Performance Management

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Fig.1.1 Performance Management Process

Contributions of the Performance Management

- Goal setting

- Appraisal Review process

- Performance Rating systems

- Pay review and reward system

- Training and development

Methods of Performance Measurements

- Rating methods: Important areas of performance are rated under a scale by the manager.

- Management by Objectives (MBO): The manager will allocate SMART (Specific, Measurable, Achievable, Realistic, Time-bound) goals for employees and review on the expected and the current performance of the employees.

- Balance Score Cards: This method takes both financial and operating measures into the account of the review. The four main areas of perspective are customer, internal, innovation and learning and financial.

- 360 Degree Feedback: This is the most effective feedback since the review of an employee comes from all categories the individual mingled around. This appraisal includes appraisals from self, superior’s, subordinate’s and peer.

Advantages of Performance Management

- The organizational activities and processes to achieve the goals would be well defined.

- Transparency and fairness in rewarding

- Optimization of operations of the organization

- Enhances comprehensive communication

- Performance Management can be used as a development tool, reward tool, compensation tool, motivational tool and legal compliance

Disadvantages of Performance Management

- Difficult and cumbersome task to perform

- Measurements are unreliable

- No uniformities in ratings

- Biasness / favouritism

Personal Development Plan

A Personal Development Plan is a result of performance appraisal. It is an organized approach to professional activities and programs that will enhance an employee’s professional skills and increase productivity.[pic 2]

Fig1.2 Process of Personal Development Plan

- Analysis of the Companies

Company X

“Everyone in the team was “busy” but the Return on Investment was not what would be expected for a firm in this industry and at this stage of its development.”

As mentioned in the above line the word “busy” could mean different ways such as, the employee could have been doing his/her own personal work, or could have been doing the assigned work. The employees were not directed with the priorities of the job activities: they would be providing attention for less priority activities according to their own sense since there was no correct direction. This reason also caused duplication and missing out of work.

Company X did not have a formal performance management system, it was ambiguous and inconsistent. The company have not had a comprehensive job description on the job roles so they fail in assessing the performance of the employees. There were random and sudden reviews where the consequences of performance were solely centred on the base compensation. The employees were de-motivated due to these unfair practices, thus evolving towards weak employee relations.

These problems arose since the managers and the Human Resource department of the company have not functioned properly. Nobody directed the employees towards the strategic goals and objective of company. The managers of the company are identified mostly to be laissez- faire. The goals alone have not been defined properly which shows that the SMART goal philosophy have not been followed. The organization lacked proper, responsible and accountable managers. Company X only emphasized on achieving financial performance and there was nobody to cross examines the current performance and expected performance.

Company Y

Company Y had an annual performance appraisal system running in place but it was overly complicated and difficult to process. The company lacked transparency of the annual appraisal process and was very much time consuming. The appraisal took four weeks from the working schedule which could be used to do something profitable. This would lead to financial issues as well. The management did not use the Performance Management as a tool but complicated the process which was very much simple. This could de-motivate the employees since even after a rigorous session of performance appraisal, if they would not receive a pay rise. The management of company Y was not able to justify the reason for different remunerations. At this point, it is identified that the appraisals do not assess the critical success factors (elements that is necessary for an organization or project to achieve its objectives) but only measured generic aspects of the people and the jobs.

The employees were not any more confident about the Performance Management process so they would not present the true facts and figures when in an appraisal since they could not rely on the results. This shows that Company Y has failed to carry out a precise and consistent Performance Management System which has a negative impact for the organization.

Company Z

The company Z is suffering a great deal of poor performance. Poor performance or underperformance can be elaborated as persistent failure to achieve a set of goals or objective. Once poor performance is identified the employees must confronted immediately since they have no idea of whether their performances meet the standards or not.

Unfortunately, even though the Managing Director of company Z has noticed poor performance a couple of years back he has failed to inform the employees due to his dislike on confrontation. Since it is confirmed that the Managing Director disliked confrontation he must have not been able to convey the strategic plan to his subordinates and also discuss the operational plans in order to specify the performance standards. Plus the employees never received a feedback on their performance so they themselves