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Performance management
- 2. Performance Management and Performance Appraisal Performance management: Dynamic, continuous process. Improves organizational effectiveness. Strategic goals. Performance appraisal: Periodic (usually annual) event. Formal review. Last step in performance management process.
- 3. Who’s Involved? What Are Their Needs? Organization: Information. Documentation. Supervisor: Documentation. Motivation. Employee: Feedback. Support for career growth. Increased compensation.
- 4. Performance Management Goals Communication between supervisor and employee. Feedback on performance. Documentation. Development Goals. Alignment with strategic planning goals.
- 5. HR’s Role in Performance Management Participate in strategic planning. Conduct job analysis. Support performance management. Design appraisal system. Train and support managers. Maintain documents. Provide employee due process. Ensure integrity of the system. Ensure compliance with nondiscrimination laws.
- 6. Performance Management Process 1. Prerequisites. 2. Performance planning. 3. Performance execution. 4. Performance assessment. 5. Performance review. 6. Performance renewal and re-contracting. Planning Execution AssessmentReview Renewal
- 7. 1. Prerequisites Prerequisites: Strategic planning. Job analysis.
- 8. 2. Performance Planning Employees must have thorough knowledge of the performance management system. Meeting between employee and manager. Set SMART goals and measurement standards: Results. Behavior. Developmental plans.
- 9. Writing SMART Performance Objectives Practice writing SMART performance objectives: S – Specific. M – Measurable. A – Attainable. R – Realistic. T – Timely.
- 10. 3. Performance Execution Shared responsibility Employee responsibility: Commitment to established goals. Communication and update with manager. Manager responsibility: Feedback, coaching and reinforcement. Resource support. Accurate observation and documentation.
- 11. Issues With Performance Management Legal issues. Untrained raters. Rater errors. Rater distortion. No grievance procedure.
- 12. Poorly Implemented PM Systems False and misleading information. Increased turnover. Wasted time and money. Damaged relationships. Decreased motivation. Job dissatisfaction. Risk of litigation. Unfair standards.
- 13. Performance Management Skills Communication. Coaching. Giving feedback. Empathy. Teamwork.
Editor's Notes
- This is the first class of this two-part module on performance management and appraisal. Start by asking students if they have ever had a performance review. A few will probably raise their hands. Also, ask if any of them have been in a position to conduct a review on another employee either in a management position or as a peer reviewer. This will result in fewer raised hands or maybe none. Ask students to express their feelings about the appraisal process. There may be a few who say it was a good process, but mostly performance appraisals are mostly viewed negatively by managers and employees, and this is probably what you will hear from your students. Acknowledge the negative and tell them that their feelings are common. This is your opportunity to tell them that a performance review is just one part of a performance management process. It is a process that involves goal setting and employee growth for the enhancement of the employee and the organization. When done properly, it is a positive experience. How it can be done is what this class is about.
- Performance management is a goal-oriented system to ensure that organizational processes exist to maximize the productivity of employees, teams and, ultimately, the organization. A performance appraisal is a formal system of review and evaluation of individual or team performance. Performance management is an ongoing organizational process that is conducted to maximize the productivity of employees with the overall intention of improving the organization’s effectiveness. It is strategic in nature and involves every person and all HR processes in the organization. All are directly tied to achieving the organization’s goals. The performance appraisal is a periodic event to reflect and evaluate past performance with the intent to identify strengths and weaknesses of an employee’s performance and to identify developmental goals. A performance appraisal is just one part of a performance management system. Source: Mondy, R. (2008). Human resource management, 10th ed. New Jersey: Pearson Prentice Hall, 224-225.
- The performance management process involves all levels in an organization. Strategic goals set by the organization filter through the organization and affect the goals and activities of each employee. In addition, the performance management process gathers and updates current employee data to maintain the human resource information system (HRIS). The HRIS contains a skill bank of employee information that enables the HR department to determine if the organization has the right mix of skills and people to achieve the organization’s goals in an ever-changing world. This information is used in all areas of HR decision-making. Effective performance management requires ongoing communication between supervisors and staff. The assessment and review part of the process provides the opportunity for documentation and formal communication. It’s the time for the supervisor and the employee to set developmental goals that reinforce the organization’s strategic plan and, if there are areas of problem performance, action plans for improvement. There should be discussion of the employee’s career progress and plans made for training and long-term career growth. Many supervisors see the appraisal process as a motivation tool to improve employee performance. The employee’s main objective is to obtain feedback from the supervisor on his or her work performance. Ideally, employees receive feedback at all times and not just through the review process. The employee will also expect organizational support in his or her career growth. Together, the employee and the supervisor should identify areas for improvement and set goals for training and skill development. Anything the supervisor can do to enhance the employee’s skills will benefit both the employee and the organization. If the organization links performance appraisal to compensation, most employees will expect a raise as a result of a positive review. Though supervisors generally conduct the review, they may not have a say in the amount of compensation awarded because compensation is normally determined by organizational policy. This can be particularly problematic for supervisors who want to motivate employees through the appraisal process but find the organization’s compensation to be a de-motivator when increases are not as much as employees would like. For this reason, many supervisors prefer that compensation increases are not linked to the performance appraisal process.
- Performance management is not a one-time event but a continuous process. It should align with the organization’s strategic goals and require open communication among managers and staff. It provides time for formal feedback, but employees should receive continuous feedback from their supervisors and not just at review time.
- HR plays a significant role in the performance management process, from the prerequisites and through the entire process. In the prerequisite stage, HR participates in goal setting during the strategic planning process, conducts job analyses and ensures that job analysis information is current. These are crucial steps in a successful performance management system. Throughout the system, HR supports and trains managers in the skills necessary to execute their part of the process. HR designs and implements the performance review system and makes sure managers have the skills necessary to offer timely, unbiased employee ratings. It is HR’s responsibility to monitor the process to ensure there is documentation that accurately represents employee performance and can be used to make personnel decisions without fear of discrimination and litigation. HR supports employees as well as the managers throughout the process by acting as an advocate for all employees. HR should establish a due process system for employees who do not agree with their performance ratings. HR acts as a sounding board for employees, allowing their issues to be heard and addressed. HR protects the integrity of the system by insisting on objective, timely reviews and addressing employee concerns with due process. In addition, HR maintains employee records and ensures employee privacy.
- These are the steps in the performance management process. An important concept of performance management is that it is a continuous process characterized by open communication between employees and supervisors in which feedback is exchanged and coaching is given if needed. The second concept is a clear identification of the link between employees’ contributions and organization’s goals. Source: Aguinis, H. (2007). Performance management. New Jersey: Pearson Prentice Hall.
- Before we can begin the performance management process, two important prerequisites must occur. First, strategic planning must be completed because the performance management process builds on an organization’s goals. Once organizational goals are established, employee goals cascade from there. Remember, an important objective of the performance management process is to enhance employees’ contributions to the organization’s goals. The second prerequisite is a thorough understanding of the job. This is done through job analysis. If it has been some time since a job analysis was conducted for a position, it may be necessary to conduct a new analysis before starting the performance management process. If you are working with job descriptions that read like the last century, it’s time to update them if you expect to be successful in today’s highly competitive, technology-driven workplace. Once strategic planning goals are established and the job analysis information is current, the performance management process can begin.
- Once the prerequisites are in place, the next step in the process is performance planning where the organization establishes the criteria and expectations for employee performance. Supervisors must communicate this to employees in such a way that everyone understands the expectations. It would not be appropriate to expect outstanding performance from employees if they had no idea how the organization describes and measures outstanding. Clear communication is a central part of the performance management process. In this step, the manager and employee together identify what needs to be done and how it will be accomplished. This includes consideration of results and appropriate behaviors to accomplish tasks. The supervisor and the employee must agree on the objectives to be accomplished. These are the specific outcomes the employee is expected to achieve. Outcomes must include specific, measurable performance standards. Use the SMART acronym to write appropriate objectives. SMART stands for specific, measurable, attainable, realistic and timely. Instructor’s Note: If students are not familiar with SMART goal setting, some additional discussion may be needed here. Remind students that goals set using SMART guidelines are more likely to be achieved than those without SMART principles. Example: Poorly written objective: Increase widget production. This objective sounds like a good goal, but it is so illusive that employees would not know how to accomplish the task and certainly no way to measure its accomplishment. SMART objective: Control product defects to increase annual widget production by 5 percent while maintaining current budget and specification levels. This objective fits the SMART formula. It’s specific. It tells employees what the end result should be–a 5 percent increase in production. It tells employees what to work on–product defects. It identifies the time period–one year. Finally, it gives measurable parameters for accomplishment–within budget and specifications. The objective is specific, measurable, attainable, realistic and timely. Just as results are important to successful performance, so too are behaviors. Results–“Did the employee accomplish the tasks?” Behaviors–“How did they do it?” Behaviors include competencies as well as traits like teamwork, leadership and communication. If employees accomplish their tasks but they are horrible to work with and have alienated their entire department–that’s not a good outcome! Open communication, working with a team and meeting deadlines so other staff members can accomplish their parts of the process are all areas that should be addressed in the performance review. The last part of the performance plan is to establish employee developmental goals. If there are areas that need improvement, they should be identified and plans made to correct the deficiency. Even without needed improvement, though, employees need an opportunity to grow in their careers and to learn new skills. Improvement plans should be identified and progress toward goals measured as part of the review process. Employee growth adds value not only to the employee personally but to the employee’s manager and to the organization as a whole.
- Class activity. Distribute the delivery driver job description provided in the instructor’s manual and ask students to write SMART objectives for the delivery driver job. If you prefer, you can use another job description. The examples below are based on the delivery driver position. Examples from the Responsibilities and Duties Section of the Job Description: 6. Performs and schedules preventive maintenance. SMART objective: By Oct. 31, complete an inventory of department vehicles and create an Excel spreadsheet to schedule and track completion of preventive maintenance, indicating due date, completion date and responsible party. 9. Complete hazardous chemical awareness program and maintains…. SMART objective: Attend and complete (with a minimum grade of C ) a hazardous chemical awareness class at the community college during spring semester of 2009. 10. Cross trains in other department operations as assigned. SMART objective: Work with the safety manager three hours per week between Sept. 1 and Nov. 30 to input safety record data and to learn the process to maintain files of safety requirements and certification.
- Accomplishing objectives is a shared responsibility between the employee and manager. It requires both to be committed to achieving the desired results. If the objectives are set by the manager only and the employee doesn’t agree, successful accomplishment is unlikely. If there is disagreement on goals, negotiation and compromise must occur; no progress can be made unless everyone is on the same page. Success also requires open, ongoing communication between the manager and employee. A manager who sets goals for the employee and then walks away and doesn’t check to see if goals are being accomplished until the next review period is setting the employee and the organization up for failure. The manager is responsible for giving feedback to the employee, coaching and encouragement when needed and praise when things are going well. The employee is responsible for communicating progress to the manager and keeping the manager informed of any deviation from timelines, budgets or other problem areas. The manager is responsible for providing the employee with resources needed to successfully complete the task. This is where the “R” part of the SMART acronym comes into play. It is not realistic to expect high-level performance from an employee if he or she is not given the necessary resources to make it happen. If resources are unavailable–there is simply not enough time, money or supplies–this must be taken into consideration when the objectives are set. Because the manager plays a key role in the assessment process, the manager must be aware of the employee’s work. It is the manager’s obligation to provide accurate observation and documentation of the employee’s accomplishments. A manager should never review an employee if that employee’s work is not known to the manager.
- When completed, the appraisal becomes part of the employee’s personnel record, and it is from these documents that many employment decisions are made. An employee’s compensation level and opportunities for training or job promotion are often made based on performance appraisal ratings, as are organizationwide decisions on retrenchment and layoffs. As a result, it is imperative that performance management activities are nondiscriminatory and that all employees receive a fair process with equal opportunity within the organization. Information in employee files can be skewed by untrained managers who make errors or inadvertently distort information. It is important that managers are trained in performance appraisal and that the HR department monitors activities to ensure that performance appraisal documents are consistent across departments. For example, if one manager is especially harsh in ratings and employees in that department are rated low and another manager is especially lenient and gives staff high ratings, the result is inaccurate appraisal documents that don’t reflect employee performance, giving an unfair advantage to staff whose appraisals are written by the lenient manager. It is important to have a grievance procedure in place for employees who may not agree with their appraisal ratings. Due process is vital. Employees need an unbiased ear where their issues can be heard and addressed objectively.
- When performance management systems are poorly managed and don’t work as intended, there are a number of negative consequences. It is impossible for HR to make accurate and equitable employment decisions when employee files are littered with false and misleading information. Employees know when a favored employee receives an undeserved performance rating or when a supervisor unfairly gives staff inappropriately high ratings. Decisions made on such inaccuracies result in employee cynicism, distrust in management and loss of morale. At the least we can expect lower productivity, but worse yet, poorly managed performance management systems will send the best people packing and may lead to claims of discrimination and litigation.
- Successful performance management doesn’t just happen. It requires a concentrated effort that includes support from upper management and trained managers at all levels. It is an ongoing process that requires open communication, coaching, feedback and documentation of employees’ work that must be a regular part of management activities and not just a once-a-year paper-and-pencil process. Communication, encouragement and empathy build successful relationships that enhance staff performance and support organizational goals. Students of management and human resources must learn these communication and leadership skills to ensure their place in successful organizations of the future.
- Student role play.