Issues with Implementation of Performance Management Systems - Example

Performance Management System: A Case Study Name: Course: Institution: Tutor: Performance Management System: A Case Study Introduction Performance management refers to the systematic process of collecting and analyzing information about employee performance in order to monitor progress towards certain desired results. Usually, the performance management process uses performance information to program resource allocation and decision making. The main objective of performance management is to use results obtained to enhance organizational learning. Lee (2006) has explained that service excellence, continuous quality improvement and enhancement of financial responsibility are the core principles of performance management. These principles should be incorporated into the employees’ daily work to serve as guidelines during the performance management process. By embracing performance management, organizations support environments of service excellence and continually improve internal and external customer satisfaction through identification of point of contact resolution. Performance management also helps in creating high quality business processes using data and initiatives as the foundation of work. This ensures that business practices and procedures are conducted within the required regulatory guidelines and in the safest method possible. To begin the performance management processes the supervisor and employees should collaborate in developing desired performance standards. The supervisor should take an active role in developing a performance plan which directs employee’s efforts towards achieving specific results which support the employee’s professional growth as well as organizational growth (Milliman et al, 2002). The goals and objectives of professional growth should be discussed throughout the year while providing a framework to ensure that employees achieve the desired results through mutual feedback. At the end of each rating period, employee’s performance should be praised against existing results and new goals established for the next rating period. In today’s world of business, performance management is beneficial to businesses in a number of ways. Firstly, the process enables managers to set clear targets for employees and in return employees perform to desired standards, both in terms of how the results are achieved and what is expected. Secondly, by ensuring that employees get a clear understanding of what is expected of them, performance management enhances employees’ contribution to the growth and success of the organization, which in turn helps in realization of strategic objectives (Roberts, 2003). In addition, performance management is likely to result in high productivity and employee motivation and commitment through increased job satisfaction. Managing employee performance in a clear and fair manner can help avoid later problems in other aspects of organizational management. Generally, performance management is an ongoing process with formal reviews at agreed intervals during the year. Although the degree of formality will vary depending on the nature of the company’s workplace, it is important to ensure that employees get a clear understanding of what they are expected to do. This is better achieved through regular discussions with employees about their performance. Steps in Performance Management Process: Case Study of Omega Inc. i. Performance Appraisal and Performance Planning Performance appraisal is the basis of an effective performance management process. Basically, performance appraisal involves setting goals for performance expectations. There are two important tasks to consider during performance appraisal. The first consideration is whether the goals have been written objectively and communicated clearly. The second consideration is whether these goals are capable of contributing to achievement of business strategy. The ability to communicate strategic business objectives clearly is an essential step in creating alignment of objectives. When setting performance goals, key job responsibilities and expectations should act as the guideline and reference. Performance planning entails using established goals as a basis to set the stage for communicating performance objectives to employees. This step also involves setting an actionable plan to guide employees to successfully achieve desired organizational goals. According to McAdam, Hazlett and & Casey (2005), performance planning, as with all other steps is a collaborative process which involves the supervisor (manager) and employee, although there will at times be elements that are non-negotiable. In performance planning it is usual to identify both short term and long term goals and to act alongside an action plan about how these goals will be achieved. Different goals can be weighted against expected outcomes and their impact on organizational growth to identify priorities. The link between performance appraisal and planning has been disrupted in Omega’ performance management system. This is because the company does not have an independent pool of workers and hence cannot appraise the employees directly (Reilly & McGourty, 1998). Performance planning discussions give manages a chance to communicate their performance expectations to employees and for the employees to state what they see as genuinely important in their jobs. This way, te process gives employees a clear communicating charter so that they can perform their jobs with full certainty that they are working in the way that the organization expects. The main tool used in performance planning is the company’s performance appraisal form. Since performance appraisal forms can be used in future to assess how employees have been doing their job, these forms should be used to start the job expectations. Managers and employees use results of performance planning to regularly monitor employee performance progress against set goals, solve problems and reassess goals and re-evaluate training and resource needs (Milliman et al, 2002). For performance planning to be effective, consistent communication between the manager and employees is essential because it facilitates process improvement. ii. Performance Execution Once performance planning has been done, it is time to get the actual job done by executing the plan. Performance execution is the third phase of an effective performance management process. For the employee, the critical responsibility during performance execution is to get the assigned task done to achieve desired objectives. For the supervisor or appraiser, the responsibility is to create conditions that motivate employees and to confront and correct any performance problems. The link between performance planning and performance execution is evident in Omega’s performance management system as shown by the company’s decision to support a training program for the sales representatives (Mondy, 2008). In an effective performance management system, performance execution includes midterm review of performance progress to ensure that everything is in track. Appraisers are also responsible for providing development opportunities and reinforcing appropriate workplace behaviours. In return the individual in the performance appraisal process is responsible for soliciting feedback and coaching as often as necessary, opening communication, sharing performance data and preparing for review of performance (McAndrews, 2005). Reinforcing effective behavior and eliminating performance problems are part of the communication process in which managers are required to provide feedback to employees regarding their performance progress. Performance feedback can be positive recognition of task completed effectively (Nankervis & Compton, 2006). It can also be negative if performance is considered poor. In a comprehensive performance execution process, supervisors (appraisers) should be more participative with employers for effective service delivery. This means that the supervisors should play the coaching role effectively to include counseling and directing their employees. This way, it becomes easier for the supervisor to provide feedback to employees. According to LaChance (2006), performance execution systems should be part of any comprehensive performance management system. The system should be able to give continuous feedback as it relates to employee’s performance progress, goal alignment and contributions to organization goals. It is imperative that employees are given performance objectives, clear expectations and a depiction of how they will be evaluated in relation to their performance progress. The performance expectations should be specific with measurable goals tied to the strategic goals of the organization. iii. Performance Assessment Performance assessment involves assessing, summarizing and documenting an employee’s performance results. It is an ongoing communication process that involves both the employee and the supervisor identifying and describing key job functions and relating them to the goals and mission of the organization (McAdam, Hazlett & Casey, 2005). Through performance assessment, the employer and supervisor develop realistic and achievable performance standards, which serve as a guide for employees in their day to day execution of tasks. The link between performance execution and performance assessment is also disrupted in Omega’s performance management system. Generally, performance assessment should be conducted as a well planned, purposeful activity designed to benefit both the employee and the organization. It should be intended to create a climate in which employees are valued, recognized and motivated to contribute to achievement of organizational goals (Nance-Nash, 2006). The employees should be treated in a manner that is consistent, fair and in alignment with the organization’s practices and policies. The process should be able to hold employees and managers accountable for their roles in the performance appraisal process including timely and thoroughly completion and communication of performance appraisal results. Fiorenza (2007) has documented that performance assessment is an essential component of the employee-supervisor relationships because it enables the two to plan developmental opportunities to improve, sustain and build on employee performance standards. The actual performance assessment serves several functions to an organization. The process encourages employee participation in performance management and provides a formal mechanism for employees to give information and receive feedback about their job performance and performance expectations. Moreover, the process allows employees to work closely with the supervisors in establishing priorities and goals for performance management. Performance assessment also facilitates development and growth of employees and gives rise to a documented history of employee performance (Muchinsky, 2004). During the performance assessment process, employees get the opportunity to discuss, review and comment on their performance records. In the process, job standards and related performance evaluation criteria are established by the manager using input from employees (LaChance, 2006). To effectively evaluate an employee’s performance, it is necessary for the supervisor to have a thorough understanding of the entire performance management and appraisal process. In other words, the supervisor needs to have a wider view of the performance management system so as to recognize how various parts of the system fit together. iv. Performance Reviews Performance review involves appraisal and discussion of employee’s performance progress. Performance review is usually based on the results obtained by employees in their performance of duties and responsibilities. Without performance reviews, performance could be a one-year paper work exercise (McAdam, Hazlett & Casey, 2005). As such, the objectives that were written down at the start of the year would change focus, move up or down the priority list or even be abandoned altogether. Therefore, having continuous review of performance is highly essential. In Omega, performance reviews are conducted though as often as should be the case. There are debates over how performance reviews should be conducted. Many researchers and organizations feel that performance reviews should be conducted at least twice a year, although this can be varied depending on how confident the managers are about their employees’ abilities to deliver on the required objectives (Lee, 2006). Regardless of the frequency with which performance reviews are conducted, they should be able to assess employee’s performance progress against set objectives. The reviews should provide for adjustment of objectives in line with changes in business priorities. Performance reviews should also give the required support for the organization to move forward. It is necessary that reviews take place face-to-face since challenging feedbacks cannot be delivered via other means such as telephone or email (Nankervis & Compton, 2006). An essential part of performance review is to establish any short falls in the employee’s performance progress and find a way to close the gap. In addition, the supervisor might be expecting employees to take on new tasks or greater responsibility. Therefore, performance reviews should be able to reflect on the employee and it is logical that the supervisor should put a logical plan to ensure that employees are able to cope with new challenges (Milliman et al, 2002). v. Performance Renewal and Recontracting Performance renewal and recontracting is the final stage in the performance management process. The renewal and recontracting stage relies on the information obtained from other stages to set guidelines for the next performance review period (Roberts, 2003). Generally, performance renewal and recontracting is the reverse of the performance planning that occurred at the start of the process. At this stage, key performance activities are assessed and necessary adjustments made to improve the management process for the next cycle (LaChance, 2006). Essentially, performance management process is a cycle that starts with prerequisites and ends with performance renewal and recontracting. However, the cycle is not over after renewal and recontracting. In fact, the process starts again and there needs to be a new discussion of prerequisites because of changes in business processes (Steelman & Rutkowski, 2004). As such, one cycle merges into the next in a seamless continuity. For the case of Omega, there is no smooth transition between performance renewal and recontracting and performance appraisal. Steps in Fixing the Disrupted Links in Omega’s Performance Management Process A key to fixing the disrupted links in Omega’s performance management system rests in the company’s ability to hire and develop own team of sales representatives instead of relying on employees from third party franchise dealers. For Omega, a good performance management system should be able to produce good results in terms of individual and organizational performance. Therefore, Omega’s performance management system needs to be adjusted to reinforce this important consideration. To fix the disrupted links in Omega’s performance management system, it is important that the company’s management embraces strategic congruence when implementing the system. This means that the employee’s goals should be aligned with the company’s organizational goals (Mondy, 2008). Since Omega sources employees from franchise dealers, its performance managements system should be made thorough in four main dimensions. First, all employees including managers should be evaluated against required competencies and capabilities. Secondly, all major job responsibilities should be evaluated including results and behaviors. Third, performance appraisal should span the entire review period and not just the few months or weeks before the actual review. Finally, appropriate feedback should be given on positive or negative performance and these should address the particular areas that are in need of improvement (Campbell & Lee, 2003). The system should be made meaningful to employees and managers so that they have a sense of the importance of the system. This means that the standards and evaluations conducted for various job functions in Omega should be made relevant to the company unlike the current case where this is done by the franchise dealers. In addition, the performance evaluation process should take place at regular intervals. This is because a single formal evaluation per year cannot be sufficient to provide a clear understanding of performance progress (Fiorenza, 2007). Instead of relying on franchise dealers to provide performance results for employees, Omega should hire its own team of employees (Ritter & Nunnally, 2002). The system should be made specific and capable of providing detailed and concrete guidance to employees about what is expected of them and what should be done to meet these performance expectations. Moreover, the kind of performance management system employed by Omega should be capable of identifying effective and ineffective performance by providing relevant information promptly (Lee, 2006). Issues with Implementation of Performance Management Systems When a performance management system is poorly implemented, a number of negative consequences are likely to arise. For instance, it may become impossible to make equitable and accurate decisions when employee appraisal records have misleading information. Decisions made from inaccurate performance appraisals often result in employee cynicism, erosion of mutual trust and loss of morale. This in turn results in low productivity and claims of discrimination and litigations. Other notable consequences of poorly executed performance appraisal process include increased employee turnover, damaged workplace relationships, decreased job satisfaction, wasted time and money and decreased motivation (Campbell & Lee, 2003). When completed effectively, performance appraisal become part of the employees’ personnel management record and it is from these records that key human decisions are made (McAndrews, 2005). For instance, the employee’s compensation level and training opportunities as well as job promotion decisions are often made based on performance appraisal ratings. It is therefore important that performance management activities are conducted fairly to afford each employee equal opportunities. It is also important to have a grievance procedure in place to help solve issues with employees who may not be contented with their appraisal ratings. Conclusion Performance management is the process of attracting, developing and retaining skilled employees. Effective performance management can go a long way in building employee’s commitment and confidence while resolving performance problems in a timely manner. The outcomes of any performance management system should be productive, motivated and satisfied employees, increased profits and enhanced market competitiveness. In Omega, performance management has been greatly devalued because the company relies of employees sourced from other companies. As such, performance management does not add any value to the company’s strategic mission. For this reason, Omega’s performance management system requires a complete overhaul so as to provide everyone the support and direction needed to enhance and improve productivity. References Campbell, D and Lee, C 2003. Self-appraisal in performance evaluation: Development versus evaluation. Academy of Management Review, p. 302-314. Fiorenza, N 2007. Tuning up performance. Printing Impressions, 49(8), p. 54-59. LaChance , S 2006. Applying the balanced scorecard, Strategic HR Review, 5(2), p. 5-9. Lee, C 2006. Feedback, not appraisal, HRMagazine, 51(11), p. 111-115. McAdam , R. , Hazlett , S. , & Casey , C 2005. Performance management in the UK public sector: Addressing multiple stakeholder complexity, International Journal of Public Sector Management, 18, p. 256–273 . McAndrews, J 2005. Managers should apply positive and negative feedback, American Agent & Broker. 77(7), p. 16-18. Milliman , J. , Nason , S. , Zhu , C., & De Cieri, H 2002. 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Roberts, G 2003. Employee performance appraisal system participation: A technique that works, Public Personnel Management. Steelman, L & Rutkowski, K 2004. Moderators of employee reactions to negative feedback, Journal of Managerial Psychology, 19(1/2), p. 6-8. Read More