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BSBHRM512 Develop and Manage Performance Management

Lecturer: Elizabeth Jane Algar

 Analyse organisational strategic and operational plans to identify relevant policies and
objectives that need to be integrated with performance management processes.
 Develop objectives for performance management processes to support organisational
strategy and goals and to build organisational capacity.
 Design methods and processes for line managers to develop key performance
indicators for those reporting to them.
 Develop organisational timeframes and processes for formal performance management
 Ensure performance management processes developed are flexible enough to cover
the range of employment situations in the organisation
 Consult with key stakeholders about the processes and agree on process features
 Gain support for the implementation of the performance management processes
 Armstrong describes performance management as: A systematic process for
improving organisational performance by developing the performance of
individuals and teams…a means of getting better results from the organisation,
teams and individuals by understanding and managing performance within an
agreed framework of planned goals, standards and competence requirements.
 A system that is designed to help employees do their jobs to the best of their
 Elements of performance management are: setting targets, developing skills,
monitoring performance and taking actions to improve performance have a direct
impact on profitability.

Act: Personal

 Planning involves defining job roles and agreeing on performance outcomes.
 Development involves a number of activities that improve employees skills and
knowledge in order to build workplace capability. The development needs to support
agreed performance outcomes.
 The entire process is monitored to identify the results of the planning and
 Finally, performance planning is reviewed and amended, based on the results of
monitoring, as necessary to support individual and organisational outcomes and to
ensure continuous improvement.
 On an organisational level, as applied to the whole of an organisation’s workforce, the
performance management cycle may be thought of as a system, in which the stages
provide a basic framework for improving people performance. The stages are
supported by important performance management components such as processes and
Core inclusions are essential to most management systems. These include:
 Job descriptions
 Orientation induction and probation
 Key performance indicators (KPIs)
 Development and performance plans
 Recruiting processes policies and procedures
 Communicated goal, strategy and tactics
 Reward and recognition schemes
 Regular coaching and mentoring
 Annual (minimum) formal individual performance reviews
 Formal training and informal upskilling
 Counselling, confronting and termination processes
 Optional inclusions assist in the delivery of the core inclusions and are more
appropriate in larger organisations. They include:
 Succession planning
 Employee surveys
 Customer surveys
 Annual training plan
 Competency framework
 Policies on authority and behaviour
 Written processes
 Competency-based organisational design
 You will need to integrate performance management systems and processes in
order for them to be effective in building capability. Effective performance
management processes ensure that activities at every level of the organisation are
coordinated and align with organisational goals.
 It is useful to think of performance management as being integrated both vertically
– linking organisational, departmental, team and individual objectives and
capabilities - and horizontally – linking other components of HR as well as other
management systems.
Vision, mission, strategy

Strategic HR Management

Planning Recruitment Monitoring
 In order to develop integrated performance management systems and processes,
you will need to analyse business plans, strategic plans and operational plans to
understand the organisation. You will need to understand the vision and mission of
the organisation, its goals and strategic objectives, its company structure and its
operations at all levels in order to coordinate HR activities and processes that are
practical and effective for the organisation.
 Naturally different organisations will require different goals, strategies and
performance management processes.
 The performance management system must support both the overall strategy and
the overall human resources strategy.
 Collectively and individually, the organisations workforce must be prepared to
continuously improve through a process of organisational learning and development.
 Systems thinking: the idea of the organisation as an adaptive, interdependent network
of coordinated functions designed for the purpose of achieving clear goals. Managers
need to analyse systems to identify barriers to information flow, learning and adapting
to changing business environments to achieve business goals.
 Personal mastery: the commitment of employees learning.
 Mental models: Mental models are the ingrained frameworks – including
generalisations and assumptions – that influence how people collectively view their
world. When applying the idea of mental models to business, an organisation should
aim to create a mental model that is understood and shared across the organisation
about how the organisation itself learns and adapts to changing conditions. Mental
models must be constantly questioned and reviewed as new information becomes
 Shared Vision: the whole organisation has a picture or idea of the future successes that
the organisation is aiming for.
 Team learning: a shared is more effective if the organisation can share the actions that
can achieve that vision. Team learning is about aligning the development of the
organisation as a whole. Much like a sports team will be more effective is all members
are learning and developing together rather than focussing on training the one or two
best team members and expecting them to achieve the results for the rest of the team.
 It is difficult to find an example of an organisation that everyone can agree on as being
a learning organisation and it also difficult to define the ‘learning organisation’
precisely but in simpler terms. It may be best, therefore, to describe the learning
organisation as an ideal towards which the HR manager should attempt to move the
 To ensure HR practises enable the organisation to respond effectively to new
challenges, you will need to analyse plans, develop performance management
processes and promote the benefits of continuously finding better ways to work in
order to help your workplace become and effective ‘learning organisation’
 In order to set a baseline for performance, you will need to set clear expectations
for people working in particular roles. You will need to develop performance
objectives and standards, develop performance metrics to enable monitoring,
align performance metrics to organisational plans, use tools such as balanced
scorecards to track organisational and individual performance against key result
 In performance management, the terms ‘goals’, objectives’ and ‘targets’ are often
used loosely and interchangeably, but the terms are distinct. The distinction is,
goals are more general than objectives, and targets are more narrowly defined than
Goal Increase profitability through superior customer service

Deliver high Increase sales
Objectives workforce sales
customer service revenue

100% customer
workforce satisfaction
Targets sales by 10%
completes ratings by 5
each quarter
within 6 months points within 12
 S : SPECIFIC Goals, objectives or targets should be clearly defined,
reducing the risk of employees or teams misunderstanding
performance expectations.
 M: Measurable Goals, objectives or targets should ideally be expressible as
a number or quantity in order to enable development of or
align to performance metrics and facilitate monitoring
 A: Agreed Goals, objectives or targets should set in consultation with
 R: Realistic/ Relevant Goals, objectives or targets should be relevant to the
organisation’s overall aims and the individuals job role. They
should also be attainable without being too easy to achieve.
There is no point in setting unreachable targets. On the other
hand, targets that are too easy to achieve may undermine
performance potential.
 T: Timeframe Goals, objectives or targets should have deadlines if they are to
be effectively monitored. You need to measure achievement to
know if you have succeeded; you also need to know what and
when to measure.
 Some aspects of organisational roles may be ongoing and therefore difficult to
define in terms of timeframed goals objectives and targets. For example, ‘superior
customer service’ may be essential to achieving strategic objectives. All customer
service staff or any employee that makes customer contact may be expected to
conduct themselves in accordance with company values and be friendly, courteous
and helpful.
 To assist performance management, job standards should be described in a way to
facilitate measurement of observation.
 Importantly, job standards do not need to include ALL types of measures; however,
each job standard should be measurable or observable in some way.
 In order for performance to be effectively monitored and evaluated, it needs to be
measured. Performance is generally measured using key performance indicators
 KPIs measure an organisations performance in critical areas, often called key result
areas (KRAs). Key result areas may include general areas of performance important
to the business or the role such as: financial measures, productivity, customer focus
or training and development. KPIs show the progress (or the lack of it) toward
realising the organisations objectives or strategic plans by monitoring activities in
key result areas. These are the activities that, if not properly performed, are likely
to cause severe losses or outright failure. KPIs will differ depending on the
To be useful in the context of performance measurement, KPIs should generally
conform to the following three requirements.
1. KPIs should promote common, clear understanding. They must be:
a) Simple enough for anyone to understand
b) Calculated in a standard way across the organization
c) Documented
2. KPIs should correlate with performance. They must:
a) Directly measure the results of a process
b) Be directly affected by changes to that process
c) Not be directly affected by factors outside of that process
3. KPIs even soft KPIs such as behaviours and attitudes, should be quantifiable, that
is they should be expressed as a number of a percentage so that they can be
 Objectives, targets and the KPIs that measure performance against objectives and
targets can be classified into three types: input, process and output.
 INPUT KPIs: measure the activities that are designed to facilitate improvements in
performance results. These activities include management actions to implement
performance management and achieve organisational goals such as holding
performance review meetings, coaching or providing training.
 PROCESS KPIs: measure the efficiency of processes, for example the number of times
stock is sold or used over a period of time (inventory turnover or stock turn). Another
example, more geared towards the measurement of individual performance might be
contribution to the improvement of team processes or the support of co-workers to do
the same.
 OUTPUT KPIs: measure the results of the input processes. These could include
productivity levels or number of sales per month.
 KPIs are often said to be leading, in that they indicate future performance, or lagging, in
that they reflect past performance.
 Objectives and KPIs at a lower level of the organisation should be aligned with the
objectives and KPIs set at higher levels. In this respect KPIs are said to ‘cascade’ from
higher level organisational goals.
 An important principle to follow is that all individual or team KPIs should be related to
organisational strategic KPIs. If the alignment is not clear, you need to question whether
the KPI is appropriate.
 Sometimes what is measured in terms of individual, team and organisational
performance ends up being what is easy to observe and measure (or was has always
been observed and measured) and not what is important to measure. In other words,
don’t measure an aspect of performance because it is easy to express as a number or
ratio, measure it because it matters.
 HR managers may be required to provide training in creating KPIs for their direct
 The simplest method of creating KPIs is to cascade them from the goals of the
organisation as a whole, or the department/section that the individual or work team is a
part of.
 A key performance management tool for the monitoring of performance at all
levels of the organisation is the balanced scorecard. A balanced scorecard utilises
KRSs, KPIs and targets concisely set out the overall performance of an individual,
team or even whole organisation.
 The concept of the balanced scorecard, first developed by Robert Kaplan and
David Norton, takes a holistic view of the organisational performance. By viewing
the organisation from four perspectives, the balanced scorecard provides a more
comprehensive understanding of current performance.
 Financial perspective – the bottom-line financial measures
 Internal perspective – the performance of the key internal processes of the business
 Customer perspective – customer needs and satisfaction
 Innovation and learning perspective – the organisations own people and infrastructure

Financial $ expenses 4% reduction in operating expenses for store.

Reduce travel expenditure to $3,000

$ value of travel receipts

Process Number of completed 100% performance reviews completed biannually.

performance appraisals

Accuracy of workplace Recordkeeping requirements completed with 97% accuracy


Customer Number of complaints by number Less than 2 complaints per quarter

satisfaction of calls

% of rejected deliveries Less than 2%

% of performance management Performance management processes should be carried out

processes for all employees twice per year.
Professional Hours of professional development Five hours of professional development including coaching
development and training on customer service for each team member
and management provided for
 As the HR manager, conduct performances appraisal with your team of 5. Your
team comprises a finance officer, HR officer, projects coordinator, customer
services officer and public relations officer. Your organisation uses the Balanced
Scorecards as an element of its performance management systems. What are the
benefits of using balanced scorecards? How would you use the balanced scorecard
to improve performance in your team.
 Choose a partner from the class and conduct a role play performance appraisal in
accordance with your organisations procedures and the results from the
performance appraisal conducted on your team of 5. Based on your experience,
how effective is your organisations procedures? What changes would you make to
the appraisals process to make it more engaging or easier to complete?
 Produce hard copies of your assignment for marking. Late assignments will incur
deductions of marks. Assignment Due 20 Aug 2018.
 You will need to consider the organisations business and strategic planning,
organisational needs, and the components of performance management systems in
order to develop effective performance management processes. You will need to
develop and maintain policies and procedures, ensure compliance with legal
requirements, ensure flexible processes and understand the drivers of
performance among personnel.
 Policies inform employees of the overall aims of the organisation, such as ensuring
quality, consistency, fairness or legal compliance, with regard to particular aspects of
operations and performance.
 Policies generally include:
 Purpose statement: the context of the policy, why it is required, the desired standard or overall
 Scope: the application of the policy (particular location, workgroup, department clients that will
be impacted)
 Resources: Additional documents, related forms etc
 Roles and Responsibilities: Who is responsible for what in the implementation of the policy.
 Legislation: identification of any legislation applicable to the policy.
 In general, when writing policy, you should keep in mind the size and the specific needs
of the organisation. Effective policies should:
 Relate to the organisational goals and objectives
 State the overall approach, principle or rule, but not deal with implementation
 Define and explain specific or specialist terms
 Procedures support policy by providing employees with specific guidance on how
to actually implement policy and perform particular functions. Procedures include
the following as applicable:
 Step-by-step instructions for carrying out tasks and processes
 Training requirements
 Process for monitoring, reviewing and reporting
 Requirements for documentation and recordkepping

 Procedures are specified series of actions, operations or instructions that need to

be followed correctly for a job to be done properly. Many organisations have
procedures documented. These can be in the form of step-by-step instructions or a
series of connected activities
 The language of policy and procedure documents should be simple and clear and
not contain jargon or technical terms unless necessary. Procedures should use
basic vocabulary where possible and simple grammar.
 You will need to ensure policies and procedures conform to legal requirements and
are regularly reviewed and updated as required. You will also need to ensure
processes as described in the policies and procedures – for example, performance
appraisal procedures or grievance procedures – are consistent with and supported
by other policies to avoid confusion over legal rights and responsibilities of
managers or employees.
 It is important to ensure processes are flexible enough to be applied to various
roles and employment situations. Varied work situations may include:
 Part-time work
 Casual work
 Contracted work
 Job sharing

 Performance management processes need to be flexible enough to be fair to

employees. E.g performance reviews or appraisals, counselling or coaching
sessions may be scheduled during a timeframe to allow part-time workers to
participate at convenient times. Targets and performance metrics may also be
adjusted to account for reduced hours or special circumstances.
 Performance management processes need to be cleverly designed to engage people,
promote organisational learning and drive high performance. So what drives
performance? In simple terms, there are three key drivers of behaviour: If people are
going to change their behaviour or perform at its best, they need to believe that:
 The new behaviour is good for them in some way. ‘Good’ may come from remuneration, self-
esteem, a sense of belonging or many other personal motivating forces.
 Their peers and friends will support them in behaving in the manner required. People are
affected by what they see as the ‘subjective mom’. If they believe that their peers and friends
whose views they value do not support them demonstrating the required behaviour, they are
unlikely to do so.
 They have the capability to behave in the way required. People need to believe that they have
the necessary skills, knowledge, resources and authority to execute the required behaviour.
 Performance management processes must therefore be designed to take the psychology of
people into account. Moreover, processes need to be promoted effectively to gain the support
of personnel.
 The performance appraisal process (or performance review process) involves the evaluation of
an employees performance as well as their development and training needs. Appraisals develop
individuals, improve organisational performance, and feed into business planning. Formal
performance appraisals are generally conducted annually or biannually for all permanent staff in
an organisation. Each staff member is usually appraised by their manager.
 During appraisals, managers should discuss with each team member:
 The goals set for the time period
 The key performance requirements
 The agreed development activities
 Any agreed actions as a result of coaching, counselling or mentoring.

 A performance appraisal meeting (or review meeting) is perhaps the most dominant component
of performance management systems. They are also the most potentially stressful for managers
and employees alike. So it comes as no surprise that people avoid them or conduct them in a way
that will cause the least resistant and discomfort. You need to develop and maintain processes to
ensure that performance appraisals happen on time and to the required standard or quality.
 A key tool for planning and monitoring performance appraisals is the performance
appraisal plan.
 At the beginning of a cycle, which may be the financial year, calendar year or
anniversary of employment, it is important to plan and schedule performance
appraisals so that everyone knows when they need to appraise another employee:
and by when they are to be appraised by their manager.

Schedule Allow time Conduct Document Schedule
appraisals to prepare appraisal outcomes follow-up
 Performance appraisal plans are usually designed so that all employees are
evaluated around the same time. While the benefit of this is that all feedback
sessions are completed over a short time frame, a serious drawback in practise is
the time taken to prepare and complete as many as 15 or 20 feedback sessions
competes with other work activities. If this happens, appraisal sessions could be
late and/or compromised in quality. If possible, appraisal sessions should occur
regularly for each individual, for example annually, six monthly or quarterly, but
managers may need to spread out their teams appraisal sessions over several
weeks, a month or more.
 You will need to develop processes for completing appraisals that meet organisational
needs and that also engage employees and drive high performance.
 When the performance appraisal begins, show that you are committed to working
towards a beneficial outcome for both the employee and the organisation.
 Start by acknowledging the employees strengths
 Be open to the employees input and ideas. Remind them it is a two way conversation
 Listen and ask for employees opinions
 Remember the objective is to evaluate the job performance and not the person.
 Remember to address whats important to the employee
 Avoid attributing motives to their behaviour. Focus on the facts, not on the person
 Discuss the potential for further career development
 Take a positive focus by looking towards the future and not where performance has been poor
in the past
 Build the conversation around employees goals of the coming year.
 You will need to ensure clear processes exist for recording outcomes in
accordance with the organisations recordkeeping system. Records of performance,
particularly regarding the performance of individuals, may be sensitive. Processes
should be built into appraisals procedures to ensure business, legal and ethical
needs such as records security and employees privacy are adequately met.
 As part of implementing the performance appraisals process, and performance
management more generally, you will need to take a systematic approach to
recordkeeping and security.
 The development of performance management processes will benefit from a wide-
ranging consultative process. There is a range of personnel you may need to
consult in order to identify performance management needs, such as:
 Consultation on performance management processes before they are developed
and finalised will help you write effective policies and procedures. Consultation
also demonstrates commitment to considering the needs of all employees – senior
management, line management, workers and those affected – and will certainly
help acceptance and employee support of performance management processes
once it comes time to implement them. Consultation can complicate decision
making, but often results in more engagement and better decision making and
planning at the end of the consultation process.
Interpersonal In consultation, it is important to understand how you relate to others within an
Skills organisation.
• Do you demonstrate professional respect?
• Do you work to foster positive interpersonal dynamics that lead to results?
• Do you respond constructively to feedback?

Teamwork During Consultation you will need to work with others as an effective team member,
Skills team leader and/or manager.
• Can you build and facilitate teams consultation?
• Do you build support and engagement for team objectives?
• Do you demonstrate professional respect and respect for rules within teams?
• Do you share knowledge or hoard it?
• Do you work to develop skills and knowledge in other?
• Can you organise detail and clearly communicate relevant knowledge?
Technical Skills Knowledge of the process, products and services provided by the workplace.
• Do you stay abreast of workplace and technological developments?
 You need to identify all stakeholders who may be impacted by your development
or adjustment of performance management processes, or who may have some
impact on how you will implement the processes. Stakeholders include everybody
who has an interest in performance management processes. To identify
stakeholders, list everyone you can that’s affected by the processes. Involvement in
performance management processes include:
 Having performance reviewed
 Reviewing others performance
 Reviewing organisational compliance with fair work legislation
 Approving changes to organisational policy and procedures
 Approving funding for performance-related reward and recognition systems
 Once you have identified stakeholders you may find you have a long list of people
that are potentially affected by your performance management processes. The
level of power, interest and influence of these people will vary. For this reason, it is
important that you complete an assessment to determine the level of consultation
required for each stakeholder identified.
 A stakeholder map records who your stakeholders are and their level of power,
influence and interest. A stakeholder map allows you to see who you need to focus
on to ensure the successful development and implementation of your processes.
 To complete this assessment, you should map out your stakeholders using your
knowledge of their level of power (influence) and interest on a power/interest grid:
 High power, interested people: these are the people you
must engage with, and make the greatest efforts to satisfy.
Keep Manage  High power, less interested people: engage enough with
Satisfied closely these people to keep them satisfied, but no so much that
Power they become bored with your message.
Keep  Low power, interested people: keep these people
informed adequately informed, and talk to them to ensure that no
Low major issues are arising. These people can be very
Low Interest High helpful with your project.
 Low power, less interested people: monitor input from this
group of people, but do not bore them with excessive
 Once you have identified and mapped your key stakeholders, you can schedule and
commence the consultation process. Consultation can involve any of the following:
 Meetings or interviews
 Brainstorming sessions
 Focus groups
 Feedback sessions
 Email communications
 newsletters
 You can use the power/interest grid for stakeholder prioritisation to assist you with
determining the appropriate method of consultation. Stakeholders who have been
identified as high priority will require a more involved consultation method than those
classified as low priority.
 Using the right consultation method for the right group of people is not only important
for obtaining the information you need. Effective consultation also helps you obtain
buy-in and support stakeholders that will ensure the successful development and
implementation of your plan.
 Confusion
 Immediate or in-your-face criticism
 Denial
 Malicious compliance
 Sabotage
 Easy agreement
 Deflection (change the subject)
 Silence
 You can address the resistance in a number of ways. The Thomas-Kilmann conflict modes
describe five modes of handling conflict:
 Competing: is an assertive approach that involves defending and maintaining your position
without cooperating with the other individual or group you are disagreeing with. Competing is
not good for developing a positive culture or strong relationship because it is essentially a win-
lose situation. When competing, you may have to use your power, position or strong arguments to
win your case.
 Collaborating: is an assertive yet cooperative. It allows both parties to be satisfied with the
outcome of the disagreement, but can require a high investment of time and energy to come to the
 Compromising: involves being moderately assertive and moderately cooperative. A
compromising approach is similar to collaboration as it leads to finding a solution that satisfies
both parties; a win-win solution.
 Accommodating: the accommodating approach is the opposite of the competing approach; highly
cooperative without being assertive. Taking the accommodating approach involves yielding to the
other party you are disagreeing with. Ineffective if you have to implement a system as it involves
adjusting your position and systems to completely satisfy the other party.
 Avoiding: an avoiding approach does not directly address the disagreement. A non-cooperative
approach but differs from competing in that it does not involve any level of confrontation.
 You will need to gain approval or co-approval for performance management
processes. When developing processes it is important that you understand your
organisations approval process
 Understanding the approval process involves understanding the following:
 Who must approve the process?
 Are there levels of approval that must be obtained before proceeding to the next level?
 In what format must the policies or processes be presented for approval?
 How is the process submitted for approval?
 Are you expected to complete a presentation as part of the approval process?
 What is the first draft submission date?
 What is the second, or final draft submission date?
 Are documented signatures required to record approval?