Traditional Performance Management Traditional performance management is generally described within the context of Management by Objectives (MBO). This concerns the management of individual performance in the workplace by first setting individual objectives and then assessing whether these objectives have been achieved. What should it accomplish? Increased management control over work tasks and results Increased management ability to identify problems at an early stage Alignment of employee objectives and organisation objectives Employee motivation through self-set objectives and performance standards Enhanced communication between managers and employees in terms of understanding expectations Clear standards so that breach of standards can be objectively identified and disciplinary action can be taken A system of objective feedback from managers to employees without any subjective influences Measurable objective criteria upon which management can determine rewards such as promotion Centralised record of performance for each employee
Traditional Performance Management Most managers agree with the concepts of performance management, however few actually implement them In reality, Managers: reluctant to give honest and objective feedback due to the fear of damaging relationships with employees, upon whom they rely on to complete tasks Employees: believe that managers are not qualified enough to discuss their performance and coach them to improve their skills A survey conducted by Watson Wyatt showed that only 3 out of 10 workers agree that their company’s performance management system helps improve performance. Less than 40 percent of employees said their systems established clear performance goals, generated honest feedback or used technology to streamline the process. (E.D. Pulakos, 2004, Performance Management, p.1)
Automated Performance Management Theory: Traditional performance management systems are insufficient to support and sustain the advanced levels of shared thinking required for high performing organizations. Benefits of Performance Management Automation Implement performance management best practices more easily Increase goal visibility and boost shared accountability Gain powerful insights by using collected data more effectively Ensure compliance Eliminate paperwork hassles Improve feedback quality and strengthen management skills Save time Gather feedback that’s more honest, objective and open Improve your bottom line
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Management By Objectives (MBO) Case Study: Pakistani Industries Aim: Identify the relationships between effective Management By Objective practices, organisational productivity and employee performance of organisations Only companies listed for more than 3 years were selected 36 responses were collected Organizations operating in the twin cities (Rawalpindi and Islamabad) were personally visited and the questionnaires were distributed to the HR Managers/Executives of the organizations Telephone interviewing and email methods were used (24 responses were collected)
Management By Objectives (MBO) Case Study: Pakistani Industries Human Resource Management professionals of the targeted organizations were requested to reply to all the questions About the MBO practices implemented in their organizations and employee’s performance of their organizations Control variables: Age of the organization and number of employees Independent variables: MBO practices, including Coaching and Mentoring, Performance Based Reward, Employee Participation and Job Description.
Management By Objectives (MBO)Case Study: Pakistani Industries Correlation of Employee Participation and Coaching & Mentoring (0.55) a mentoring system caused better employee participation Correlation between Job description and Coaching & Mentoring system (0.6) showing mentoring effect Between Performance Based Reward and Job Description, correlation is highest (0.59) whenever a highly scientific and rigorous performance based reward is delivered to employees, they act on job description in a proper manner, so their performance increased significantly
Management By Objectives (MBO)Case Study: Pakistani Industries Correlation between Employee Participation and Job Description (0.59) employee’s increased participation in MBO practices automatically describes his/her job area and goal Coefficient of correlation between ‘Organizational Productivity’ and ‘Employees Performance’ is (0.46) usage of transparent coaching and mentoring, performance based reward, employee participation and job description lead to higher organizational productivity and employee performance Significant association between Job Description, Organizational Productivity and the employee’s performance of organization (0.46) psyche of the Pakistani organizations i.e. the performance of the employee is measured on the basis of quantifiable results.
Management By Objectives (MBO)Case Study: Pakistani Industries Impact of Coaching and Mentoring on the employee’s performance of the organizations is showing a positive relationship up to (0.24) among individual MBO practices, Coaching and Mentoring in routine decision-making as well as in strategic decision-making, is a very important factor which is likely to increase the organizations' market share employees in the organizations are allowed to make decisions related to cost and quality matters, they are asked by their supervisors to participate in operations related decisions and suggest improvements in the way things are being done Highest mean of Performance Based Reward (3.75) majority of the managers in the corporate sector are thinking that Performance Based Reward is the most important factor in organizational productivity but Job Description is showing the lowest mean (3.57) Positive correlation amongst several MBO practices
Management By Objectives (MBO)Case Study: Pakistani Industries Conclusion: Positive relationship amongst effective MBO practices, organizational productivity and employee performance. Job Description system has a positive and significant impact and is one of the main indicators of the high organizational performance Employee participation/empowerment is another Effective MBO practice that has a significant impact on the employee performance and proving that an employee’s participation in decision-making leads an organization to perform much better than its competitors in the industry Investing in Coaching and Mentoring tends to have a high employee productivity level that ultimately contributes towards high organizational productivity MBO practices have positively affected the Pakistani corporate sector, and is acting like a catalyst towards the growth in organizational productivity and better employee performance
Balanced Scorecard Introduced by Kaplan and Norton ‘A balanced scorecard is a performance measurement system that identifies and reports on performance measures for each key strategic area of the business’ (Langfield-Smith et al. 2006) It measures organisational performance across four different but linked perspectives that are derived from the organisation’svision, strategy, and objectives
Financial Perspective Question to answer: How should we appear to our shareholders?
Customer Perspective How should we appear to our customers? The unique mix of product, service, relationship and image that a company offers to its target customers; for example: Lowest total cost Product innovation and leadership Complete customer solution
Internal Business Process Perspective What business processes must we excel? Need to consider a number of processes: Operating processes Customer management processes Innovation processes Regulatory and social processes
Learning and Growth Perspective How will we change and grow? Identify initiatives to continuously improve our capabilities in order to support our processes and customers Consider: Human resources (employee competencies) Information technology Organisational culture and alignment
Limitations of BSC Difficulty in evaluating the relative importance of measures (i.e. are all measures equally important?) Large number of measures dilute overall impact Requires quantification of qualitative data Time and expense involved Requires a highly-developed information system Linkages between measures can seem too linear/simplistic Linkages to reward systems: how do we weigh different measures in the reward system?
360 Degree Feedback Overview 360 Degree Feedback is a system in which employees receive confidential, anonymous feedback from fellow workers. Feedback comes from subordinates, peers and supervisors. It also includes a self assessment component from the employee. Results from 360-degree feedback are typically used for training and development purposes.
360 Degree Feedback Development tool to recognise strengths and weaknesses 360 is a highly effective development tool. This type of feedback process gives people an opportunity to provide anonymous feedback to a fellow worker, that they might otherwise feel uncomfortable giving. Feedback recipients gain insight into how others perceive them and have an opportunity to adjust behaviours and develop skills that will enable them to excel at their jobs. Performance Appraisal tool to measure employee performance Using a 360 degree feedback system for Performance Appraisal is a common practice, but not always a good idea. It is difficult to properly structure a 360 feedback process that creates an atmosphere of trust when you use 360 evaluations to measure performance. Moreover, 360 feedback focuses on behaviours and competencies more than on basic skills, job requirements, and performance objectives. These things are most appropriately addressed by an employee and his/her manager as part of an annual review and performance appraisal process. It is certainly possible and can be beneficial to incorporate 360 feedback into a larger performance management process, but only with clear communication on how the 360 feedback will be used.
360 Degree Feedback What it measures 360 feedback measures behaviours and competencies 360 assessments provide feedback on how others perceive an employee 360 feedback addresses skills such as listening, planning, and goal-setting A 360 evaluation focuses on subjective areas such as teamwork, character, and leadership effectiveness http://www.custominsight.com/360-degree-feedback/what-is-360-degree-feedback.asp
360 Degree Feedback What it doesn’t measure 360 feedback is not a way to measure employee performance objectives (MBOs) 360 feedback is not a way to determine whether an employee is meeting basic job requirements 360 feedback is not focused on basic technical or job-specific skills 360 feedback should not be used to measure strictly objective things such as attendance, sales quotas, etc. http://www.custominsight.com/360-degree-feedback/what-is-360-degree-feedback.asp
Westpac Banking Corporation Background Westpac is Australia’s second largest bank Group has a handful of other business units (Rams, St. George, BT Financial) As a large group, a solid performance management structure is required for their staff Westpac transitioned to become more decentralised, with a lot of staffing issues (hiring, performance reviews) done at the branch level Interviewed the manager and other employees to get both views of the performance management systems in the bank
Westpac Banking Corporation People Interviewed Employees in different roles were asked on what they thought of the current performance management systems Frank Speranza (Bank Manager) provided information on Westpac’s Performance Management Systems How were they asked? Questions emailed to manager Approached the manager after work and asked the following questions
How the club managed performance? (traditional or automated)
Type of performance management methods used by the club
Do the performance management systems put in place work?
Are managers basing appraisals on hard facts or opinions?
What does the company define as ‘best practice’ in performance management?
Via email, I asked randomly selected employees to rate the system
Westpac Banking Corporation Findings Westpac uses a combination of both traditional and automated performance management systems The performance management system uses methods including appraisals and 360 degree feedback WBC makes career plans through communication with individual Short and long term goals are set during half yearly appraisals WBC has an appraisal every 6 months starting from the financial year Both the Bank Manager and Assistant Bank Manager conduct the half yearly appraisal Awards and bonuses are provided if the employee meets certain Key Performance Indicators Weekly results are logged on the intra-net and ranked nationally to others in the same role Performance goals are followed up closely by managers
Westpac Banking Corporation Discussion of results Performance is based mainly on sales revenue figures, however attitude to work is also a factor in the employees overall performance. Each employee has his or her own unique career plan set by the acting managers Staff at the Burwood branch have given strong feedback in the branch’s performance management system However, staff felt they were not provided with enough options to learn new skills Burwood branch is currently ranked 20th nation-wide in terms of revenue generated and customer service feedback
Canterbury Leagues Club Background Research by group member into Canterbury Leagues Club to help relate the link of theory and practice behind managing performance Canterbury Leagues Club is one of the biggest clubs in NSW, thus efficient performance management is required Separated into two sections Food and beverage and Gaming. Interviews were conducted by group member aimed at human resources, management and fellow work colleagues to get a overall view of performance management in the club.
Canterbury Leagues Club People Interviewed Several employees were interviewed in the workplace to gather information on what they thought about performance management. Scott Ballesty (Human Resources) was interviewed in depth How were they asked? Some Key questions that were asked were: - How the club managed performance? (traditional or automated) - Type of performance management methods used by the club - Do the performance management systems put in place work? - Are managers basing appraisals on hard facts or opinions? - What does the company define as ‘best practice’ in performance management? Food and Beverage attendants and gaming attendants were given rating survey and ask to rate the performance management that the club was providing.
Canterbury Leagues Club Results of study Club uses traditional and automated elements in performance management and uses short term goals yearly in defining it’s performance management criteria to employees. Methods used for performance management are NTF’s (note to files), appraisals, 360 degree feedback and pager analysis. Club will assess career goals of certain individuals piror to start of employment and regularly set short or long term goals with employee during appraisals. Appraisals are performed in intervals of 6 week, 3 month, 6 month and yearly depending on length of time employee has been employed. Only supervisors and managers conduct appraisals and discuss with human resources Employee of the month and year awards, are rewards measure for improved performance in employees. Appraisals are performed on regular basis and logged on spreadsheet database for human resources to manage. Performance criteria goals regularly discussed and made clear in staff meetings and self-assessment appraisal.
Canterbury Leagues Club Discussion of results Managers and supervisors base appraisals on hard facts rather than opinions and this is done by assessing note to files, as well as self observation. 360 degree feedback is then used by supervisors and managers to back up the facts Club understands the different needs and goals of certain employees and manages their performance accordingly. From rating surveys given out to employees, most employees rated the club’s performance management system to be efficient and effective and meeting their requirements. Process can be streamlined a bit better (more automated) but for the size of the business is not critical
Canterbury Leagues Club From evidence given though club provides employee improvement such as further training and courses to take, club will not enforce this on employees The club 30 years ago had no performance management put in place and was on the verge of bankruptcy. New management then put in long term goals. Club is now the biggest revenue making club in NSW, now basing performance criteria on short term goals. When asked if the current system for evaluating employee performance obtains the desired results? Interesting answer given back by Scott Ballesty was," In cases where the employees goal is to improve.”
Comparison between Westpac and Canterbury Leagues Similarities Interview style performance appraisals 360 degree feedback Rewards based on performance (bonuses, end of year holidays, employee of the month, half yearly awards) Use of both traditional and automated theories of performance management
Comparison between Westpac and Canterbury Leagues Differences Westpac performance management more results based, compared to Canterbury which is more traits and orientated based. Canterbury assess employees with use of self assessments, whilst Westpac will use more of a results based approach to performance appraisals Employees in Westpac are compared and ranked accordingly internally and nationally whilst Canterbury assess employees more individually.
Reference List 2011, Performance Management & Appraisal Help Center, reference library, Bacala and Associates, viewed 8 April 2011, < http://performance-appraisals.org/appraisal-library/>; Elaine D. Pulakos, 2004, Performance Management, effective practice guidelines, SHRM Foundation, viewed 8 April 2011, <http://www.shrm.org/about/foundation/research/Documents/1104Pulakos.pdf>; SuccessFactors, Inc, 2007, 9 critical reasons to automate performance management, The CBS Interactive Business Network, viewed 8 April 2011, http://jobfunctions.bnet.com/abstract.aspx?kw=9+critical+reasons+to+automate+performance+management&;docid=253343&tag=bn-left Qureshi, M, Khan, A, Khan, B, 2008, 'Management by objectives, an effective tool for organisational performance: a case study of Pakistani industries' American Society of Business and Behavioral Sciences, vol 15, no.1, February, pp. 22-33