Implementing A Performance Management Framework Management Essay

INTRODUCTION

Managing people in organisations is becoming more and more important nowadays so as to produce the best result and achieve efficiency. Therefore employees should be managed efficiently so as to add value in organisations.

Performance management is not new, despite the fact that nowadays more emphasis is being laid on it, especially in the public sector. Performance management system is considered as a tool to an organisation.

Performance management is a whole work system that begins when a job is defined as needed. It ends when an employee leaves your organisation. The performance management system is a process which increases competence, decreases cost and promotes quality.

Performance management is a term borrowed from the management literature. The term ‘performance management’ was first used in the 1970s, but it did not become a recognised process until the later half of the 1980s (Armstrong & Baron, 1998).

It has been among the most important and positive developments in the sphere of management in recent years.

The meaning of performance management has evolved and continues to evolve. While in the sixties and seventies performance management was often equated to some form of merit-rating, in the eighties and nineties it has been linked to ‘new’ management paradigms such as Management by Objectives, Performance Appraisal, Behaviourally Anchored Rating Scales and Performance-related Pay.

The ultimate competitive asset of any organization is its people (Band et al., 1994), thus organizations should develop employee competencies in a manner aligned with the organization’s business goals. This can be achieved through performance management systems (Moullin, 2003), which act as both behavioural change tool and enabler of improved organizational performance through being instrumental in driving change.

ORGANIZATION INDIVIDUAL

Defines mission, values, strategies and objectives

Understands and agrees objectives

Define tasks, standards and performance measures

Understands and agrees tasks, standards and performance measures

Monitors organisational, team and individual performance

Monitors own performance

Develops team and individual performance

Develops own performance

Figure 1: The contribution of the organisation and the individual in performance management

Performance management therefore aims to emphasize and encourage desired and valued behaviours (Risher, 2003), thus is a key tool of communication and motivation within organizations seeking a competitive edge through strategic change and control.

Performance management then becomes a system for translating organizational intention and ambition into action and results delivering a strategic goal, such as behavioural change (Band et al., 1994).

DEFINITION OF PMS

Fowler (1990) defines performance management as: “…the organisation of work to achieve the best possible results. From this simple viewpoint, performance management is not a system or technique, it is the totality of the day-to-day activities of all managers.”

The (then) Institute of Personnel Management (1992) produced a similar definition:

“A strategy which relates to every activity of the organisation set in the context of its human resources policies, culture, style and communications systems. The nature of the strategy depends on the organisational context and can vary from organisation to organisation.”

Storey and Sisson (1993) define performance management as: “…an interlocking set of policies and practices which have as their focus the enhanced achievement of organisational objectives through a concentration on individual performance.”

Performance management systems are defined as:

…the formal, information-based routines and procedures managers use to maintain or alter patterns in organizational activities (adapted from Simons, 2000).

PERFORMANCE MANAGEMENT AS AN INTEGRATING PROCESS

Performance management is concerned with the interrelated processes of work, management, development and reward. It can become a powerful integrating force, ensuring that these processes are linked together properly as a fundamental part of the human resource management approach which should be practised by every manager in the organisation. This concept is illustrated in Figure 2.

Figure 2: Performance management as an integrating force

CHARACTERISTICS OF PMS

Armstrong and Baron (1998) define performance management by eliciting the characteristics of a performance management system, which are as follows:

It communicates a vision of its objectives to employees.

It sets departmental, unit, team, and individual performance targets that are related to wider objectives.

It conducts a formal review of progress towards these targets.

It uses the review process to identify training, development and reward outcomes.

It evaluates the whole process so as to improve effectiveness.

It defines a managerial structure to look after all the characteristics above, so that individual staff and managers are assigned specific responsibilities to manage the Performance Management System.

Furthermore, a performance management system should have SMART objectives namely; Specific, Measurable, Appropriate, Relevant and Timed.

PURPOSES OF PMS

Armstrong and Baron (1998, pp. 51-6), Williams (2002, pp. 219-24), Poister (2003, pp. 9-15) and others have noted that organisations introduce performance management and/or measurement for a variety of purposes which might include one or more of the following 17 (the list below is not intended to be exhaustive):

(1) to provide information on organisational effectiveness;

(2) to provide information on employees’ effectiveness;

(3) to improve organisational effectiveness;

(4) to improve employees’ effectiveness;

(5) to provide information on organisational efficiency;

(6) to provide information on employees’ efficiency;

(7) to improve organisational efficiency;

(8) to improve employees’ efficiency;

(9) to focus employees’ attention on areas deemed to be of greatest priority;

(10) to improve employees’ levels of motivation;

(11) to link employees’ pay with perceptions of their performance;

(12) to improve the quality of employees’ training and development;

(13) to raise levels of employee accountability;

(14) to align employees’ objectives with those of the organisation as a whole;

(15) to improve customer service;

(16) to facilitate the implementation of an organisation’s mission and/or strategy;

and

(17) to act as a lever of change in developing a more performance oriented culture.

OBJECTIVES OF PMS

To implement organisational objectives and strategies

To facilitate ongoing performance improvement, organisation development and culture change.

To achieve quality and efficiency, i.e. to meet the customer’s needs as precisely, quickly and cheaply as possible.

To ensure clarity regarding work expectations and performance standards, reducing job holder anxiety/stress, resource wastage and conflict.

To continually enhance employee competence through the identification of output-related training and development needs and strategies.

To reduce Line Manager reluctance and fear to do Performance Appraisals with their staff.

To facilitate performance-based remuneration and rewards, so employees can see and experience a clear link between their performance and the rewards they receive.

Thus the main objectives of performance management are:

For performance evaluation

To improve work and performance

For promotion purposes

For performance-related pay

For staff development and continuous learning

PERFORMANCE APPRAISAL

The focus of the performance appraisal is measuring and improving the actual performance of the employee and also the future potential of the employee. Its aim is to measure what an employee does.

According to Flippo, a prominent personality in the field of Human resources, “performance appraisal is the systematic, periodic and an impartial rating of an employee’s excellence in the matters pertaining to his present job and his potential for a better job.” Performance appraisal is a systematic way of reviewing and assessing the performance of an employee during a given period of time and planning for his future.

It is a powerful tool to calibrate, refine and reward the performance of the employee. It helps to analyze his achievements and evaluate his contribution towards the achievements of the overall organizational goals.

PURPOSES OF PERFORMANCE APPRAISAL

The main purposes of performance appraisal are as follows:

Measuring and improving performance

Training and development needs

Performance-related pay

Provide feedback on performance

Promotion

Set revised performance objectives

Deciding future goals and course of actions

THE DIFFERENT APPRAISAL TECHNIQUES (some n my own words)

There are mainly 11 appraisal methods / types which are as follows:

1. Critical incident method

This is a method where the manager takes note of the positive and negative performance behavior of the employees.

2. Weighted checklist method This method describe a performance appraisal method where the rater, familiar with the jobs being evaluated, prepare a large list of descriptive statements about effective and ineffective behavior on jobs.

3. Paired comparison analysis

A range of plausible options is listed and each option is compared against each of the other options. The results are tallied and the option with the highest score is the preferred option.

4. Graphic rating scales

The Rating Scale is a form on which the supervisor checks off the employee’s level of performance.

It is the oldest and most common method used for performance appraisal.

5. Essay Evaluation method

This method is often used with the graphic rating scale method, where supervisors describe strengths and weaknesses of employees’ behavior.

6. Behaviorally anchored rating scales

It is a mixture of the rating scale and critical incident techniques of employee performance evaluation.

7. Performance ranking method

This method is used to evaluate employee performance from best to worst.

Managers use it to compare an employee to another employee, instead of comparing each one to an average measurement.

8. Management By Objectives (MBO) method

It is a process in where managers set objectives for employees, evaluate their performance from time to time and reward them according to their performance.

MBO lays emphasis on goals rather than methods.

9. 360 degree performance appraisal

360 Degree Feedback is a process where employees receive confidential, private and unspecified feedback from individuals who work around them.

10. Forced ranking (forced distribution)

This method ranks workers but in order of forced distribution.

11. Behavioral Observation Scales

This refers to the frequency rating of critical incidents that employee has performed.

MANAGING PERFORMANCE IN THE PUBLIC SECTOR

Measuring performance in the public sector is not a simple task because various qualitative and sometimes, unqualifiable variables have to be considered. These qualitative aspects – such as the general welfare of a community are complex and intangible and hence make performance improvement and productivity measurement difficult. The improvement of performance embraces far more calculable or quantitative criteria to determine how many resources have been expended to achieve specified objectives. Performance improvement should become a way of evaluating the entire institutional context within which services and/or products are provided. It requires analysing types of organisational models, environmental constraints, resource management, working conditions and numerous other aspects which could have either a positive or a negative impact on institutional performance.

Managing performance in the public sector highlights some of the most critical considerations for such a framework. It focuses on the context and importance of performance for good governance, the regulatory guidelines , the designing of a departmental performance management system, as well as the integration of human performance and appraisal into such a system.

BENEFITS OF PMS

A well designed and consistently managed performance management process can be rewarding for both the employee as well as the manager. The main advantages of performance management system are as such:

Performance based conversations

Managers get busy with day-to-day responsibilities and often neglect the necessary interactions with staff that provide the opportunity to coach and offer performance feedback.  A performance management process forces managers to discuss performance issues.  It is this consistent coaching that affects changed behaviors.

Targeted Staff Development

If done well, a good performance management system can be a positive way to identify developmental opportunities and can be an important part of a succession planning process.

Encouragement to staff

Performance Appraisals should be a celebration of all the wonderful things an employee does over the course of a year and should be an encouragement to staff. There should be no surprises if issues are addressed as they arise and not held until the annual review.

Rewards staff for a job well done

If pay increases and/or bonuses are tied to the Performance Appraisal process, staff can see a direct correlation between performance and financial rewards.

Underperformers identified and eliminated

As hard as we try it is inevitable that some employees just won’t cut the mustard as they say.   An effective Performance Appraisal process can help identify and document under performers allowing for a smooth transition if the relationship needs to be terminated.

Documented history of employee performance

It is very important that all organizations keep a performance record on all employees.  This is a document that should be kept in the employee’s HR file.

Allows for employee growth

Motivated employees value structure, development and a plan for growth.  An effective performance management system can help an employee reach their full potential and this is positive for both the employee and manager. A good manager takes pride in watching an employee grow and develop professionally.

DRAWBACKS OF PMS

A well-tuned performance management system has become a new way to attain organizational success by some. Performance management means matching employees with tasks and functions equivalent to their skill and knowledge. The system encompasses employee training and development, team dynamics and organizational restructuring. As such, a performance management system is complex because it involves employees, supervisors and strategic managerial personnel. As a system, its advantages have been broadly advertised, but the system has to be carefully monitored for smooth functioning.

The main disadvantages are discussed below:

Risk of Internal Competition

Under this system, employees compete with each other for job status, position and pay. This could amount to backstabbing, failure among team members to communicate efficiently and strong employee rivalry. It could lead to dysfunction of the department and/or team, resulting in failure to achieve performance standards.

Favoritism

Managers and supervisors tend to trust and depend on one employee more than the others. This employee could be the foreman or the team leader. This employee is entrusted with responsibility of explaining new job roles and duties to other employees. It leads to dissension and distrust among the group members. It causes team fraction and adversely effects employee morale and satisfaction. The attitude is “Why should I even try when the boss will only trust Employee A?”

Expensive and Time-Consuming

Performance management systems are costly, requiring a lot of administrative work, patience and time. Usually, the areas impacted negatively include the human resources department, finance and organizational development. Performance management demands equipping employees with the “right” skills and knowledge. This means conducting extensive training, retraining and career development workshops for every division and employee level. This turns out a costly process. Further, projects are lost as employees are getting trained with new improved skills. This means a negative organizational performance as the time when employees could have been working was spent in a workshop.

Manager’s Dilemma

The manager is unable to perform his tasks efficiently because he spends too much time supervising employees about their job functions. He is faced with value-based appraisal systems. It becomes challenging and tough to decide value and performance indicators for measurement. It is not possible to have common indicators as each job has different job requirements. Managers are faced with information overload.

Convoluted and Bureaucratic

The company ends up hiring and training new personnel. Performance management creates new organizational layers. The employee population increases. Now, instead of one team to do a project, two teams are doing it. This actually affects the financial structure of the organization.

Organizations should take a global look at their performance management system and have very objective goals that are tied to strategic initiatives and the performance management process.  Successful organizations have learned the secret to this and while not always perfect, a constant striving to improve the process can help organizations reach their vision.

IMPLEMENTING A PERFORMANCE MANAGEMENT FRAMEWORK: KEY FACTORS UNDERLYING THE SUCCESS

Employee commitment within the management of change process is crucial, both regarding consolidating present change, and the likely future success of any ongoing change programmes (Bennet and Durkin, 2000).

Commitment and motivation are crucial to the success of a new initiative and the organization must introduce hard procedures to support them (Jackson, 2001).

Previous research has shown that positive involvement of top management acts as support to a new system (Chattopadhyay, 2001). This is largely because senior managers must manage the necessary culture change required (Jackson, 2001).

This culture change is a necessary prerequisite for strategic initiative implementation success because values such as respect, cooperation, trust, and openness are crucial to the effective implementation of initiatives (Jabnoun, 2001).

Strong internal motivation and emotional involvement are necessary if implementation is to be successful (Wang and Ahmed, 2001). Superiors and subordinates must have high levels of trust and confidence in each other, and cooperation and teamwork must exist at all levels (Keating and Harrington, 2002).

Effective implementation of any strategy is more likely to occur if the organizational members are committed to a common vision (Keating and Harrington, 2002).

It is essential that executives and managers be trained in how to effectively implement their strategies into practice within complex and dynamic environments (Okumus, 2003).

A performance management framework will make it possible for an organisation to address:

• desired outcomes and objectives;

• the performance model;

• establishing performance measures;

• setting performance targets;

• monitoring performance;

• performance assessment and evaluation;

• statutory performance reporting requirements; and

• performance improvement.

However, performance management presents severe challenges in terms of practical implementation (Bourne et al., 2000).

Many managers remain sceptical of researchers’, advice in this area, as previous studies have largely failed to overcome many of the organizational constraints on its successful implementation (Redman, 2001).

Institutional Framework for PMS Implementation in the Public Sector

High Level Committee on Public Sector Reforms

Central Performance Management Monitoring Committee

PMS Steering/ Monitoring Committee Ministry/ Department Level

PMS Coordinator/ Facilitator

Implementation Work Team

Other Key Stakeholders

Figure 2

FACILITATORS IN IMPLEMENTING THE PMS

There are five main facilitators in implementing the PMS (M. Cheng, A. Dainty and D. Moore, 2006).

Support and leadership

Senior management support is crucial for any change initiative until it is fully established and accepted (Latino, 1999; Allen and Kilmann, 2001; Chattopadhyay, 2001). Management should ensure that they have the time and resource to properly implement improvement efforts, and be realistic about the time and wider impacts of change demands placed on their employees.

Strategic planning

This involves activities linking the new system to the company mission, vision and defined business strategy, and strategic priorities and goals (Lorange, 1998; Trader-Leigh, 2002; Garrick, 1998; Garavan et al., 2002). The new strategy should be consistent with the strategic direction of the company and be appropriate to the prevailing market conditions.

Planning the implementation

The aim here should be to clearly identify obstacles to change, as well as the driving forces behind it. This should include activities, which encourage the participation of all concerned parties (e.g. front-line staff and management), usually by means of small teams, in goal setting, and identifying solutions (Hansson et al., 2003; Lewis et al., 2004; Hill et al., 2001). The operational planning process will have a great deal of impact on existing resources if it is to be implemented effectively.

Appropriate training and education

Appropriate training has an important part to play in enhancing individuals’ preparedness and abilities to change (Hansson et al., 2003). Training should bolster efforts at communication by helping individuals to develop their contextual understanding in order to convey what is going on, and why. Courses that explain the concept of the new system and how to adopt the new system to the work will be needed. Furthermore, training should be employed to enhance the new skills required of people to adopt the new system.

Monitoring and evaluation

Finally, careful monitoring of the implementation process is crucial to ensuring its sustained effectiveness. This should include activities such as obtaining measurable outcomes in order to provide a clear focus for monitoring and following through the process. Essential elements of this should include control and feedback in the form of both formal and informal mechanisms that allow the process of implementation to be monitored, the use of quick feedback such as customer satisfaction, which can encourage employees to continue with the change process. Failure to achieve the espoused objectives should be investigated and addressed (Hansson et al., 2003; Okumus, 2003).

CONDITIONS FOR SUCCESS OF THE PMS

Top management commitment

Involvement and participation of staff

Communication

Change of mindset

Training

BARRIERS TO IMPLEMENTATION SUCCESS

There are three main barriers to the implementation success of the PMS (M. Cheng, A. Dainty and D. Moore, 2006).

Lack of senior management commitment

Studies show the detrimental impact a lack of management commitment can have on implementation of change initiatives (Hansson et al., 2003; Trader-Leigh, 2002). Without continued senior management commitment, interest in new systems and processes soon wanes. The phenomenon of declining commitment from senior management is attributable to a range of factors including lack of understanding of the objectives and methodologies of the new system (see Hipkin and Lockett, 1995; Hansson et al., 2003), or a perceived threat to supervisors’ and managers’ roles induced by the system (Barodoel and Sohal, 1999). In common with other studies, senior management were found to have little patience for waiting for the new performance management system’s benefits to accrue (Laszlo, 1999).

Employee resistance to change

Employee commitment to change programmes is crucial given that they actually execute implementation activities (Hansson et al., 2003). Low employee commitment could therefore obstruct acceptance of an implementation process (Saad and Siha, 2000).

Inadequate training and support

Lack of the necessary knowledge and skills required for the particular contribution to the system’s implementation act as a barrier to the successful implementation. Therefore adequate training should be given to very member of the organisation so that everyone is aware of the functions of the system, which may lead to successful implementation.