Performance Management is a system and process that link the organization’s goals and strategies to individual and team performance, to increase organizational effectiveness (and, thus, profitability).
It is a joint process that involves both line managers and their direct reports (“subordinates”) who jointly identify common goals/objectives which correlate to the higher goals of the organization. This process results in the establishment of written performance expectations (a Performance Agreement) - later used as measures for feedback and performance appraisals/reviews.
Performance Management is the best route to learn what should be happening at all levels in an organization, and then measuring whether it is happening as intended. Where there is a gap between these two, a performance management system will help identify the causes and help implement corrective actions.
Performance Management is a much wider concept than Performance Appraisals/Reviews. The latter is only one part of Performance Management (stage 3 in a 4-stage process):
Performance Management consists of four stages:
This model is aligned with the work needs of individual employees, which are as follows:
To provide for the above needs of an employee, consider what should happen at each stage of the Performance Management Cycle:
1. Planning Performance: Performance Measures (Goals, Objectives, Targets, KPI’s, Competencies, etc.) for individual employees (at all levels) are jointly discussed and agreed during one-on-one, face-to-face meetings with their direct line managers. These are put into a formal, written Performance Agreement for each staff member. (Performance Agreements can also be drawn up for entire work teams in organizations where teamwork is paramount.)
2. Managing Performance: During this stage, employees implement/execute their agreed Objectives/KPI’s. They manage their own performance, assisted by line managers who should aim at removing performance obstacles in the work environment and providing necessary resources, training and coaching. Line managers are also responsible for integrating and coordinating (horizontally and vertically) the Objectives/KPI’s of all their employees/units/teams, monitoring their performance, taking corrective action, and participating joint problem solving, when necessary. The leadership, motivation, feedback, reinforcement and support they provide throughout the process are of utmost importance.
Managing Performance is an ongoing activity that actually runs through all phases of the Performance Management Cycle. It is the “Golden Thread” of Performance Management.
3. Reviewing Performance: During formal Performance Appraisal/Review Interviews, employees and their line managers discuss (and assess) how well the agreed Objectives/KPI’s have been achieved, and whether the specified competencies are being demonstrated. Problem areas are identified and corrective measures put in place, including possible coaching and training that the jobholder needs. Depending on the type of organization and its management philosophy, the frequency of Performance Appraisals may be any of 1, 2, 3, 4, 6, or 12-monthly (Appraisal Smart allows for all these options).
4. Rewarding Performance: The actual RATING of performance (how well each Objective/KPI had been achieved and Competencies demonstrated) forms part of the Performance Appraisal/Review Interview. Rewarding people for good performance takes the form of monetary incentives or rewards (performance-based pay such as bonuses and/or salary adjustments). However, the power of non-monetary rewards, such as praise and recognition, should not be ignored and should be used to maximize returns.
It is important to note that Performance Management is not an additional responsibility for line managers. Rather, it should be seen as the most effective method of managing. In fact, managing employee performance in the way described above is the essence of a manager’s job, and not something that detracts from it.
Crucial Performance Management Principles
“What gets measured (monitored, rewarded, emphasized) gets done”
“What you don’t measure, you can’t (effectively) manage”
The most important objectives and benefits of having a sound Performance Management System in place:
Appraisal Smart includes a Tutorial on Performance Management and its linkage with Staff Appraisals/Reviews
- To serve as the primary vehicle for implementing organizational goals and strategies (cascaded from top to bottom throughout the organization)
- To align and integrate the goals/objectives and Key Performance Indicators (KPI’s) of the organization vertically and horizontally through all job categories and levels, including management. In this way the entire system works together in pointing towards the critical bottom line measures, with bottom line results generally following as a matter of course
- To facilitate continuous performance improvement and organization development - the perfect Change Management and Learning Organization tool
- To achieve quality and efficiency, i.e. to meet the customer’s needs as precisely, quickly and cheaply as possible
- To ensure clarity regarding work expectations and standards, reducing jobholder anxiety/stress, resource waste and conflict
- To continually enhance employee competence through the identification of output-related training and development needs and strategies
- To reduce Line Manager reluctance and fear to do Performance Appraisals with their staff
- To facilitate performance-based remuneration and rewards, so employees can see and experience a clear link between their performance and the rewards they receive.
- Not only is the existence of a sound Performance Management and Appraisal System an operational prerequisite for achieving organizational goals, but it may also satisfy a legal requirement to prove that proper/due process was followed (backed by a sound documentation and process audit trail) when eventually disciplining -- and especially dismissing -- a staff member for persistent poor performance.
Some Key Differentiators of Appraisal Smart:
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- The system accommodates any kind and combination of Performance Measures such as Goals, Objectives, Key Performance Indicators (KPIs), Competencies, and Values.
- The Appraisal Template feature of the system allows generic Performance Measures and Standards for individual positions to be created centrally, for easy one-click download by managers for all their staff (can still be customized for individual employees).
- Accommodates the following Performance Cycle alternatives: 1, 2, 3, 4, 6 or 12-monthly performance appraisals, as well as employee anniversary-based.
- Enables the creating and updating of Job Descriptions online, giving managers the ability to view the Job Descriptions of their direct reports—and employees to view their own—with the mere click of a mouse (this feature comes at no extra cost).
- Job Descriptions can be linked to Appraisal Templates and Performance Agreements/Plans to ensure perfect alignment between them.
- Performance is expressed as an overall performance percentage (based on the rating and importance weighting of each measure), resulting in easy employee performance ranking and comparison (and which can also be easily used for fair performance-based remuneration calculations).
- The system does not limit you to ‘regular’ Performance Reviews only, but allows you to create any number of additional AD-HOC Appraisals as well, such as for Probation, Promotions, Succession, and Performance Improvement (this feature comes at no extra cost).
- The Multirater Functionality allows you to, as part of the ‘regular’ Performance Appraisals, request up to FIVE ‘other’ (Multi-) raters to provide input to an employee’s performance.
- The (world-first) CONTEXT-TARGETED 360-degree feedback add-on module (Smart360) can be activated at any time, allowing one login to both system components (regular & 360 reviews).
- The Learning Management add-on module caters for individualized employee Personal Development Plans, a Learning & Development Library of company L&D Activities/Courses/Workshops, and reporting capability to see who needs to attend what type of training, or who has undergone what type of training.