Collinson Grant has more than 40 years' experience of helping large organisations to improve efficiency and profitability. In many cases, improving the effectiveness of people and the work they do has played a pivotal role in the success of our assignments. This document outlines our approach and contains many tips which managers will find useful. You can find out more by visiting our website www.collinsongranthr.com. or by following us on LinkedIn: http://www.linkedin.com/company/collinson-grant-hr?trk=top_nav_home

1. Performance management

2. Contents
Our approach 1
What is performance management? 2
People as assets (‘Human capital management’) 2
Defining the job 3
Improving competence 3
Setting targets 4
Motivation and attitude 4
Performance management ‘tools’ 5
Appraisal 5
Appraisal systems 5
So why do organisations have appraisal systems? 6
High challenge, high support environment 6
Components of performance management 7
Consultancy support 7
Using the Hersey-Blanchard ‘Situational Leadership’ model 8

3. Performance management
1
Our approach
It is not easy to set up and run an effective system for managing performance.
The starting point is to decide what the strategy for the business actually is.
What is its broad context? What are its longer-term goals? This will shape
how it wants to manage people and teams.
There are three imperatives.
To be clear about the accountability of each job. What is expected
from it? There must be measurable outcomes.
To make sure that each jobholder understands those accountabilities,
expectations and outcomes.
To set out agreed measures of success for the person in the job, and
the controls necessary to review progress such as formal and informal
reviews.
Performance management should be pivotal, as it drives organisational
performance, pay (usually), training and development, promotion, and
dismissal (sometimes).
But most organisations are dissatisfied with the way they operate it.
Most systems have some form of annual appraisal. But all too often it is seen
as bureaucratic – as a burden imposed by Human Resources (HR) rather than
as a spur to the business.
Operational and
financial measures and
controls
Core processes
and systems
Organisational
structure,
accountabilities and
job design
Business
strategy
Culture
Values Knowledge

4. Performance management
2
Annual appraisal is not necessarily appropriate, unless the ‘cycle’ of work is
best measured annually. But some work may have a shorter (or longer) cycle.
Project-based team working, for example, needs more frequent review. Not
all working groups have the same timeframe.
If this is not taken into account, the system for managing performance will not
be fully effective, because it is not synchronised with the business.
Nor should ‘appraisal’ be an isolated event, whatever the timescale. It is a
continuous process – and a fundamental part of a manager’s job.
‘Appraisal’ is not only the formal review. It has other components, such as:
a pat on the back, for a one-off success
the opposite of this, for a lack of success
a performance/disciplinary process
coaching.
Any system for managing performance must fit the particular organisation
and its parts. There is no template.
It should not be complex or create lots of paperwork.
It must be initiated by the senior managers and owned by the
business, not by HR.
It must be synchronised with the business cycle.
It must measure the things that are important for business success.
What are they?
Skills in managing performance (the ‘how’) are more important than
the system (‘the ‘what’). So start with the people who will do the
managing.
What is performance management?
The term ‘performance management’ wrongly implies that it is a discrete
activity, like setting budgets or introducing new products.
Managing performance is what managers do. If they do it well, the people
who report to them will do their own jobs more effectively.
Managing performance is about getting the best out of people – motivating
and helping them to achieve the objectives of the organisation.
People as assets (‘Human capital management’)
When a business acquires new assets, such as plant and equipment, it usually:
evaluates different options, specifications, reliability and payback

5. Performance management
3
monitors operating performance, schedules regular maintenance, and
instals upgrades to improve productivity
decommissions and replaces the plant at the end of its operating life.
But when a business acquires a new employee, all too frequently it:
offers only a vague job description or instruction
goes through a subjective and unstructured selection process or the
random formation of a team
provides no clear objectives
sets up no proper review of performance or development.
What influences the performance of people?
Clear accountability and targets
Competence
Motivation and attitude
Organisational factors.
The manager’s job is to provide the ‘environment’ in which people can
perform.
Defining the job
Start with the business strategy.
Establish the organisational structure.
Determine the jobs required.
Agree on the accountabilities.
Ensure that the main processes and systems are in place.
Provide operational and financial measures and controls.
Improving competence
Understand the skills required of the job.
Technical/professional skills and ‘behaviours’.

6. Performance management
4
What are the standards that must be met? Can you describe them?
Develop the appropriate skills.
Offer training, coaching, and mentoring, et cetera.
Measure the improvement – how?
Be prepared to remove anyone who cannot achieve the required standards.
Setting targets
Targets should be SMART: specific, measurable, achievable, realistic, and
time-related; and consistent with the strategy for the business.
Seek improvement, beyond day-to-day activities.
‘Continue to operate the plant efficiently’ is not a target
‘Improve process efficiency by [x%] by [date]’ is a target.
Ensure that achievement does not detract from the performance of others.
Motivation and attitude
These are matters of ‘conduct’, not of ‘capability’.
Factors that might influence motivation are:
pay and benefits (absolute, or relative to others)
pay progression
non-monetary recognition
career opportunities
the attitudes and cooperation of others
relationship with the manager
respect
communication
job security
discipline
organisational constraints (such as lack of autonomy)
personal or domestic situation
inherent personality traits.

7. Performance management
5
Performance management ‘tools’
Performance appraisal systems.
Competence frameworks.
360-degree feedback.
Situational leadership model (Hersey-Blanchard).
Matrices of skills.
Managerial audits.
Assessments of personality, ability and aptitudes.
Organisational analysis, such as labour turnover, grievances or
absence.
Appraisal
Appraisal should be a continuous process.
An appraisal review should be a ‘health-check’. It provides an opportunity:
to recognise achievement
to review the ‘environment’ (competence, motivation, et cetera)
to plan training, development and succession
to reset objectives.
Annual might not be the appropriate frequency. It depends on the cycle of
work (project-based jobs?)
Appraisal systems
Generally do not work well, because they:
are bureaucratic, complex and inflexible (structure, frequency)
provide no follow-up between formal reviews
spotlight the performance of the manager as well as of the employee –
causing discomfort all round.
The qualities we seek in leaders (initiative, flair, vision) are generally not
consistent with making them follow formal, structured, detailed systems.
That is why senior managers often ignore them.
Appraisal systems try to apply scientific rigour to the measurement of
performance. But human nature gets in the way.

8. Performance management
6
Managers ignore the concept of normal distribution. There is little
differentiation of performance ratings.
Appraisal reviews rarely produce new information. They are often just an
exercise in fitting preconceived views into the categories for rating
performance.
‘It is remarkable how often the first interpretations of new evidence have
confirmed the preconceptions of its discoverer’.
(John Reader, Missing Links, referring to anthropologists).
So why do organisations have appraisal systems?
As a control mechanism for senior managers.
To justify the distribution of salary rises (PRP).
To convert information on people into quantitative data (many
managers prefer numbers to people).
To force managers to sit down with their employees at least once a
year.
HR sees it as part of its ‘intellectual capital’.
High challenge, high support environment
High
HighLow
CHALLENGE
SUPPORT
Antagonism
Isolation
Contribution
High Performance
Comfort
Low Esteem
Apathy
Laziness
Low
High
HighLow
CHALLENGE
SUPPORT
Antagonism
Isolation
Contribution
High Performance
Comfort
Low Esteem
Apathy
Laziness
Low

9. Performance management
7
Components of performance management
Consultancy support
Collinson Grant can help:
to set the business strategy and establish the organisational structure
to define the jobs and competences required
to design the process for managing performance
to introduce tools or methods
to design mechanisms for reward
to coach managers (individuals or teams)
to measure performance
to change the culture (where the ‘environment’ inhibits high
performance)
to restructure the organisation.
There is a need to review how performance is managed when:
the current system has fallen into disuse or disrepute
an acquisition necessitates the integration of two systems
money for salary rises is restricted to high performers
a new Managing Director wants to introduce new values and measure
compliance
Building Blocks
Foundations
Individual
Trust
Respect
Manager
DeliverablesGoal setting Accountabilities
Monitoring Improvement
Reward Sanctions
Building Blocks
Foundations
Individual
Trust
Respect
Manager
DeliverablesGoal setting Accountabilities
Monitoring Improvement
Reward Sanctions

10. Performance management
8
the company wants to select high performers for senior positions, or
poor performers for redundancy
there is no ‘system’ and the organisation feels the need to start one.
Using the Hersey-Blanchard ‘Situational Leadership’
model
Managing people singly or collectively is made easier when managers and staff
can refer behaviour and style to a commonly understood model, of which
Hersey-Blanchard is one.
Its main principle is that managers or leaders should adapt their style to the
follower’s development (or 'maturity') – how ready and willing (that is,
competent and motivated) the follower is to do the required tasks.
The four leadership styles (S1 to S4) match the development levels (D1 to D4)
of the followers.
The emphasis that leaders place on the task in question, and/or on the
relationship between the leader and the follower, depends on the development
level of the latter.
How leaders adapt their style to suit followers
The Hersey-Blanchard Situational Leadership Model
Leadership style in response
to follower’s development
Low Task/directive High
behaviour
Relationship/
Supportive
Behaviour
R4 R3 R2 R1
High
S3 Participating S2 Selling
Low
S4 Delegating S1 Telling
S1: Telling/directing
Follower: (R1) Low competence, low commitment/unable and unwilling or
insecure.
Leader: Focuses on the task rather than on the relationship.
When the follower cannot do the job and is unwilling or afraid to try, the
leader takes a highly directive stance, explaining what to do but with no great
concern for the relationship. The leader may also provide a working structure
for the job and for how the person is controlled.

11. Performance management
9
The leader may first find out why the person is not motivated and if there are
any limitations in ability. These two factors may be linked. A lack of belief in
personal capacity can sap confidence and reduce ability.
If the leader focused on the relationship, the follower might become confused
about what must be done and what was optional. So the leader takes a firm
stance – 'Do this' – which makes all the required actions clear.
S2: Selling/coaching
Follower: (R2) has some competence, variable commitment, but is willing or
motivated.
Leader: focuses on the task and on the relationship.
A follower who can do the job, at least to some extent, and who may even be
overconfident, might be demotivated or resistant if ‘told’ what to do. So the
leader needs to 'sell' another way of working – to explain and to clarify the
decisions.
So the leader spends time listening, advising, and, where appropriate,
coaching the follower in the necessary skills.
S3: Participating
Follower: (R3) is competent to do the job but is unwilling because of insecurity
or a lack of confidence.
Leader: focuses on the relationship rather than on the task.
A follower who is able to do the job but is unwilling to take responsibility or
lacks confidence. The leader needs to encourage their participation in
decisions about how tasks should be done.
By engaging the follower and sharing ideas, the leader builds a greater
understanding of the task and fosters confidence.
S4: Delegating
Follower: (R4) is able, willing and confident in doing the job.
Leader: turns over the decisions over to the group, with little focus on the task
or the relationship.
A follower who is very capable and willing to take responsibility for making
decisions and being accountable for the results.
By allowing the follower, or the group, to take responsibility for decisions
about the task, the leader's intervention is kept to a minimum.
120313

12. Costs People Organisation
Productivity Performance Restructuring
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Kingdom
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Complexity, Direct costs, Employee relations,
Employment law, Implementing change, Integrating organisations, Lean,
Managerial controls, Organisational design, Overheads, Performance management,
Pricing, Process improvement, Procurement, Reward, Supply chain,
Transitional management, Value chain analysis, Workforce planning
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