Session 7: Performance and reward management Flashcards
What is performance management
has been defined as a ‘strategic and integrated approach to delivering sustained success to organizations by improving the performance of the people who work in them and by developing the capabilities of teams and individual contributors’ (Armstrong & Baron, 1998).
Regardless of whether we are attempting to examine the relationship between organisational strategy or people and performance management from a hard or a soft perspective, organisations need to undertake two interrelated tasks which are:
- Identify the type, amount and nature of performance required of the business, its departments, teams and individuals, as well as some means of communicating such information to these groups.
- Establish a means of recognising and rewarding behaviours and performance delivery in line with the organisation’s needs.
Line of Sight Model
WTF
Managing individual performance
Individual performance may be considered as both the outcome of work and as a process in which the individual employs knowledge, skills, competencies and behaviours to achieve those outputs (Wilton, 2016).
Performance Management Cycle (Armstrong, 2012: 332)
The management of performance for individuals is often described as a ‘cycle’ comprising three or four key phases.
Armstrong (2012) identifies the four stages as:
- plan,
- act,
- monitor and
- review
- Plan (Performance and development planning)
This includes:
- Role definition
- Objectives
- Competencies
- Performance improve and
- Personal development
- Act (Performance and development activities)
This includes:
- Carry out the role
- Implement a performance improvement plan
- Implement a personal development plan
- Monitor (Manage performance through the year)
This includes:
- Monitor performance
- Provide continuous feedback
- Provide coaching
- Deal with underperformance
- Review (Joint analysis of performance)
This includes:
- Dialogue and feedback
- Agree and build on strengths
- Agree on areas of improvement
The line manager’s role in improving performance
research (CIPD, 2005) suggests that good line management is central to raising and maintaining individual performance, this can be sobering for people managers – a reminder that what they do is often the key to the motivation, and hence the performance
Linking performance management to other HR activities - The HOUSE MODEL
(Integrated Managing People (Houldsworth & Jirasinghe, 2006)
THE FOUNDATION
suggests that core aspects of HR – here represented by job design, recruitment and HR policies – exist as the foundations, or key building blocks, of a people management process.
THE STRUCTURE
Performance management systems then sit as the key elements of the integrated structure once individuals have been recruited and roles defined
Part of the Structure (think of this as the 2nd floor)
It is then the performance management system that serves to drive such performance improvement aspects as reward, training and development, promotion and career progression. Integrating and structuring people management
THE ROOF - the result
result in motivated employees who are aware of, and committed to, the mission and strategy of the organisation.
Reward management - reward strategy is
whether defined or implied, defines what an organisation wants to pay its people for and it should be clearly linked to an organisation’s strategy.
reward strategies typically develop over time and may involve the following features (Murlis, 2004):
a. assumptions that length of service and experience may be linked to incremental growth in contribution
b. promotion to the next job being the only real reward for doing well
c. progression to general management being rewarded, but other ways of progressing, such as developing technical expertise, is not (Huawei has both)
d. traditional working patterns are rewarded
e. individuals are incentivised at the expense of teams
f. processes for assessing salary market competitiveness are not in line with current sources of competent staff
What are defined reward strategies:
are those that have been developed to serve future needs (Murlis, 2004), and embrace issues such as:
- rewarding people for learning new skills and capabilities in their current role (like C&Q at Huawei)
- rewarding behaviours associated with broader roles (e.g. emotional intelligence for managers) - WTF
- changing career patterns - (as a PM going to Sales)
- measuring differences in roles and levels using an agreed analytical approach (such as job evaluation) - that C&Q monster at Huawei
- considering rewards in line with total rewards philosophy (as discussed later) - again WTF
- build line manager capability – to manage and communicate reward policies more effectively (Huawei has a big problem with this)
An alternative way of thinking about reward strategies is:
is to reflect on what is the main strategic driver that rewards need to underpin. The three main strategic categories appear to be:
- cost-based – reward needs to deliver performance at the lowest possible cost
- capability based – the focus of the reward strategy is to reinforce strategic imperatives that depend on attracting, retaining and developing talent
- commitment based – in organisations whose strategy depends on high levels of employee commitment the reward strategy should reinforce this
The Reward Process
Starts from
- Reward Strategy - what do we need to achieve to attract and retain the required talent
- Reward Principles - what are the policies and principles such as competitive market salaries or performance components in salaries
- Reward Mechanism - operationalise points 1 and 2 by short term incentives and or performance-related pay
