Evaluating performance management systems

1. Evaluating performance management systems
No matter which way we look, our business and personal worlds are changing. In fact,
the changes are coming so fast and furious that sometimes we feel exhausted from
everything whirling around us. It feels like a tornado of traumatic events over which the
individual has no control.
General Motors (GM) and others were in deep trouble just a little while ago and now with
an influx of investment, restructuring and changes in leadership, GM has announced its
re-emergence from bankruptcy. The employment rate announcements show ups and
downs across the country as different regions experience the worst economic conditions
in many decades. And we are constantly hearing about mergers, acquisitions, work
sharing, downsizing and layoffs, rightsizing, and outright closings.
Frankly, my head is spinning with the constant battering of mostly depressing news. I'll
bet you'll agree with me that it's easy to get bogged down in fuzzy thinking.
Yet one thing is crystal clear. No job is secure, not even those in large institutions such as
government, health care or educational bodies. Everyone is cost cutting. Sometimes I
facetiously think there are managers out there who are so desperate that they are resorting
to rubbing nickels together to see if they can squeeze even more out of their funds. Sorry,
but unless you are a true magician, it just doesn't work. So, bite the bullet and make those
hard choices.
At the same time, if you're an employee who is lucky enough to have kept your job, don't
plan to rest on your laurels. In fact, you have to take charge of your career and ensure you
have the right skills to continue contributing to your company or organization. You have
to ensure you have value for the organization. Typically, this means becoming a
continuous learner, taking on new tasks, learning new skills and, in fact, becoming multi-
skilled.
The economic turmoil around us is also forcing organizations to pay a lot more attention
to productivity issues, which means they must also ensure they have the right skills in the
right place at the right time. This in turn has led to a greater focus on employee
productivity and performance management. To be honest, these areas haven't been well
addressed in the past; in fact, in some cases performance reviews haven't been completed
for years.
While manufacturing companies are known to do a better job of identifying productivity
and performance measures, the so-called white collar service industries that are flush
with "knowledge workers" have often stumbled badly in this HR functional area.
Sometimes service industry leaders don't even know where to start. Yet, if you don't
conduct some sort of objective evaluation of your organization, how will you know

2. where to improve? How will you know where to allocate resources? How will you know
if you are improving, growing or declining? How will you know if your programs are
successful or effective for that matter? Guesses, hunches and relying on tradition will not
work in today's work world.
The following explanation and brief guidelines will help managers and leaders in service
industries to begin the process of establishing an effective performance management
system.
First of all, be aware that essentially, there are five areas where an organization can focus
its measurement efforts. These include 1) performance against the mission 2)
performance against process 3) performance of subsystems such as products, services,
projects and employees4) individual performance measures and 5) staff alignment. Let's
discuss each of them in turn.
1. Performance against mission and strategy -- The mission of your organization is the
ultimate purpose of why you exist. To measure this, you need to look at how well the
organization is meeting the mission. This can be measured in terms of time, quantity,
quality and the cost to produce services as well as elements such as customer
convenience, response time, or the amount of customer face time.
2. Performance against process -- Every organization has numerous processes or steps
that are taken to provide a service or make a product. Typically, an organization would
measure efficiency, effectiveness and timeliness of these processes as these elements play
a key role in building or sustaining key operating systems.
3. Performance of subsystems -- These are the internal subsystems that are key to
supporting the production processes that in turn result in specific outputs of service or
products. It includes such elements as the implementation of new policies or procedures
or installing a new information technology system. Measurements include evaluating the
time, effort and effectiveness of these internal systems.
4. Individual performance -- Unfortunately, many organizations put too much focus on
individual performance rather than including measurements for the other three key
factors mentioned above. However, when implementing a system for individual
performance, include individual personal goals and objectives that are mutually agreed
upon such as financial targets, level of customer service and/or satisfaction. You can also
focus on quality, efficiency, quantity and elements such as flexibility, attitude and
support for the overall mission of the organization.
5. Staff alignment -- If the goal is to ensure the right people in the right place at the right
time, then organizations must measure and evaluate elements such as staff turnover,
absenteeism, worker satisfaction and the cost of all your recruitment efforts. Finally, the
organization needs to assess the return on investment of its training initiatives; are these
initiatives developing the needs and capabilities you require?

3. While documenting a performance system will take time and effort and can itself be well
done, the key to success is in the overall implementation. To ensure success,
organizations need to involve their management team in designing the system and
ensuring consensus on all of the measurements that will be used in its application.
The measurements themselves must also be well chosen so that they truly link with
strategic goals and direction, are easily implemented and can remain consistent for a
period of time. As well, some organizations place too strict a focus or reliance on
numerical calculations and ignore the "soft" elements of personal performance such as
personal suitability, attitude, adaptability and flexibility. This one-sided focus on
performance management will only serve to create additional challenges to be overcome.
While developing and installing a performance measurement and management system in
service organizations is complex, leaders can no longer ignore the value of this human
resource initiative. So, take your time, research and gain information on what is most
suitable for your organization and seek out professional assistance when needed. Get
going and good luck!
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