As a business grows and takes on more staff, the management of people becomes a bigger issue. There will reach a point where it is right to introduce a staff performance management system.
In addition, a number of organisations in the public sector have recently introduced performance management systems; as reaching demanding government targets has meant developing performance management cultures across departments. For example, organisations in the emergency services have designed performance management systems that tie in control room and field staff to meeting targets.
A performance management system consists of agreeing objectives or goals with each employee that reflect what they will achieve in the coming period (say the next twelve months). The precise objectives will depend on the employee’s role; for example, a sales manager may have objectives relating to the amount of sales to new or existing customers as well as correct completion of order forms and related administration.
Objectives are recorded and, if achieved, should make sure that the employee makes a strong contribution to overall company performance.
Generally, staff will receive an annual review and progress towards achieving the objectives will form part of this discussion. Sometimes the outcomes of the annual review will decide pay awards and bonus payments.
Performance management systems are in operation in most medium and large companies. They are often seen as a way of maximising individual employee performance and can mean that everyone is pulling together to achieve the goals of the organisation. Most managers I speak to see them as a way of improving employee morale with all the associated benefits that come with this.
In practice, however, there are few things that managers and supervisors struggle more with in their day-to-day duties. The worst thing is that, in spite of this, most companies let their performance management systems run and run, not aware of the damage that they can create.
Here are some of the things that happen:
- Objectives for the forthcoming year are generally imposed and may often be unrealistic or out of the control of the staff member
- Managers, supervisors and staff are often poorly briefed in how the performance management system is supposed to work
- While meeting structures are put in place to review objectives, these are often the first thing to be cancelled when pressures of work dictate
- The yearly performance appraisal is based on events over the last few weeks and not the year
- If a rating is given as part of this process, the results are often influenced by how the parties get on
- The final appraisal often involves completing complicated documentation that serves little purpose. All parties, except the Human Resource department, see this as an end in itself and a major achievement when the documentation is complete and signed.
For a staff member, there aren’t many things as personal as appraisals about their own performance at work. The chances of de-motivating staff members, if the performance management processes aren’t effective, are high.
It gets worse if there is a pay rise or bonus that is determined by the process, particularly if the achievement of an objective has been hit by a reason outside the staff member’s control. For example, an unexpected loss of a large customer due to financial reasons may impact greatly on the sales managers performance.
So, if a senior manager is thinking about designing, implementing or improving a performance management system, here are some points to consider:
- Staff should have input into the design of the system and accept its fairness
- Where possible there should be a combination of individual and team goals for staff members to work to
- The system should be as simple as possible and fully communicated to staff
- There should be an element of 360 degree feedback (i.e the employee has an opportunity to review the way she is being led)
- Any personal development objectives agreed should have a realistic chance of being fulfilled and a clear action plan on how they are going to happen. All too often such objectives are agreed and nothing then happens
- There should be consistency in the way the system is applied across the company and checks and balances to make sure this happens; for example managers should meet regularly to compare results
- The system should be regularly reviewed to make sure weak areas are corrected. Staff members should play a part in this review process.