
Step 1: Identify a performance management process for the organisation:
An organisational approach to performance management needs to be articulated, including dates, review cycles and deliverables. This would set out a framework going forward, and should outline roles and responsibilities for managing performance going forward. An additional task would also be to integrate performance management into other HR related processes (such as recruitment and selection, talent management, employee development, retention, etc) to ensure a holistic approach to people.
Step 2: Align necessary performance requirements:
Individual performance requirements should be identified using a “goal cascade” method, i.e. Organisational goals, translated into divisional goals, departmental goals, team goals, and finally individual goals, etc. This process ensures a clear line of sight between what the employee is doing on a daily basis, and what the organisation as a whole is trying to achieve. As a result, employees will also feel more engaged and focused, and the organisation will be assured that all employees are working towards a common vision and purpose. The result of this step for individuals is a comprehensive position description and performance plan, outlining their performance areas, indicators and targets, which sets the basis for performance management going forward.
Step 3: Track, monitor and discuss performance:
Based on the position description and performance plan developed in the previous step, the performance area, indicators and targets should be defined and clear. Performance tracking and monitoring should then be centred on this, as evidence of performance is necessary for having an objective discussion during the performance review. Informal discussions should also be held between managers and their employees on a regular basis to ensure performance is on track, and that there are no “surprises” for anyone during the final reviews. Regular communication helps with better understanding, guidance and performance tracking.
Step 4: Conduct formal performance reviews:
At specified dates during the year (for example quarterly or biannually) employee performance would need to be formally reviewed (over and above possible informal discussions held as per previous step). This process would include the preparation for the review, completion of necessary performance documentation, conducting the review, providing feedback and setting up or reviewing development plans. The more prepared managers and employees are for the review, the better the results.
Step 5: Identify development and action planning:
Feedback and results from the formal performance review need to be fed back into actions and plans for the next review period. This can then be used to guide development and performance of the employee and should be highlighted in future informal discussions that may be held between the employee and the manager to track progress.
What is in it for me?
In building a business case for, or promoting performance management, a number of benefits can be identified for the organisation, managers and employees. Although not an exhaustive list, some of these may include:
For the organisation:
- Alignment of business drivers and work efforts to organisational goals and leads to a broader understanding of company objectives by employees
- Increased organisational performance achievement due to defined performance focus, deliverables and monitoring
- Integrating reward and recognition, retention, succession and career planning and employee development strategies and initiatives into a broader people strategy and approach
For the Employee:
- Understanding of performance standards, expectations, strengths and development areas to be successful in their role
- Facilitating more feedback and communication with managers
- Providing a clear line of sight between personal contributions and organisational goals. This would enhance employee motivation and sense of direction.
So what is stopping us from doing this?
Based on possible previous experiences, legacy, management capabilities etc, certain barriers to performance management and its implementation may exist. For example:
Organisation
- Inconsistent or misaligned people strategies means no holistic view of people and how to manage and develop them
- Non alignment of performance expectations to organisational goals and direction inhibits organisation wide focus and common purpose
- No formal or structured approach to performance management prevents organisational efficiency in driving performance achievement
Manager
- Managers may underestimate the importance of performance management, and how it fits into people strategies. This means managers have an incomplete picture of the tangible business benefits it should deliver, as well as the required work that is involved to perform it effectively.
- There may also be an assumption of manager’s capability to manage people and their performance, and provide meaningful feedback to them. This may lead to inconsistent approaches to, and quality of, performance management in the organisation.
- Capacity of managers may also be limited, and performance management may then be seen as a “nice to have”, and not as important as the daily running of the team or department. This may lead to less time spent on managing employee performance and development.
- Fear of conducting performance reviews and discussions
Employee
- Not understanding the performance management process and what it is meant to deliver means a limited awareness of the real business need and strategic intent of performance management by employees. This may result in less focus, time and energy being spent on performance management by them.
- Preconceived ideas of performance management, based on past experiences, systems and managers may also be a barrier. Some employees for example may see performance management as merely a ‘once-a-year’ exercise performed merely to subjectively rate them to determine salary increases, or a way to manage them out of the company. Although incorrect, these perceptions may lead to them possibly resisting a future performance management approach being implemented.
- Having no clear understanding of how work and performance contributes to broader organisational success, may limit employee motivation and feeling of positive contribution.
Again – although these may not be an exhaustive list of potential barriers to performance management, they provide some idea as to what possible issues may be. Barriers also highlight the need to perform comprehensive change management, including an analysis of an organisation, prior to any implementation of a performance management approach. Understanding the levels of awareness, capability and motivation to use a performance management system and how to maintain this on an ongoing basis, is as important as the process and technology that may be used.
So how does this link to a performance culture?
Getting the basics right is crucial, which includes the development of a performance management strategy, process and tools, as well as the initiatives needed to implement and sustain the approach going forward. This just ‘sets the scene’.
A performance culture goes further and covers areas such as integrating performance management into broader people and business strategies, and finding a technology to make the process and activities associated as seamless and smooth as possible. In addition to this would be to educate employees to be able to understand the principles, process and values of performance management, and continually relooking at ways to engage with them around performance and how this ties this back to business drivers and goals.
However to ensure even greater impact, organisations need to look beyond this, and formulate a comprehensive approach to people, of which performance becomes a component. An end to end approach to people (sometimes referred to as the employee life cycle) clarifies, managers, and supports the continued drive for performance, and helps to reshape and ultimately embed this performance focus even deeper into the organisation’s culture. When this has been achieved, performance management and achievement becomes less of an ‘external activity’, and something that needs to be actively managed, to more of a “part of everyday work life”.
Way forward
Performance management as an isolated process or system will only be able to deliver a certain level of increased business performance. However, combining this with a performance culture ensures that performance becomes embedded in “the way that things are done”, and becomes part of the mindset of the organisation.
From the discussion, performance management is not ‘just a process’ or ‘just a system’ needed to drive performance. It is a mindset change to the importance of focusing on and managing performance at all levels, and developing a culture within the organisation that is centered on performance achievement. This, coupled with the fast paced and changing business environment illustrates why performance management is seen, correctly, as a business imperative, and one of the drivers of organisational success.
For more information, contact us
Imprint Global
Level 11, 17 Castlereagh Street
Sydney NSW 2000
Phone: +61 2 9216 2800
Fax: +61 2 9216 2888
Email: information@imprintglobal.com
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