Performance Management

Performance management (PM) includes activities which ensure that goals are consistently being met in an effective and efficient manner. Performance management can focus on the performance of an organization, a department, employee, or even the processes to build a product or service, as well as many other areas. PM is also known as a process by which organizations align their resources, systems and employees to strategic objectives and priorities.[1] Performance management as referenced on this page is a broad term coined by Dr. Aubrey Daniels in the late 1970s to describe a technology (i.e. science imbedded in applications methods) for managing both behavior and results, two critical elements of what is known as performance.[2]

Contents

1 Application 2 Benefits 3 Organizational Development 4 Implementation 5 See also 6 References 7 External links 8 Further reading

Application
This is used most often in the workplace, can apply wherever people interact schools, churches, community meetings, sports teams, health setting, governmental agencies,social events and even political settings - anywhere in the world people interact with their environments to produce desired effects. Armstrong and Baron (1998) defined it as a strategic and integrated approach to increase the effectiveness of companies by improving the performance of the people who work in them and by developing the capabilities of teams and individual contributors. It may be possible to get all employees to reconcile personal goals with organizational goals and increase productivity and profitability of an organization using this process.[3] It can be applied by organizations or a single department or section inside an organization, as well as an individual person. The performance process is appropriately named the self-propelled performance process (SPPP).[citation needed] First, a commitment analysis must be done where a job mission statement is drawn up for each job. The job mission statement is a job definition in terms of purpose, customers, product and

scope. The aim with this analysis is to determine the continuous key objectives and performance standards for each job position. Following the commitment analysis is the work analysis of a particular job in terms of the reporting structure and job description. If a job description is not available, then a systems analysis can be done to draw up a job description. The aim with this analysis is to determine the continuous critical objectives and performance standards for each job.

Benefits
Managing employee or system performance facilitates the effective delivery of strategic and operational goals. There is a clear and immediate correlation between using performance management programs or software and improved business and organizational results.[citation needed] For employee performance management, using integrated software, rather than a spreadsheet based recording system, may deliver a significant return on investment through a range of direct and indirect sales benefits, operational efficiency benefits and by unlocking the latent potential in every employees work day (i.e. the time they spend not actually doing their job). Benefits may include: Direct financial gain

Grow sales Reduce costs in the organization Stop project overruns Aligns the organization directly behind the CEO's goals Decreases the time it takes to create strategic or operational changes by communicating the changes through a new set of goals

Motivated workforce

Optimizes incentive plans to specific goals for over achievement, not just business as usual Improves employee engagement because everyone understands how they are directly contributing to the organizations high level goals Create transparency in achievement of goals High confidence in bonus payment process Professional development programs are better aligned directly to achieving business level goals

Improved management control

Flexible, responsive to management needs Displays data relationships Helps audit / comply with legislative requirement Simplifies communication of strategic goals scenario planning

Provides well documented and communicated process documentation

Organizational Development
In organizational development (OD), performance can be thought of as Actual Results vs Desired Results. Any discrepancy, where Actual is less than Desired, could constitute the performance improvement zone. Performance management and improvement can be thought of as a cycle: 1. Performance planning where goals and objectives are established 2. Performance coaching where a manager intervenes to give feedback and adjust performance 3. Performance appraisal where individual performance is formally documented and feedback delivered A performance problem is any gap between Desired Results and Actual Results. Performance improvement is any effort targeted at closing the gap between Actual Results and Desired Results. Other organizational development definitions are slightly different. The U.S. Office of Personnel Management (OPM) indicates that Performance Management consists of a system or process whereby: 1. 2. 3. 4. 5. Work is planned and expectations are set Performance of work is monitored Staff ability to perform is developed and enhanced Performance is rated or measured and the ratings summarized Top performance is rewarded[4]

Implementation
Erica Olsen notes that "Many businesses, even those with well-made plans, fail to implement their strategy. Their problem lies in ineffectively managing their employees once their plan is in place. Sure, they've conducted surveys, collected data, gone on management retreats to decide on their organization's direction-- even purchased expensive software to manage their process-- but somewhere their plan fails." [5]

2nd

Overview

Performance management is the systematic process by which an agency involves its employees, as individuals and members of a group, in improving organizational effectiveness in the accomplishment of agency mission and goals. Employee performance management includes:

planning work and setting expectations, continually monitoring performance, developing the capacity to perform, periodically rating performance in asummary fashion, and rewarding good performance.

The revisions made in 1995 to the Governmentwide performance appraisal and awards regulations support sound management principles. Great care was taken to ensure that the requirements those regulations establish would complement and not conflict with the kinds of activities and actions practiced in effective organizations as a matter of course. Additional background information on performance management can be found in the following articles:

Chronology of Employee Performance Management in the Federal Government Setting the Stage for Performance Management Today

In an effective organization, work is planned out in advance. Planning means setting performance expectations and goals for groups and individuals to channel their efforts toward achieving organizational objectives. Getting employees involved in the planning process will help them understand the goals of the organization, what needs to be done, why it needs to be done, and how well it should be done. The regulatory requirements for planning employees' performance include establishing the elements and standards of their performance appraisal plans. Performance elements and standards should be measurable, understandable, verifiable, equitable, and achievable. Through critical elements, employees are held accountable as individuals for work assignments or responsibilities. Employee

performance plans should be flexible so that they can be adjusted for changing program objectives and work requirements. When used effectively, these plans can be beneficial working documents that are discussed often, and not merely paperwork that is filed in a drawer and seen only when ratings of record are required.

In an effective organization, assignments and projects are monitored continually. Monitoring well means consistently measuring performance and providing ongoing feedback to employees and work groups on their progress toward reaching their goals. Regulatory requirements for monitoring performance include conducting progress reviews with employees where their performance is compared against their elements and standards. Ongoing monitoring provides the opportunity to check how well employees are meeting predetermined standards and to make changes to unrealistic or problematic standards. And by monitoring continually, unacceptable performance can be identified at any time during the appraisal period and assistance provided to address such performance rather than wait until the end of the period when summary rating levels are assigned.

In an effective organization, employee developmental needs are evaluated and addressed. Developing in this instance means increasing the capacity to perform through training, giving assignments that introduce new skills or higher levels of responsibility, improving work processes, or other methods. Providing employees with training and developmental opportunities encourages good performance, strengthens job-related skills and competencies, and helps employees keep up with changes in the workplace, such as the introduction of new technology. Carrying out the processes of performance management provides an excellent opportunity to identify developmental needs. During planning and monitoring of work, deficiencies in performance become evident and can be addressed. Areas for improving good performance also stand out, and action can be taken to help successful employees improve even further.

From time to time, organizations find it useful to summarize employee performance. This can be helpful for looking at and comparing performance over time or among various employees. Organizations need to know who their best performers are. Within the context of formal performance appraisal requirements, rating means evaluating employee or group performance against the elements and standards in an employee's performance plan and assigning a summary rating of record. The rating of record is assigned according to procedures included in the organization's appraisal program. It is based on work performed during an entire appraisal period. The rating of record has a bearing on various other personnel actions, such as granting within-grade pay increases and determining additional retention service credit in a reduction in force. Note: Although group performance may have an impact on an employee's summary rating, a rating of record is assigned only to an individual, not to a group.

In an effective organization, rewards are used well. Rewarding means recognizing employees, individually and as members of groups, for their performance and acknowledging their contributions to the agency's mission. A basic principle of effective management is that all behavior is controlled by its consequences. Those consequences can and should be both formal and informal and both positive and negative. Good performance is recognized without waiting for nominations for formal awards to be solicited. Recognition is an ongoing, natural part of day-to-day experience. A lot of the actions that reward good performance like saying "Thank you" don't require a specific regulatory authority. Nonetheless, awards regulations provide a broad range of forms that more formal rewards can take, such as cash, time off, and many nonmonetary items. The regulations also cover a variety of contributions that can be rewarded, from suggestions to group accomplishments.

Managing Performance Effectively. In effective organizations, managers and employees have been practicing good performance management naturally all their lives, executing each key component process well. Goals are set and work is planned routinely. Progress toward those goals is measured and employees get feedback. High standards are set, but care is also taken to develop the skills needed to reach them. Formal and informal rewards are used to recognize the behavior and results that accomplish the mission. All five component processes working together and supporting each other achieve natural, effective performance management.

3rd

An introductory guide
Performance Management is a cyclical process aimed at improving performance (eg: achievement of business objectives). Performance Management involves the following principles (illustrated by a call centre example):

Measurement o You establish performance measures (eg: sales turnover) o You establish measurable behavioural goals that will improve performance (eg: making 30 prospective phone calls a day) o You measure current behaviours (eg: logging actual phone calls) Appraisal o You compare the current behaviours with the behavioural goals and identify the main differences (eg: on average, 20 phone calls are actually being made, giving a shortfall of 10 phone calls). Action

For each difference, you plan how to bring actual behaviours in line with the goals, in order to improve the performance (eg: introduce a revised telephone script that qualifies the prospect more quickly, shortening each phone call and enabling more calls to be made in the time available) o You implement the plan (eg: issue the revised script to all telesales people, perhaps with some training to support its use) Monitoring o Check that the new plans are being followed (eg: review a sample of phone call recordings to determine whether the new script is being used and check that it is 'workable'). o At an appropriate time, you return to the appraisal stage to assess the impact of the changes on the behavioural and performance measures (eg: review the average number of calls made per day and sales achieved).

The term "Performance Management" is often used in two contexts:

1. A way of maximising performance of an individual, team or organisation 2. A process for dealing with underperforming individuals (or teams).

Whilst the underlying principles are always the same, the way in which they are implemented varies between the two contexts.
Maximising performance Poor performers

Usually collaborative between management and staff

Involves more confrontation

Can be informal, with written records only recording revised targets

Is a formal process with each step being written down

Is a cyclical process, one of constant improvement

Is a process that escalates into disciplinary proceedings, possibly concluding with termination of employment

Often involves analysis of the process

Often involves analysis of one individual's behaviours/attitudes

Conclusion

Performance Management is a term used to improve team performance, based on the principles of measurement, appraisal, action and monitoring. However, it can be manifest in very different forms depending on whether the aim is to further improve good performers, or deal with underperformance. Performance Management can also apply to individuals, teams, groups or organisations. We have an article on performance management for teams, which is aimed at helping good teams improve their performance even further.

4th Definition of Performance Management

The role of HR in the present scenario has undergone a sea change and its focus is on evolving such functional strategies which enable successful implementation of the major corporate strategies. In a way, HR and corporate strategies function in alignment. Today, HR works towards facilitating and improving the performance of the employees by building a conducive work environment and providing maximum opportunities to the employees for participating in organizational planning and decision making process. Today, all the major activities of HR are driven towards development of high performance leaders and fostering employee motivation. So, it can be interpreted that the role of HR has evolved from merely an appraiser to a facilitator and an enabler.
Performance management is the current buzzword and is the need in the current times of cut throat competition and the organizational battle for leadership. Performance management is a much broader and a complicated function of HR, as it encompasses activities such as joint goal setting, continuous progress review and frequent communication, feedback and coaching for improved performance, implementation of employee development programmes and rewarding achievements. The process of performance management starts with the joining of a new incumbent in a system and ends when an employee quits the organization. Performance management can be regarded as a systematic process by which the overall performance of an organization can be improved by improving the performance of individuals within a team framework. It is a means for promoting superior performance by communicating expectations, defining roles within a required competence framework and establishing achievable benchmarks.

According to Armstrong and Baron (1998), Performance Management is both a strategic and an integrated approach to delivering successful results in organizations by improving the performance and developing the capabilities of teams and individuals. The term performance management gained its popularity in early 1980s when total quality management programs received utmost importance for achievement of superior standards and quality performance. Tools such as job design, leadership development, training and reward system received an equal impetus along with the traditional performance appraisal process in the new comprehensive and a much wider framework. Performance management is an ongoing communication process which is carried between the supervisors and the employees through out the year. The process is very much cyclical and continuous in nature. A performance management system includes the following actions.

Developing clear job descriptions and employee performance plans which includes the key result areas (KRA') and performance indicators. Selection of right set of people by implementing an appropriate selection process. Negotiating requirements and performance standards for measuring the outcome and overall productivity against the predefined benchmarks. Providing continuous coaching and feedback during the period of delivery of performance. Identifying the training and development needs by measuring the outcomes achieved against the set standards and implementing effective development programs for improvement. Holding quarterly performance development discussions and evaluating employee performance on the basis of performance plans. Designing effective compensation and reward systems for recognizing those employees who excel in their jobs by achieving the set standards in accordance with the performance plans or rather exceed the performance benchmarks. Providing promotional/career development support and guidance to the employees. Performing exit interviews for understanding the cause of employee discontentment and thereafter exit from an organization.

A performance management process sets the platform for rewarding excellence by aligning individual employee accomplishments with the organizations mission and objectives and making the employee and the organization understand the importance of a specific job in realizing outcomes. By establishing clear performance expectations which includes results, actions and behaviors, it helps the employees in understanding what exactly is expected out of their jobs and setting of standards help in eliminating those jobs which are of no use any longer. Through regular feedback and coaching, it provides an advantage of diagnosing the problems at an early stage and taking corrective actions. To conclude, performance management can be regarded as a proactive system of managing employee performance for driving the individuals and the organizations towards desired performance and results. Its about striking a harmonious alignment between individual and organizational objectives for accomplishment of excellence in performance.