What is Performance Management and Development?

Introduction

For most organisations, people are the greatest asset yet also the hardest to manage and control. Whether it is recognised or not, the organisation in its entirety will have an overall aim and it is the role of management to ensure that all individuals within the organisation are working towards this ultimate goal.

Ensuring consistency of performance is critical and something that is often overlooked by the management team. There are considerable benefits to be obtained, for both the employers and employees, of a company that is keen on performance management and has suitable practices in place.

What is Performance Management and Development?

Performance management and development has a wide scope in terms of areas that it covers within an organisation, but commonly refers to the development, training and appraisal of employees (Wilson, 2005)^[1]. Every organisation has a different approach to the way in which performance is managed. Many of these changes are due to the way in which the organisation is run and the personality types that are involved. Whilst some performance management approaches are just about getting the most out of their employees, on a day to day basis, others take a longer term view and include issues such as career development and internal progression. It should be noted that the way a performance management plan is undertaken includes both subjective and objective measures which together deal with achieving the overall organisational goals (Burkholder, 2007)^[2].

Appraisals are often regarded as negative in the way that they deal with employee performance, whereas performance management offers a much more positive approach. For most employees, appraisals are seen as an opportunity to pick up on poor performance and to deal with it. Performance management, on the other hand, should involve a more positive way of looking at how each individual can contribute to the overall organisation. It is not simply about berating bad performance, but rather about achieving the best possible results in the long term. Employees are not normally acutely aware of the performance management process and only see the one distinct area of the whole process, namely that of goal setting and of monitoring their behaviour. In reality, the issue of performance management is much wider and should be about ensuring maximum efficiency across all levels of the company (Adair, 1999)^[3].

Performance Management and Development for the Company

Regardless of how importantly the management team rates performance management, the reality is that it is central to the corporate strategy undertaken by the company. People are incredibly important to the way in which an organisation performs and failure to recognise this could be devastating to the efficiency of the company as a whole. Companies that rely heavily on professional services such as accountants and lawyers are particularly reliant on a solid and efficient performance management system.

Despite the recognition that performance management and development is a wide concept, the reality is that most employees only see one very narrow element of the whole process. Staff appraisals occur in the majority of companies, regardless of size. Appraisals relating to performance (e.g. sales targets) or to training progress generally look, historically, at what has happened in the past. Furthermore, they are often linked to the way that pay reviews are undertaken or bonuses are paid out. It is often worth noting that, despite the popularity of the appraisal process, it is rare that these are linked into the entire corporate strategy (Miller, 2006)^[4].

For larger corporations, appraisals are more commonly linked to career progression with certain performance being directly linked to the way in which individuals climb up the career ladder. In these cases, employees largely view performance management as something that is a means to an end for them, personally, rather than something which is good for the benefit of the wider company.

Theories for the use of Performance Management and Development

It is recognised that most performance management approaches do not make full use of all available skills and purposes. One of the main reasons for this limitation is that there is no vertical integration within an organisation. Targets and performance are generally managed by team leaders with the view to achieving their specific goals. Therefore, it is not unreasonable to expect that an individual will try and achieve the best possible appraisal and will not necessarily consider (or indeed care) about the wider organisation.

Regardless of the type of organisation, employees are powerful; therefore, the way in which they are encouraged to behave in relation to the organisational goals will be incredibly important. The key to performance management is setting the necessary goals and targets that will work towards achieving the same goals as the organisation as a whole.

This approach to performance management involves much more involvement at the higher end of the corporate ladder. What is needed and expected from every team should be something that is laid out by the top level of management. Moreover, these objectives should then be filtered down through the various levels of management in terms of setting goals and training and development needs, all the time ensuring that focus on the central goal is maintained.

Take a situation, for example, where there is a new technical product being planned. Performance goals and management should be looking at ensuring every department is ready for the launch, in advance of the actual launch itself. For example, extra technical training for the maintenance team, greater product awareness for the sales team and suitable involvement of the marketing team would all help to ensure that the best possible results are obtained from the launch. This is a classic example of performance at the lower levels of a corporation being used to feed into the ultimate success of the company (Armstrong, 2006)^[5].

Recognised Best Practices in Performance Management and Development

Performance management is all about the comparison of actual performance with desired performance, in a way that brings together organisational goals. Clearly, the degree of control and management of the individual people will vary depending on the nature of the organisation. Factors such as the inherent employee motivation levels and general management style will make a big difference to how prescriptive the performance management process needs to be. Many of the parameters are company specific, but the process should also pay attention to the sector as a whole. For example, retail structures tend to need much more micromanagement in performance management than sectors with a high degree of professional participation such as accountancy or engineering.

Despite the differences in the company and sector approaches, there are still some widely recognised good practices that management should follow. Firstly, performance management is something that needs to be carefully planned and integrated into the role of management, at all levels. Haphazard use of performance appraisal means that not only are management not regularly getting the data they need, but employees are not being encouraged to recognise the importance of the whole process. If the process is not driven forward by management and given an important platform, it is unlikely that middle and lower management and employees will give it any importance either. Also, by ensuring that the appraisal process is conducted regularly, employees are more likely to regard the whole process as being positive in nature. Irregular appraisals will be viewed with suspicion. Therefore, structured, regular appraisals and discussions are essential for any performance management process (Thomson, 1998)^[6].

Secondly, performance management is all too often associated with dealing with poor performance. This is partly due to the way that it has often been used previously by management to deal with troublesome employees or as an excuse not to give staff the pay rise that they feel they deserve. For this reason, those developing best practices in performance management feel that the process of managing troublesome employees should be removed from the wider issue of organisational performance management. In doing so, a large amount of the suspicion will be removed and employees will be more inclined to look at the process as being genuinely progressive in nature.

Thirdly, the performance management process should always be progressive and positive. Whilst it is necessary to consider past performance when it comes to setting future goals, the focus should be firmly on where the company is going and not on the errors of the past. This links in with ensuring that poor performance is managed separately, often by the central human resources function rather than the managers in the performance management process.

Fourthly, the performance management process needs to be continuous. There is little or no use in simply completing standard appraisals, on an annual basis. An organisation and the individuals within it are dynamic and constantly changing; therefore, the performance management process should reflect this and be continuous in nature. Typically, this will involve sets of guidelines and aims that will be focussed on by employees on a day to day basis, so that they can get a sense of continual improvement and achievement.

Fifthly, the process of performance management has to be guided from the absolute top level of management. This is vital, not only to ensure that all teams are working consistently towards the overall corporate strategy, but also to make sure that all teams within the organisation are being dealt with consistently and know how they fit in with each other. This is critical, as ensuring that no single team feels left out will assist in pulling all sections together.

Finally, the performance management process itself needs to be put under continuous scrutiny to ensure that it is actually achieving what top level management wants it to. The whole aim of a performance management process is to align individual performances with the organisational aims. If it is not doing this, then something needs to be done to tweak the goals and aims so that they encourage behaviour that is more in line with the organisational aims.

Contribution of Performance Management and Development

Critically, as is the case with any internal system within an organisation, the performance management and development processes must be continuously assessed in order to determine whether or not they are successful and what needs to be done to improve the whole strategy.

From a top level management perspective, one of the critical things that should be looked at is how readily middle managers are implementing the processes. If these are not being implemented fully, then the question ‘why not?’ needs to be asked. Is it that there is a general lack of understanding or are employees resistant? This gives important information to the top level managers and might, in fact, suggest areas within the business that are not as efficient as they should be. All performance management processes need to be easy to adopt by both managers and employees in order to encourage maximum participation. By monitoring the use of these processes, high level management can ascertain which work well and which are not producing the desired results (Marchington, 2005)^[7].

All those involved in the performance management process need to be adequately trained. This holistic approach to performance management requires not only appraising employees, but also coaching and mentoring staff to perform better. This is a difficult skill and everyone responsible for any other member of staff should be trained in this area to ensure that the process is undertaken efficiently. This should be carried out across all teams so that everyone is treated equally and the same management message is given out consistently, across the teams.

As with many of the problems inherent in traditional performance management centres using the old style appraisal system, it is often useful to remove the actual appraisal meeting entirely. Replacing this meeting with a coaching or mentoring session will help to shift the mentalities of the employees into seeing the process as one of positive development rather than one of apportioning blame (Fournies, 1999)^[8].

Setting Objectives in Performance Management

It is very difficult for any employee or manager, regardless of how good they are at their role or how diligently they work, to be totally effective if they do not know what they are trying to achieve. For this reason, the central setting of objectives is the singularly most important element of any performance management and development process.

In order for performance management to be successful, the goals and objectives laid out must be both clear and must encourage the correct sort of action from those involved. As with any project that requires input from a variety of sources, the SMART principles of goal setting should be followed. That is the top level management need to set out goals that are specific, measurable, accountable, realistic and time-based.

All goals, at every level, should be clear and objective. This is important so that the employees themselves can understand what they are trying to achieve and also to prevent any argument when it comes to discussing whether the goals have been met. There is nothing more damaging to employee motivation than being told a poor job has been done, despite the employee believing that they were performing well.

Leading from this, the goals must be measurable, as these will then be easier to understand and strive towards by employees and managers who will be able to see at a glance which areas remain problematic for the company.

Accountability within an organisation is crucial. All employees must understand exactly to whom they are responsible, as well as whom they should look to for guidance and additional assistance, where necessary. All levels within the organisation must know whom they have to report to and for what reason (Houldsworth, 2006)^[9].

Realistic objectives are, clearly, of the utmost importance; everyone involved in the performance management process must feel that potentially they can achieve what they are tasked with. Aiming for an impossible goal is almost certainly going to result in loss of motivation and underperformance, at all levels.

Timeliness is also important and everyone involved should have a clear idea of timescales, in terms of each of the objectives being set. In particular, being aware of the long term organisational goals, even if they are not immediately achievable, will help employees to see how their current efforts will fit in. This is critical, not only to maximise performance, but also to maintain high levels of employee motivation.

Conclusions

Performance management is one of the hottest areas of debate within the human resources and management functions. With people making up the most valuable part of any organisation, the way in which they are motivated and managed in order to work together towards achieving the overall goals of the organisation will prove absolutely central to the company’s success.

Traditional processes have been particularly negative in their approach and generally involve a backward looking, infrequently conducted appraisal process. It has now been recognised that the processes of performance management can be much more successful with a combined use of performance management and a mentoring approach from managers, at every level.

Setting clear objectives and giving the process the level of importance that it deserves will allow managers, at all levels, to pull together their resources to ensure that the overall corporate objectives are met in the most efficient and suitable manner.

References

Adair, J. & Allen, M., 1999. Time Management and Personal Development. Thorogood.

Armstrong, M., 2006. A Handbook of Human Resource Management Practice.

Kogan Page Publishers.

Blyton, P. & Turnbull, P., 1992. Reassessing Human Resource Management.

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Burack, E.H., Hochwarter, W. & Mathys, N.J., 1997. The New Management Development Paradigm. Human Resource Planning, 20.

Burkholder, N.C., Golas, S. & Shapiro, J.P., 2007. Ultimate Performance: Measuring Human Resources at Work. John Wiley and Sons.

Fournies, F.F., 1999. Coaching for Improved Work Performance. McGraw-Hill Professional.

Houldsworth, E. & Jirasinghe, D., 2006. Managing & Measuring Employee Performance: the evolution of performance management, Hay Group

Kogan Page Publishers.

Marchington M. & Wilkinson, A., 2005. Human Resource Management at Work: people management and development. Chartered Institute of Personnel and Development, CIPD Publishing.

Miller, C.E. & Thornton, C.L., 2006. How Accurate Are Your Performance Appraisals? Public Personnel Management, 35.

Schay, B.W., 1993. In Search of the Holy Grail: Lessons in Performance Management. Public Personnel Management, 22.

Schwartz, A.E., 2001. Performance Management: Work and Development.

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Stivers, B.P. & Joyce, T., 2000. Building a Balanced Performance Management System. SAM Advanced Management Journal, 65.

Thomson, A., Mabey, C. & Storey, J., 1998. The Determinants of Management Development: Choice or Circumstance? International Studies of Management & Organization, 28.

Wilson, J.P., 2005. Human Resource Development: Learning and Training for Individuals and Organizations. Kogan Page Publishers.

Footnotes

^[1] Wilson, J.P., 2005. Human Resource Development: Learning and Training for Individuals and Organizations. Kogan Page Publishers.

^[2] Burkholder, N.C., Golas, S. & Shapiro, J.P., 2007. Ultimate Performance: Measuring Human Resources at Work. John Wiley and Sons.

^[3] Adair, J. & Allen, M., 1999. Time Management and Personal Development. Thorogood..

^[4] Miller, C.E. & Thornton, C.L., 2006. How Accurate Are Your Performance Appraisals? Public Personnel Management, 35.

^[5] Armstrong, M., 2006. A Handbook of Human Resource Management Practice. Kogan Page Publishers.

^[6] Thomson, A., Mabey, C. & Storey, J., 1998. The Determinants of Management Development: Choice or Circumstance? International Studies of Management & Organization, 28.

^[7] Marchington M. & Wilkinson, A., 2005. Human Resource Management at Work: people management and development. Chartered Institute of Personnel and Development, CIPD Publishing.

^[8] Fournies, F.F., 1999. Coaching for Improved Work Performance. McGraw-Hill Professional.

^[9] Houldsworth, E. & Jirasinghe, D., 2006. Managing & Measuring Employee Performance: the evolution of performance management. Hay Group, Kogan Page Publishers.