Performance management Flashcards
What is performance management?
- development of shared understanding of goals/targets
- seek to encourage continuous improvement within organisations
- focused on both behaviours and results, where we get to and how we get there
Armstrong and Taylor (2014)
PM provides better results by giving the means for individuals to perform well with an agreed framework of plan goals, standards and competency requirements
PMS are Developmental
PMS are developmental in nature: links to HMD (developing skills and competences) and also with developing performance of organisation as a whole
- PM reaches work systems and processes themselves, not just the people bringing them to life
Armstrong (2006)
PM acts as an integrative force within organisational areas
- Direct links with: developing skills and competences, reward management, improving individual and organisational performance
- Indirect link with: improving managerial effectiveness
Why is PM necessary?
Regulation of performance is vital for organisations to sustain themselves. If managers did not seek some form of control over working practices, organisations would descend into anarchy.
Torrington et Al (2014)
Mapped out stages of PMS:
- Definition of business role (job description, objectives of dept/group)
- Planning performance (individual objectives, development plans)
- Delivering and monitoring (ongoing manager support, ongoing review)
- Formal assessment/reward (annual assessment, link to pay)
PM is cyclical (not linear) system, it is ongoing and doesn’t start and stop:
- definition of organisational objectives/goals
- broad objectives are translated into individual objectives
- these show the performance level expected/required
- individuals deliver upon required performance with support of line manager, HR and HRD professionals
- feedback is provided on an ongoing bases rather than an annual review
- formal assessment of performance against set objectives before the cycle begins again
Latham and Locke (1979)
Argue that when we set goals, this motivates superior performance, even when no rewards are offered for meeting the goals. The fact that there is a ‘goal’ to reach motivates better performance
McDonald and Smith (1995)
Found that having formal PMS influences stronger financial performance, and higher growth per employee in comparison to no PMS
Guest and Conway (1998)
Found links between PMS and improved business performance
Issues with Setting performance standards
- Performance is usually measured objectively however some performance are difficult to measure (quality, creativity, leadership)
- Differentiate ‘what is measurable’ with ‘what is important to measure’
- Recognize that strategy and objectives are dynamic - not static, implication of PM is that we revisit goals and standards - see if still appropriate with long-term goals
Performance standards should be SMART
S - Specific M - Measurable A - Achievable R - Realistic T - Time bound
ROWE (results only work environment)
Outputs measured, not inputs - don’t care about the process only that final standards are met
Pros and cons of ROWE
- Provides autonomy for employees-improved satisfaction and engagement
- drawbacks: employees who need more directions, teamwork and communication suffer, encourage unethical behavior
Discretionary effort
Difference between what an employee has to do and what he/she wants to do
- extra effort that an employee willingly commit without being coerced/asked
Negative versus positive stress
Negative stress: when employees get burned out due to demand accumulation or excess stress
Positive-necessary to motivate performance
Why does PM go wrong?
- When systems are too bureaucratic
- Changing PMS just for the sake of it
- line managers must learn the mechanics of PM and build their own knowledge and skills
- Line managers do not ‘buy in’ the PMS approaches-important to involve them in design/development of PMS and get their feedback on how it’s operating
- Clear and unambiguous communication about the PMS - how the employees will be assessed, when and against what standards they will measure performance - confusion of these leads to disenchantment of system
The performance appraisal - define
CIPD: Process for individual employees and those concerned with their performance to discuss their performance and development, as well as support their need in their role. Used to both assess recent performance and focus on future objectives, opportunities and resources needed
- Assessment or measurement of performance
- Helps control performance and motivate superior performance
Lake Wobegon effect
Most people assume that they are above average, managers must provide critical feedback in a way that motivates improvement and not cause negative stress
Problems with performance appraisal interviews (Torrington et al, 2014)
- prejudice
- insufficient knowledge of individual being appraised
- halo or horn effect
- problem of context
- paperwork
- formality
Appraisals rely on competence of manager for running interview
- Provide managers with necessary skills/knowledge to correctly appraise performance
- Provide support for employees, link appraisals with learning opportunities
Torrington et al (2014) - PA involves subjective assessment of performance, it is potentially based on hard evidence (sales figures), but still relies on managerial discretion and ability in rating of performance
PA follow-ups
Appraisals that don’t lead to outcomes or if agreed outcomes are ignored, employees become disenchanted with the process (seeing it as paperwork)
- Important that outcomes are followed up, linking with wider performance management cycle (Armstrong and Taylor, 2014)
Appraisal meetings
One-to-one format between employee and line manager, focused on discussing achievements of individual goals, how contribution maps into achievement of organisational goals
- Opportunities for managers to assess learning needs, pointing employees to learning events
CIPD (2016) ‘ideal’ PA system
- With such a fast-paced business environment, PA should be a continuous discussion around ongoing issues (not just once or twice a year)
- Regular comments on progress, aiding developmental and progression
- Goal setting not appropriate for contemporary jobs, complex and innovative work should have broader outcomes, not specific goals
The 360 degree appraisal
AKA multi-rater feedback
- Considers view from line manager, peers and subordinate employees, self assessments and customer feedback
Benefits of 360 degree appraisal
- Provides fuller picture of performance
- Deeper feedback
- Highlight potential learning/development needs
Problems with 360 degree appraisal
- Objectivity of those giving feedback - ensuring that peers/subordinates are not acting on self-interest
- If source of feedback is known, managerial reprisals against those who rated them poorly may happen
- Not assume that everyone knows how to deliver an effective feedback - full training must be provided
How to overcome issues with 360 degree appraisals
Organisations stress that this approach is for developmental purposes only (not linked to pay/promotion)
- Also ensure confidentiality/anonymity for feedback and ratings, participants must not be identifiable
Reasons for underperformance
- Lack of skills/knowledge
- Personal problems
- Poor engagement, commitment or motivation
Must understand reason for poor performance, as solutions depend on underlying problem
After assessing level of underperformance, we can apply corrective actions:
- Retribution
- Rehabilitation
- Deterrence
These emerge from theories of punishment and nature of discipline at work (Pilbeam and Corbridge, 2006)
Retribution
Some form of punishment, ensure that consequence fits the offence
- E.g. If sales target is failing, scale their bonus back accordingly
Rehabilitation
Both employer and employee are keen to improve performance through positive/developmental approach
- Use of HRD input and learning programmes to improve competence in their role
- Emphasis on corrective action of issue that led to underperformance
Deterrence
Dissuade employees from taking courses of action or repeating conduct/underperformance
- E.g. Highlighting consequences of behaviours, interview people who are absent
Underperformance can be dealt with…
- Punitive approach
- Developmental approach
Punitive approach
Punitive: retribution and deterrence, disciplinary action or threat to do so
- Necessary evil: used in low-trust relationships
- Little effect on performance as it doesn’t address root of cause (demotivating)
- Threat of sanction helps deter slackness/carelessness
Developmental approach
Encouraging commitment, using sophisticated approaches to solve root cause
- Remove reward/punishment issue
- use more positive forms of action (e.g. HRD interventions and managerial strategies to build commitment and engagement)
Some issues in which reward/punishment is more appropriate
- Inappropriate to use purely developmental/punitive to manage underperformance
- Absence management: we must hold employees accountable for their actions
- Must use a mixture, see the nature of what is being measured
Disciplinary vs capability issues
- disciplinary: associated with poor confuct, theft, absence, discrimination, fraud, and other issues at work
- capability: employee’s ability to perform role/job given
Disciplinary process in organisation
- must be consistent across org, must be communicated to employees
- make employees aware of stages: informal warnings, formal warnings, dismissal
