PERFORMANCE MANAGEMENT
What makes effective performance management?
The relentless search for the perfect performance management system continues as HR professionals recognise that how work is managed has far reaching effects on both companies and their employees.
In a recent report, the Work Foundation takes a different approach to this subject, examining the issue from a broader, commercial perspective rather than a purely HR one.
Based on six case studies, the report illustrates strategies and practices being currently used and from these highlights seven critical elements associated with performance management.
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Using these critical elements, the report draws up key considerations, describes how organisations need to look at performance management and highlights the important questions they need to ask.
The seven critical elements
The framework of seven elements, says the Work Foundation, must be “discussed and, more importantly, got right when looking to maximise the effectiveness of performance management in organisations.” The elements are:
Process: the means, by which individual performance is directed, assessed and rewarded.
People management capability: the skills, attitude, behaviours and knowledge that line managers need in order to raise the performance standards of those around them.
Motivation: the extent to which the organisation’s approach to performance management unlocks discretionary effort among its employees.
Measurement and reward: the indicators or ”dials on the dashboard” that are used to assess individual performance and the effectiveness of the whole performance management system, and how these are used to allocate rewards.
Role of HR: the extent to which HR leaders demonstrate subject matter expertise, draw on relevant theory and research evidence, and influence thought leaders in organisations to focus energy on the aspects of performance management that make the most difference to performance.
Learning organisations: the extent to which organisations are able to reflect objectively and learn from their own performance management experience, building on what works and refining where necessary.
Role of culture and clarity of purpose: the extent to which a performance management approach resonates and is congruent with the broader culture of the organisation in which it is being applied.
Key considerations
Based on the seven critical elements and the experiences of the case study companies the report provides a number of useful considerations to bear in mind.
Such considerations include realising that performance management sends a message to the organisation about what is important and valued, how it is easy to lose sight of the role of motivation in the process and that managers must be advocates of the system.
The full list of key considerations is more numerous but using them The Work Foundation raises some key questions that all organisations need to ask when thinking about performance management. These include:
Is putting effort into the process worth it?
To what extent does everyone understand what is expected of him or her individually and how this will be assessed?
What is the handful of core skills and behaviours that managers need really to drive individual contribution?
What data do we have regarding how good they are at these now and what are we doing to help them improve?
What do we know about the extent to which our performance management system motivates or demotivates those who use it? What can we do to change this?
How effective are our performance metrics in isolating and assessing individual achievements and contributions?
What value is our overall performance management system adding to the core goals of the business, and does this return justify the investment of time and money?
What have we learnt from our experience, the experience of others and from the world of theory and empirical research regarding how to get the best out of performance management?
Do our aspirations for performance management fit with the prevailing culture of the organisation and, if not, what else needs to happen to ensure its success?
Is HR taking the lead on performance management?
Are they challenging the status quo and popular opinion?
Are we clear about what our system is for?
While all companies need to think about the seven critical elements, one of the Work Foundation’s conclusions is that “when it comes to performance management, one size does not fit all. Performance management can be used to achieve a range of aims. It is important for organisations consciously to adopt whatever aim suits the culture and its business strategy.”
Want to know more?
Title: What Makes for Effective Performance Management? by Kathy Armstrong and Adrian Ward, The Work Foundation.
Methodology: The Work Foundation carried out six case studies between June and September 2005.
Availability: To download the 58-page report, free of charge, in PDF format visit the “Performance” section of the Work Foundation’s site at www.theworkfoundation.com and choose the heading “Performance Management” on the left of the page. Or click on this link to access the PDF www.theworkfoundation.com/Assets/PDFs/Performance_Management.pdf
The Work Foundation is a not-for-profit organisation that brings all sides of working organisations together to find the best ways of improving both economic performance and quality of working life. Its core belief that mutual respect and motivation leads to “good work” and better performance is supported by rigorous evidence-based research. It provides answers to practical problems for UK-plc and the public sector. For more information visit www.theworkfoundation.com