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Key considerations when creating or enhancing a Performance Management System
Whether you’re aiming to improve your present performance management system or to introduce a fresh new system, there are some key factors to consider.
A good system ensures that performance management is a continuous process which involves communication between manager (appraiser) and appraisee throughout the year. The performance appraisal is just one element of this annual performance management process. The best performance management systems have an integral performance appraisal element within their framework.
Having an effective performance management process is an essential contributor to a company’s success. It focuses employees’ effort and behaviour on your company’s goals by ensuring that the workforce knows what's expected of it, both at ground level and more strategically as a business. Information derived from the performance management system should also assist your Human Resources (HR) team with succession planning, talent management, training and development, salary and bonus decisions and disciplinary procedures.
Developing and implementing an effective performance management system can be a major challenge, even for HR professionals. One of the keys to success is getting your employees to actually buy into the concept of performance management and performance appraisals in the first place. They need to understand how your new performance management system works, the part they have to play in it and the benefits they’ll get from it. It’s not uncommon for new performance management systems to be met with considerable resistance by those whose performance is being appraised. People tend to be naturally cautious, sometimes even negative about the prospect.
There are three key considerations when introducing a new performance management process: skills matching, performance appraisal and the choice of system itself. With skills matching, you’ll need to determine the behaviours and competencies (skills) necessary for successful performance. Performance appraisal involves choosing the appropriate criteria for the appraisal form and assessing performance. You’re then in a strong position to choose the performance management and appraisal system that best suits your requirements and company culture.
Skills Matching
Skills matching involves establishing which skills and behaviours should be linked to which roles within the company for performance appraisal purposes. Determining the skills employees require and the behaviours they should demonstrate to perform their roles ensures they understand what’s required of them in order to be effective. These skill sets are sometimes known as behavioural competencies. Some organisations like to focus on a group
of core competencies which are relevant to all employees.
Not all
companies like to include competencies, some prefer to keep the process more generic. To determine which competencies are important to job performance, it’s helpful to refer to job descriptions; it follows therefore that these must be accurate and up-to-date.
In the skills matching stage, you’ll also need to decide who will rate each employee’s performance. Performance appraisals are normally the responsibility of the immediate supervisor or manager of the employee.
Some companies like to add peer appraisals to supplement those given by the manager. This is normally known as 360 feedback and is useful because the appraisee gets a feel for how other colleagues perceive their performance, not just their manager. Appraisees can also be invited to score themselves in both the 360 feedback appraisal (the self-perception element) and the performance appraisal itself.
The performance appraisal element of the performance management system
Once you've decided on the behavioural competencies to include on the appraisal form, you’ll need to consider which measurements to use to assess and evaluate employee performance.
There is no ‘correct’ way to rate or assess the performance of employees during the appraisal and performance management process. In fact, some organisations prefer not to score performance against any strict rating criteria.
Normally, employees are assessed formally once a year, however, effective performance management involves regular discussions between appraiser and appraisee throughout the year. These discussions may take the form of more informal performance reviews, perhaps one every quarter. The discussion should also take account of personal objectives which may have come up for achievement around that time. Notes, plans and decisions agreed at these meetings should be taken account of during the more formal annual performance appraisal.
If you’d like to incorporate a rating scale to score employees during the performance appraisal, there are a number of options to consider. We advise that you choose the option(s) that best suit your organisation’s performance management objectives and also your culture. Our experts can assist you with this.
The Performance Management System
To ensure success, it’s essential that your Performance Management System suits your company.
It must be simple and efficient to use, worth the effort to complete and be beneficial to the employee. At the outset, it’s essential to be clear about:
- What you expect to achieve from the performance management system.
- How your workforce approaches the concept of performance appraisals.
- How the new performance management system will align with your present performance management process.
Traditional performance management and appraisal systems usually review past behaviour and provide an opportunity to reflect on past performance. But to be successful, they should also be used as a basis for making development and improvement plans and reaching agreement about what should be done by the employee in the future. These outcomes may be presented in the form of personal objectives.
Here are some key considerations when introducing a new performance management system;
Focus – Be clear about what you want to achieve from the performance management system. At one extreme it may simply be an opportunity to discuss with employees how they think they are performing and agree some actions which can be monitored as time progresses. At the other extreme, it may be a comprehensive online performance management and appraisal system which is linked to compensation management, succession planning, recruitment and talent management.
Simplicity – Effective performance management should be simple and straightforward. If the performance management system is over-complicated, appraisers and appraisees will lose the motivation to use it with any commitment or belief. It will also become an effort to administrate and manage. If it’s an on-line performance management system, it needs to be user friendly, easy to understand and well tested. If it’s a paper-based performance appraisal system, it mustn’t be over elaborate or burdensome.
Openness – The performance management system should encourage openness and transparency between appraiser and employee, yet at the same time be confidential. Employees should feel that the performance management system presents them with the opportunity to air their views or concerns and also to record and present achievements they consider to be worthy of note.
Credibility – Employees must believe in the performance management process. The performance management system may fall flat if people don’t feel it's worth making an effort for. To achieve credibility, it's helpful to involve both appraisers and employees in the development of the system, or at least to invite feedback from them during the development stage.
Consistency – Employees should feel that they are being treated fairly and on a par with their colleagues. The performance appraisal element of the performance management system should be designed so that it has a consistent appraisal form. Employees should feel that they are being assessed against matching criteria. This can be achieved through the development of competencies which relate either to employees as a whole or to previously identified work groups and / or seniority levels.
Confidentiality – It’s essential that your employees feel that their personal information is recorded and filed confidentially. If the performance management system is online, users should have their own personal login facility with password protection.
Measurement – The performance appraisal element of the performance management system should have fair and practical measurement and rating criteria. This may be a numbered scoring system or it could be a system that uses descriptive words. Ideally, appraisers will work to a previously agreed and consistent benchmark relating to employee performance. This will help to alleviate any subjectivity due to some appraisers being generous with their scoring and others being less so.
Training - Senior managers must ensure that appraisers have training in the skills required to conduct a professional performance appraisal. Even if you have a first class performance management system, it is likely to fail if your appraisers don’t know how to manage and run it effectively. Employees should also be briefed on the performance management system, the benefits they can get from it and the part they have to play in the performance appraisal part.
Development – The performance management system should provide a platform to identify and coordinate the personal development and training needs of employees. Appraisers should know how to use the performance management system to cater for these needs and to coordinate the relevant assistance. This may take the form, for example, of a training course. Depending on the complexity and type of system, training and development records can be aligned with succession planning and other talent management related processes.
Record – A performance management system can only be effective if the information recorded is filed properly. Appraisal records will need to be accessed for reference. This may need to take place more often than just annually because amendments may need to be made during the year to keep the appraisal up to date. For example, objectives may change and therefore require amending during the year. Recording must of course be confidential and managed professionally.
