Performance Management for Omega Inc - Case Study Example

Performance management report for Omega, Inc [Course coordinator] [Unit] [Due Date] [Student Name] [Student Number] Word count: 3064 Executive summary Performance management is a continuous process designed for identifying, developing and measuring the performance of teams and individuals and aligning the performance with the organisational strategic goals. It is an outgoing and a continuous process or a cycle that consists of the following stages or components: prerequisites, performance planning, execution, assessment, review and renewal and re-contracting. The key considerations in this system include the continuity of the process, alignment with the organisational strategic goals and evaluation of the performance of an individual. This report identifies and fixes the disrupted links that exist in Omega, Inc new performance management system. These links in the case study are attributed to lack of continuity of the process, partial participation for employees in the performance management system and lack of essential tools for development and evaluation of the performance of employees. This led to decline in the quality of customer services as well as sales. Fixing of disrupted links requires consideration of active participation of employees in the entire process, the knowledge of organisational goals and strategies, and inclusion of crucial tools for evaluation of individual performance such as performance appraisal. This will lead to performance improvement as well as an increase in the productivity of the organisation. Table of contents 1.0 Introduction 3 2.0 Performance management links 5 2.1 Prerequisites-Performance planning 5 2.2 Performance planning – performance execution 7 2.3 Performance execution- performance assessment 8 2.4 Performance assessment-performance review 8 2.5 Performance review- performance renewal and re-contracting 9 2.6 Performance renewal and re-contracting – prerequisites 9 3.0 Fixing disrupted links 10 3.1 Prerequisites- performance planning 10 3.2 Performance planning – performance execution 10 3.3 Performance execution- performance assessment 11 3.4 Performance assessment-performance review 11 3.5 Performance review- performance renewal and re-contracting 12 4.0 Conclusion 12 5.0 Recommendations 13 References 14 1.0 Introduction Aguinis (2009, p. 3) defines performance management as a continuous process designed for identification, developing and measuring the performance of teams and individuals and aligning the performance with the organisational strategic goals. It is worth noting that the key to the definition of performance management is the continuity and alignment with the organisational strategic goals. For instance, if a manager or a supervisor may fill a form once annually because it is a ‘requirement’ by human resource manager, then this will not be taken as a continuous process. Robbins et al (2012, p. 444) adds that performance management system requires the manager to understand if their employees’ performance in their jobs is effective and efficient. Thus, it involves the establishment of performance standards that are employed in evaluation of the performance of the employees. Aguinis & Kraiger (2009) identified the following as the purposes of a system of performance management; strategic, administrative, developmental, communication, organisation maintenance and documentation. Strategic purpose involve linking the goals of an organisation with individual goals thus, reinforcing the attainment of the organisational goals. Administrative purposes make this system a source of useful and valid information for decision making in regard to employees such as promotions and identification of poor performers. Communication purpose of the system allows informing the employees on how they are doing, learning about the expectations of the management and getting information on areas requiring improvement. Developmental purpose includes feedback in order to improve performance. Organisational maintenance leads to yielding of information about the current employee’s abilities, promotional potential and skills among others. Documentation purpose ensures yielding of data which is essential for making administrative decisions. Grote (1996) refers the performance management system as an outgoing and continuous process or a cycle that consists of the following stages or components: prerequisites, performance planning, execution, assessment, review and renewal and re-contracting. Performance management process is aimed at improving the productivity of the organisation and employee growth among others. This report reviews and evaluates a case study of performance management process at Omega Inc by considering the links of the process. It also identifies and fixes the disrupted links of this process. 2.0 Performance management links 2.1 Prerequisites-Performance planning According to Agunis (2009), before implementation of a performance management system, there are two prerequisites required. The first one is the knowledge of the mission and strategic goals of the organisation. The second one involves the knowledge of the job position that is in question. Thus, the clarity in regard to where the organisation is heading and the relationship between the mission and strategies of the organisation and the mission and strategies of each unit are very essential. This allows the organisation to have a clear identification of its reason or purpose for existing, what to achieve, its preferred position in future as well as the strategies to use in order to achieve these goals. These goals cascade downwards through departments up to an individual employee. At this level each employee will have a set of goals which are compatible with departmental and organisational goals. The other essential prerequisite involves understanding the job in question. This is achieved through a job analysis that provides the key components of a specific job such as tasks, activities, products or services. There are various tools of analysing job such as personality trait among others. If there is no idea on what an employee is required to do in a particular job, it means we will not have information on what requires to be evaluated and how to do it (Aguinis, Mazurkiewicz & Heggesstad 2009). According to our case study, the franchise owners have a mission statement based on provision of high quality customer service that is distributed in each franchise offices for the employees. The managers set goals for employee without discussion and agreement on the set goals. Based on job analysis, the management analysed the role of sale representatives, they wrote a job description and then distributed it to the sale representatives. Aguinis (2009) add that the performance planning stage enhances the employees to have a thorough knowledge in regard to the system. In this stage, the manager or supervisor need to meet with the employee in order to discuss as well as agree on what is required to be done as well as how it needs be done. It involves consideration of results, behaviours and development plan. Results refer to what the employee needs to do. The discussion between the supervisor and employee about the results include key accountabilities and specific objectives for producing better results. Cascio & Aguinis (2008) state that behaviours are more important in modern organisations as their structure have changed from traditional hierarchical chart to web like. Thus, how a job is done or the behaviours are important factors in planning stage. For instance, Pettijohn, Parker, Pettijohn & Kent (2001) found out that salespeople like to be appraised on various behaviours such as product knowledge and communication skills. Development plans requires the supervisor and the employee to agree first. It involves identification of areas which require to be improved then setting goals together which needs to be achieved in each part. They highlight the strength of the employee and areas requiring development as well as an action plan to improve the weak areas (Reyna & Sims 1995). Morgeson, Mumford & Campion (2005) stated that feedback is also a crucial tool in this stage where it helps the employees to improve performance through gathering information from various groups. The system is referred as 360- degree feedback system since gathering of information is done all around the employees. Employees rate themselves in regard to various performance dimensions and compare self-perception using the information provided by other employees and management. According to the case study, the managers set each employee’s performance goals or sales quotas. In this setting, the performance goals for each employee require discussion between the manager and the employee where they both agree on what is required to be done. In addition, though the managers set sales quotas, the feedback systems do not allow employees to rate themselves. Thus, although they have the knowledge of the mission, strategic goals and the job analysis in the prerequisite stage, there is no link between the prerequisite and planning stage. This is due to lack of discussion and agreement between the managers and the sale representatives during the development of the sales quota (Reyna & Sims 1995). In addition, the feedback system lacked to provide the employees with ways to rate themselves (Morgeson, Mumford & Campion 2005). 2.2 Performance planning – performance execution Based on performance planning stage, the sales representatives lacked the ways to rate themselves based on various performance dimensions. Thus, the performance planning stage in this case involved engaging the sales representatives in achieving the sales set by managers only without discussions. The sales representatives do not even rate themselves (Morgeson, Mumford & Campion 2005). Performance execution stage depends primarily on the employee and its success depends on their participation in the previous stages. Thus, the employee must have active input performance standards as well as in the creation of the rating form (Agunis 2009). Supervisors also have primary responsibility over the various functions. Firstly, observation and documentation is important to ensure that they observe and document daily performance of employees. Secondly, they have to provide feedback regularly on progress in regard to goals and coaching in order to improve performance. Thirdly, they need to provide resources and opportunities to the employees in order to participate in development activities. Finally, they need to reinforce employee’s progress and effective behaviours towards the set goals. They need also to provide feedback in regard to negative performance and take appropriate steps to address any problem (Cascio 2006). In our case, the employees lack active input due to lack of participation in the previous stages and they don’t have self-evaluation tools. Supervisors failed their responsibilities of documenting discussions. Failed documentation is reflected by lack of regular feedback on progress and lack of reinforcement on the progress of sales representatives. Thus, there is no link in performance planning and execution mainly due to lack of active participation of sales representatives at initial stages, lack of self-assessment as well as poor feedback. 2.3 Performance execution- performance assessment In the performance stage, the employees lacked participation and self-rating. In addition, and the supervisors failed to document progress. This is evidenced by poor feedback that led to decline of monthly sales. Benet, Lance, & Woehr (2006) found out that in performance assessment stage, both the managers and employees have the responsibilities of evaluation. Evaluation is based on the display of the desired behaviours and whether there is achievement of the desired results. The manager must fill his or her appraisal form while the employee must also fill his or her appraisal form. This ensures that there is active participation in evaluation process by both the managers and employees. Aguinis & Pierce (2006) adds that self-rating helps to identify the differences between other peoples’ views and self-views. The difference between the two views is very important as it triggers development efforts. Thus, there is no existence of this link since the sales representatives did not participate actively in the performance execution which results to poor feedback. On the other hand, there is no performance appraisal for the managers and employees which has finally led to lack of feedback. In turn, this has resulted to low quality of customer service and decline in sales. 2.4 Performance assessment-performance review Performance assessment involves participation of both managers and employees in evaluation process and is enhanced through filling of appraisal forms for both. Lack of these forms in our case study is an indication of poor assessment. Performance review involves the meeting between the manager and the employee to review their assessments. Appraisal or discussion meeting provides a formal setting where the employee receives feedback on performance (Kikosi 1999). Ghorpade & Chen (1995) argues that managers become uncomfortable in providing the feedback on performance especially in case of a deficient performance. This discomfort creates anxiety and appraisal interview is avoided leading to more decline in performance. Based on the arguments, there is no link between the two stages because the performance review stage involves provision of feedback based on the appraisal forms from the performance assessment stage. In the case study, there are no appraisal forms filled by either the managers or the employees which is evidenced by lack of feedback. 2.5 Performance review- performance renewal and re-contracting The performance review consists of discussion meetings where employee receives feedback on performance (Kikosi 1999). From the case study, the managers were giving feedback during the first months of implementation based only on the sales quota goals set by managers. Later, due to lack of consideration of behaviours such as communication skills in providing feedback led to decline in sales. This could have been achieved through appraisal forms which were lacking. Performance renewal and re-contracting is based on the information that has been gained from previous stages of performance management process (Agunis 2009). Lack of previous information such as appraisal forms as tools of providing feedback in the performance review is an indication of lack of link between performance renewal and re-contracting stage and performance review stage. 2.6 Performance renewal and re-contracting – prerequisites Based on the previous challenges faced by the Omega, Inc, the management realised that the roles of the sales representatives who dictates the success of this organisation were not clearly understood. The sales representatives did not feel motivated in making additional sales. Finally, the management strategies of franchises as well as the follow up with Omega, Inc also varied greatly. It is through these challenges that the organisation decided to develop a new performance management process. These challenges led to development of new performance management. In reaction to this, they conducted a job analysis to have a clear understanding of the roles of sales representatives. They also adopted a mission statement franchise-wise that was based on providing high quality services to the customers. The franchises informed the sales representatives about their individual sales’ contribution in achievement of their mission. The managers set sales quotas for sales representatives and later provided extensive training to these employees. This information is referred to as prerequisites (Agunis 2009). Thus there existed a link between the renewal and re-construction of the contract and prerequisites as evidenced by development on the new performance management system based on the previous challenges. 3.0 Fixing disrupted links 3.1 Prerequisites- performance planning The disrupted link between prerequisites- performance planning is attributed to the knowledge of the mission and strategic goals of the organisation. Once Omega, Inc identified its strategic goals and objectives, it failed to involve the employees at lower levels. This is evidenced in the case study as the manager set sales quotas or performance goals for the sales representatives without discussion. To fix this, the organisation senior management needs to meet with franchises’ managers and discuss about the organisational goals, strategies and objectives. Subsequently each manager should meet with the employees to develop goals and strategies of the franchise. Then the manager should meet with each employee and set performance goals through discussion and in agreement with the employee. This will make every sales representative to actively participate in achievement of the set goals. Such an approach led to improvement of performance in Key Bank of Utah (Addams & Embley 1988). 3.2 Performance planning – performance execution The disrupted link is caused by lack of discussion and agreeing on what is supposed to be done and how it will be done. To fix this, there is a need to create a development plan which incorporates the results and behaviours. Results refer to understanding what needs to be done. After discussion, the manager and employee will include the key accountabilities responsible for producing results. They will come out with specific objectives to be achieved by sales representative. Both will agree on the steps to be taken by the employee to improve performance (Dunning 2004). Development plan will assist in understanding the important behaviours required by the employee to achieve the set objectives. Consideration of behaviours in this case includes discussion in regard to competency, regarded as measurable clusters of skills, knowledge and attitude. They are crucial in determination of the way the results are achieved (Shippmann 2000). Such important behaviours in this case include communication skills and the knowledge of the product in order to improve the quality of customer service. The manager will create an appraisal form and the employee will create a self-appraisal form to monitor performance. Thus, the manager will be able to understand the strengths and weaknesses of the employee while the employee will be satisfied with this system (Boswell & Boudreau 2000). 3.3 Performance execution- performance assessment The disrupted link will be fixed by appraisal form. Shore, Adams, & Tashchian (1998) state that including self appraisals will reduce the defensiveness of the employees during appraisal meeting and boost the satisfaction of the employees with the system of performance management. In addition, it will create the perception of fairness and accuracy thus, acceptance of the system. This indicates regular feedback and reinforcement in order to diagnose problems and act on time (Cawley, Keeping, & Levy 1998). 3.4 Performance assessment-performance review The disrupted link will be fixed by appraisal meetings. The appraisal meeting must include the discussions on the past, the discussion on the development progress of the employee and the future plans (Soltani 2003). In addition, the manager must be very honest and straightforward in giving feedback. This is because avoiding negative feedback will convey acceptability of weaknesses which will in turn damage the top performers’ morale (Rogers 2006). A scorecard will also be effective in fixing the link as it will help the managers to assess and review performance while they make sure that there is a always a link to the organisational overall objectives (LaChance 2006). 3.5 Performance review- performance renewal and re-contracting The disrupted link can be fixed using the various steps in order to ensure conduction of effective reviews on performance. First, the managers should identify what the employee has performed well and what the employee have perfromed poorly by referring to specific behaviours (positive and negative). The manager should also seek from the employee about these behaviours while listening for explanations and reaction. Then they should discuss results of altering or maintaining these behaviours and make sure the employee is made aware of the implications of poor performance. The employee should be informed of how skills that have been applied in the past can help in overcoming the current problems in performance. Discuss and agree on an action plan and motivate the employee by asking about the ideas for improvement. Finally, set a meeting to follow up and evaluate the attitudes, behaviours and actions agreed (Grossmans & Parkinson 2002). 4.0 Conclusion The performance management process is very crucial in the management of any organisation. There are key components in the performance management system that needs to be considered. These include; the continuity of the process and alignment with the organisational strategic goals. Evaluation of the performance of the employee is also a crucial factor to consider. It must have clear considerations on how an individual is contributing to the performance of the unit of the organisation and the way of improving the performance in future. The case study presents a situation where the performance management of the organisation is affected by lack of continuity, lack of the knowledge of the mission and strategic goals for the employees, lack of active participation and lack of essential tools in evaluation of the performance of the sales representatives. This has led to disrupted links in the entire process. However, the renewal of the performance management system with consideration of the employee participation and employment of the necessary evaluation tools will improve the performance of the Omega, Inc. 5.0 Recommendations Due to the poor performance management process it is recommended that the organisation develop a new performance management system which will fix the disrupted links. Firstly, actively involve the employees in setting the performance goals by discussing and agreeing. Secondly, managers should create a development plan for each employee after discussing. 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