PERFORMANCE MANAGEMENT AN OVERVIEW
PERFORMANCE MANAGEMENT AN OVERVIEW
by Patti Cabantug, MBA Student
Performance Management is a method used to measure employees’ work performance across all levels, from top management down to rank-and-file employees. The rationale of conducting a performance review is to monitor and correct the efficiency and effectiveness level of the employees for the company to achieve optimum productivity. There are two parties involved in performance appraisal, the rater and the ratee.
Performance management as a system will enable the company to create a training needs direction or design a training program for the employees using the annual performance review. As such, this will help develop the employees to attain the company’s goals and help managers create a workable environment for employees. By having good performance management, the company shall create criteria and metrics to measure employees’ work execution.
Dynamic performance management will help develop the employees’ potentials, set goals to be achieved, and will present feedback to employees who will complete the whole process of the appraisal. Most companies conduct the appraisal at least once a year for permanent employees but more than once for the project-based and probationary employees, which will be the basis for renewal of the contract or conversion to permanent status. The number of Performance Management reviews will depend, of course, on the nature of work and the organization. This will also assist HR in deciding whether to develop, retain, promote, or convert employees’ employment status.
Performance Management is very important for all organizations, whether Marketing, Production, or Service entities. This is the only way to know what, how, and why employees are doing in the company. This program will give the supervisor the idea as to what strengths and weaknesses possessed by their staff. Moreover, this will provide feedback on what areas need to be developed as part of the interventions to improve employee’s performance. This will also give a hint for providing incentives or promotion to employees and, in some cases, transferring employees to an area where they are suitable to work.
Talent Management is a vital part of every organization. Still, it is confronted with problems such as keeping employees engaged in work, retaining talented or knowledgeable employees, and developing their potentials to become future managers. In keeping employees engaged, goals are articulated at the beginning of the year, and after a year, they are evaluated whether achieved or not. The time element involved is quite tricky when there is no feedbacking, which is quite challenging. Some study shows, 94% of the employees prefer to have timely feedbacking, while 81% prefer quarterly feedbacking.
Traditional Performance Management focuses on process rather than employees, formal and done periodically, separate from work, and has only 3-5% impact on work performance. On the other hand, Everyday Performance Management focuses more on employees rather than the process, relatively informal and on-going as the need arises, conducted as part of the work, and has a higher impact on work performance by 39%.
Employees’ performance is good if feedbacking is done monthly or quarterly to check when work issues are solved and to adjust goals when deemed necessary for any condition. This will be a good way to remind the employees of the set goals, which will deliver at least above-average financial performance by at least 50%.
According to a certain study, employees have undesirable feelings about the annual performance appraisal. 62% of the respondents said that the performance appraisal is somehow incomplete. 48% are uncomfortable about raising the issues with their boss during the process of evaluating performance. 61% felt that the process of conducting performance reviews is obsolete. 74% said they are more effective when there is frequent feedbacking. 68% of the superiors are not aware of employees’ pressing problems unless there is a performance review. All these downsides contribute to problem-solving failures, decreased level of performance, and engagement.
Targets of Employees Engagement are as follows:
1. Because of increased employee engagement, problems are resolved such as absenteeism, employee turnover, shrinkage of the manpower complement, employees and patients safety incidents, reduction of service or product quality by at least 25%. And in return, good customer experience in terms of services, productivity, and profitability of the company are improved.
2. Employees remain with the company when there are constant performance appraisal review and feedback and are granted the needed training. When employees are being developed professionally, assisted by management to meet their goals, and are rewarded due to their excellent performance, they work harder and stay with the company because of their excellent performance.
3. Raising and developing employees as potential leaders due to collaboration between managers and employees. The high cost of recruiting and training/developing new employees is high compared to retaining employees. Employees who are performers are assets of the organization and are honed to be potential leaders. Investments in training these employees are not lost but provide more benefits to the company. A good leadership path provides incentives and a good compensation package.
Good performance management’s purpose and goals provide a vibrant and steady system to improve both the employee and company productivity level. The system provides the avenue to success that allows a measure of performance with constant feedbacking provide for training and development prospects.
Performance management with adequate feedbacking provides a hint to managers to understand how their employees are functioning and monitoring their performance while meeting the objectives of the company.
Performance Management Objectives
The main objectives of performance management are as follows:
1. Develop a clearer vision about the role of each employee;
2. Intensifying engagement of employees;
3. Develop leadership and coaching skills of employees;
4. Augmented productivity due to the good performance of employees; and
5. Development of rewards system that provides incentives for overperforming employees.
There are a lot of benefits in good performance management for both managerial and rank-and-file employees which will benefit the company as well. A work environment that adequately provides for both the employees and customers engagement generates 240% worthy results, as follows:
1. Precise roles and performance models make the hiring process easier for new employees because they are aware of what is being expected of them in terms of work performance. As such, HR will be able to know if the applicant is suitable for the position being applied for;
2. Defined roles and standard makes training undemanding because it provides ample information on the training needs of the employee and identifies less essential information for the position;
3. Consistent development and review of goals assist in meeting the needs of the volatile labor market without reference to the size of the organization;
4. Explicit expectations and roles will provide a good stepping stone to achieving success;
5. Companies who invest in the success of the employees will indeed retain them;
6. Constant feedbacking and coaching by their managers will improve employees engagements up to becoming a skilled manager in the future;
7. When employees skills are developed, they are moving up in their career path;
8. Productivity improves employees’ skills and engagements and also provide a more straightforward path to meeting their goals; and
9. Employees are rewarded/recognized for their hard work as part of providing the right incentives.
Performance Management best practices which are highly considered as essential:
1. Let employees become aware of what they want to accomplish because it will help them achieve the goals;
2. Let the employees/ratee know what is expected of them, how to do it, and what results are needed;
3. Set goals vis-à-vis with clear performance plans so employees will not become overwhelmed by the expected results and be able to foresee the path in a clear perspective;
4. Review performance using the right metrics and analytics to make it easy to apply interventions when needed;
5. Constant coaching is needed to identify problem areas and provide solutions to the problems through periodic meetings;
6. Guidelines must be established as employees go through the performance management cycle. These guidelines must be specific to help them work better;
7. Shared strong values must be created and aligned with the culture of the company to develop a workable and collegial environment;
8. Organize workshops involving employees from different departments and units to know how they understand work and identify their strengths and weaknesses. This will help them discover something and establish a new connection that they need when the time comes;
9. Feedback must be given to employees in a very constructive manner to encourage positive actions;
10. Feedbacks must focus on the behavior rather than characteristic, more on the professional level rather than personal;
11. Training programs must be designed for both managers and employees;
12. Take advantage of the different sources of feedback;
13. Planning coaching and rewarding employees are equally important with performance review;
14. Always remember that problems emanate from external sources and not always from employees;
15. Recognize and reward employees more often in public to motivate them and also others who are underperformers.
Real-world examples for good performance management; these companies are:
1. Google -rely on data analysis and rewards managers
2. Facebook -put more emphasis on peer evaluation and feedbacking
3. Cargill – focus on positive relationship and feedback between managers and subordinates
4. Adobe – frequent appraisal and feedbacks are made while providing actionable guidance to provide leeway for managers
5. Accenture – provide continuous feedbacking for employees and focus on employees development
Performance Management versus Performance Appraisal
Performance appraisal is an integral part of the performance management program. The review focuses more on employees’ past work performance given a certain period by way of rating each criterion on how they perform their roles and how they meet their goals set by their boss.
Performance appraisal is a reactive formal evaluation based on parameters quantitatively set by the management. In contrast, performance management is proactive informal and a strategy that focuses more on improving the employee’s performance. Performance appraisal is operational and conducted yearly, while performance management is strategic, performed continuously.
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