Hrm3706 Performance Management

HRM3706 – PERFORMANCE MANAGEMENT

MODULE SUMMARY INFORMATION

- Lecturer

Ms Maimela

012-429 3713

Unisa, Muckleneuk campus, AJH van der Walt Building, Room 3-70

Fax: 086 561 1488

- Assignment due dates

- Steps when answering questions about a case study

1. Identify the problem
2. Identify the causes of the problem
3. Develop alternative solutions
4. Select the best alternative
5. Develop a strategy (action plan)

- Modules outcomes

1. Demonstrate the ability to explore a shift from performance appraisals to performance management
2. Demonstrate a comprehensive knowledge base of an insight into the dynamics and challenges related to designing and implementing an integrated performance management system in organisations
3. Demonstrate the ability to explore performance management in the organisational context
4. Design a performance management system that incorporates individuals and teams
5. Critically synthesise the strategic nature of performance management

TOPIC 1 (ONE)

- Learning Outcomes

After completing this topic, you should be able to

1. either justify or criticise a shift from performance appraisal to performance management in managing employee performance
2. recognise the difference between an individual and team performance management in the organisational context
3. interpret a link between performance management and the reward system
4. design an employee developmental plan in accordance with a specific job position

Study Unit 1 (ONE) – Performance Management in Context

- Learning Outcomes

After completing this Study Unit, you should be able to

1. explain the concept of performance management
2. distinguish between performance management and performance appraisal
3. illustrate by means of a diagram the performance management process
4. outline the aim and role of performance management in the organisation
5. explain the contributions a performance management system can make in the organisation

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Learning outcome 1

Performance Management can be defined as:

“Acontinuous process of identifying, measuring and developing the performance of individuals and teams, and aligning performance with the strategic goals of the organisation”

This definition is thus composed of 2 main components:

Continuous Process: Performance Management is an ongoing. It involves a never ending process of setting goals and objectives, observing performance and receiving ongoing coaching and feedback. Once the end of the process is reached it starts all over again.

Alignment with Strategic goals: Performance management requires managersto ensure that employees’ activities and output are congruent with the organisation’s goals and consequently help the organisation gain competitive advantage. Performance therefore creates a direct link between employee performance and organisational goals and makes the employee’s contribution to the organisation explicit. Performance management systems that do not make explicit the employee’s contribution to the organisational goals are not true performance management systems.

Performance Management is characterized with the following qualities:

Performance management is an ongoing process.

Organisational goals should be linked with individuals’ goals.

Performance should be monitored and reviewed, and feedback provided.

Employee development is crucial to ensure improvement in employee performance.

The Performance Management Process includes the following steps (Aguinis 2009 adaptation): (refer to LO 3 – page 5 for full diagram)

Prerequisites

Performance Planning

Performance Execution

Performance Assessment

Performance Review

Performance Renewal and Re-contracting

Learning outcome 2

Performance management is a forward-looking process, taking frequent measures as work occurs and responding to small steps forward, while performance appraisal is a backward-looking process of performance, measuringwhat happened in the past.

According to Aguinis (2009:2), performance appraisal refers to a system thatinvolves employee evaluation once a year without any effort to provide feedback and coaching so that performance can be improved. It is a systematic description of an employee’s strengths and weaknesses. Performance management is more than just evaluating employee performance. Performance management is an ongoing process rather than a one-off event taking place, for instance, annually or biannually. It is a comprehensive, continuous and flexible approach to the management of organisations, teams and individuals which involve the maximum amount of dialogue between those concerned.

Comparisons between Performance Management and Performance Appraisal system:

PTO…

Learning Outcome 3

Learning Outcome 4

Performance Management is most frequently used for Salary Administration, Performance Feedback and Identification of Employees Strengths and Weaknesses. However, Performance Management can serve the following 6 purposes (Anguinis 2009:14):

Strategic Purpose:The first purpose of the performance management system is to help top management achieve strategic business objectives. By linking the organisational goals with individual goals, the performance management system reinforces behaviour consistent with the attainment of organisational goals. Moreover, even if for some reason individual goals are not achieved, linking individual goals with organisational goals serves as a way to communicate what the most crucial business strategic initiatives are.

Administrative Purpose:A second function of the performance management system is to furnish valid and useful information for making administrative decisions about employees. These administrative decisions include salary adjustments, promotions, employee retention or termination of service, recognition of superior individual performance, identification of poor performers, layoffs and merit increases. Therefore, the implementation of reward systems based on information provided by the performance management system falls within the administrative purpose.

Informational Purpose:Performance management serves as an important communication device. First, it informs employees about how they are doing and provides them with information on specific areas where they may need improvement. Secondly, related to the strategic purpose, it provides information on the organisation’s and supervisor’s expectations and what aspects of work the supervisor believes are most important.

Developmental Purpose: Managers can use information gathered during the performance management system, feedback specifically, to coach employees and improve performance on an ongoing basis. This feedback allows for the identification of strengths and weaknesses as well as the causes for performance deficiencies (which could be due to individual, group, or contextual factors)

Organisational Maintenance Purpose:The performance management system also provides information to be used in workforce planning. Workforce planning comprises a set of systems that allow organisations to anticipate and respond to needs emerging within and outside the organisation, to determine priorities and to allocate human resources where they can do the most good. An important component of any workforce planning effort is the talent inventory, which is information on current resources (eg skills, abilities, promotional potential and assignment history of current employees). Performance management systems are the primary means through which accurate talent inventories can be assembled. Other organisational maintenance purposes served by performance management systems include assessing future training needs, evaluating performance achievements at organisational level and evaluating the effectiveness of HR interventions (eg whether employees perform at higher levels after participating in a training programme). These 16 activities cannot be conducted effectively in the absence of a good performance management system. By managing performance the organisation can track down the talent it has and the ones it still has to search for. In the meantime the organisation should endeavour to maintain or keep what it has in its talent inventory.

Documentational purpose:Finally, performance management systems allow organisations to collect useful information that can be used for several documentation purposes. Firstly, performance data can be used to validate newly proposed selection instruments. For example, a newly developed test of computer literacy can be administered to all administrative personnel. Scores on the test can be paired with scores collected through the performance management system. If scores on the test and on the performance measure are correlated, the test can beused with future applicants for the administrative positions. Secondly, the performance management system allows for the documentation of important administrative decisions. This information can be especially useful in court cases. This document will also assist organisations in applying consistency to its decision making.

Learning Outcome 5

The advantages associated with the implementation of a Performance Management system are as follows:

Motivation to perform is increased: Receiving feedback about your performance increases motivation for future performance. Knowledge about how you are doing and recognition about your past successes provides the fuel for future accomplishments.

Self-esteem is raised: Receiving feedback about your performance fulfils a basic need to be recognised and valued at work. This is likely to raise your self-esteem.

Managers gain insight into subordinates: Gaining new insights into a person’s performance and personality will help the manager build a better relationship with that person. Also, supervisors gain a better understanding of each individual’s contribution to the organisation. This can be useful for the direct supervisors, as well as for supervisors once removed.

The job of the person being appraised may be clarified and defined more clearly: In other words, employees gain a better understanding of the behaviour and results required in their specific positions.

Self-insight and development are enhanced: The participants in the system are likely to develop a better understanding of themselves and of the kind of development activities that are of value to them as they progress through the organisation.

Administrative actions are more fair and appropriate: Performance management systems provide valid information about performance that can be used for administrative actions such as merit increases, promotions, transfers and terminations. In general, a performance management system helps ensure that rewards are distributed on a fair and credible basis.

Organisational goals are made clear:The goals of the unit and the organisation are made clear, and the employees understand the link between what they do and the organisational success.

Employees become more competent:An obvious contribution is that employee performance is improved. In addition, there is a solid foundation for helping employees become more successful by establishing developmental plans.

There is better protection from court cases: 4Data collected through the performance management system can help document compliance with regulations (eg equal treatment of all employees regardless of gender, race, ethnic group).

Better and timelier differentiation between good and poor Performers:The performance management system allows for a quicker identification of good and poor performers. It also forces managers to face up to performance problems in good time (i.e. before the problem becomes so entrenched that it cannot be remedied easily).

Manager’s view of performance is communicated more clearly: The performance management system allows managers to communicate to their subordinates their judgments regarding performance.

Organisational change is facilitated: In cases where an organisation wants to change the organisational culture, this initiative can be added to the employees’ list of responsibilities and be subjected to review, together with other performance areas.

Motivation, commitment and intention to stay in the organisation are enhanced:When employees are satisfied with their organisation’s performance management system, they are more likely to be motivated to perform well, to be committed to their organisation and not try to leave the organisation.

Conditions for the successful implementation PM

1. Convey reasons for such a system to all participants
2. ensure tope management’s commitment to the system
3. all participants should take part in the development and implementation
4. organisational culture should have a focus on delivery outputs
5. all managers should be properly trained in applying the PM system
6. PM should not be implemented in isolation, other HR systems should allow for the PM system

Study Unit 2 (TWO) – Performance Management Process

- Learning Outcomes

After completing this Study Unit, you should be able to

1. apply the stages of the performance management process step by step in the organisational context
2. comment on the interrelatedness of the stages in the performance management process

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Learning outcome 1

Prerequisites Stage

This stage includes 2 important prerequisites for the implementation of the PM system:

Knowledge of he organisations mission and strategic goals

Just knowing the organisational plan is not enough, the presence of a strategic plan does not guarantee that the information will be used effectively as part of the PM system. To ensure that these strategic goals cascade down the org and lead to concrete actions, a conscious effort must be made to link them with individual performance (as depicted above). PM is the 3rd most important factor affecting the success of a strategic plan.

Knowledge of the job in question

This is done due to the process of job analysis (process of determining the key component of a particular job, including activities and processes). This is a pre-requisite for any PM process as it is difficult to understands what constitutes the required duties for a particular job, without it, neither do we know what needs to be evaluated or how to do so. The 2 products of a job analysis are the job description (Knowledge, skills and abilities, KSA’s and working conditions of a particular job) and the job specification. A job analysis is commonly done by way of observation, interview an questionnaire.

Performance Planning

This is the stage where the manager provides the employees with a thorough knowledge of the PM system. The manager and the employee meet to discuss and agree upon what needs to be done and how it should be done. The planning stage gives direction to both managers and non-managers alike. If employees know where the org or work unit is going and what they must contribute, they can coordinate their activities, cooperate with each other, and do what it takes to accomplish those goals.

Planning includes a consideration of results and behaviour as well as developmental plans. These factors need to be clarified during the discussions between manager and employee.

Results

Results refer to what is needed to be done or the outcomes an employee must produce. This needs to include 3 things:

1. The key accountabilities, or broad areas of a job for which an employee is responsible for producing results. This information is obtained from a job description.
2. A discussion of results also includes specific objectives that an employee will achieve as part of each area of accountability.
3. Discussing results also means discussing performance standards

Behaviour

An exclusive emphasis on results can give a skewed picture of employee’s performance. Behaviour or how a job is done constitutes an important component of the planning stage. This is because for some jobs it may be difficult to establish precise objectives and standards; employees may have control over how they do their jobs but not over the results of their behaviour. A consideration of behaviour includes discussing competencies, which are measureable clusters of KSAs that are critical in determining how results will be achieved, e.g: customer service, written or oral communication and creative thinking.

Developmental Plan

The manager and the employee need to agree on a developmental plan. At a minimum, this plan should include identifying areas that need improvement and setting goals to be achieved in each area; highlights an employee’s strengths and provides and action plan to improve areas of weakness. The developmental plan requires the following 3 components:

1. Description of developmental objectives
2. Activities that will be carried out to achieve these objectives
3. Date of completion

Performance Execution

Once employees are aware of the behaviour to display and the results to be achieved, and that a development plan has been submitted, they must get down to fulfilling these commitments. Employees have the primary responsibility for and ownership of this stage. The following factors must be present in the performance execution stage -

Employee:

1. Commitment to goal achievement – enhanced by employee being an active participant in process of setting goals
2. Ongoing performance feedback and coaching – continuous, do not wait till review or until a serious problem develops
3. Communication with manager – regular comms, freedom to request clarity on issues and roles
4. Collecting and sharing performance information – regular updates on progress towards goals to manager.

Manager:

1. Observation and documentation – daily basis, keep track of good and bad performance
2. Updates – revise and update objectives based on changes to org goals.
3. Feedback – on regular basis
4. Resources – ensure employees are equipped with resources and opportunities to participate in developmental plans.
5. Reinforcement – on outstanding performance and remedies on negative performance

Performance Assessment

Both employee and manager are responsible for evaluating the extent to which the desired behaviour has been displayed and whether the desired results have been achieved. This includes an evaluation of the extent to which the goals stated in the development plan have been achieved.

Performance Review

This involves a meeting between the employee and the manager to review their assessments. It is called appraisal meeting or discussion and is importance because it provides a formal setting in which the employee receives feedback on his/her performance. Anguinis recommends the following steps for conducting a productive performance review:

1. Identify what the employee has done will and poorly by citing specific positive/negative behaviour
2. Solicit feedback from your employee about these types of behaviour – listen for reactions and explanations
3. Discuss the implications of changing, or not changing. Positive feedback is best, but and employee must be made aware of what will happen if an poor performance continues
4. Explain how sills used in past achievements can help overcome any current performance
5. Agree on an action plan
6. Set up meeting to follow up and agree on the behaviour, actions and attitudes to be evaluated

Performance Renewal and re-contracting