Module 4 Notes

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Merlin B Joseph, Asst. Prof.

, BIMS

Module 4
Performance Management system [PMS]

Performance Management system [PMS]

PMS is a systematic and integrated process in which individuals & groups take the responsibility
for

⮚ Continuous improvement of business processes

⮚ Their own skills, contribution & development

It is an ongoing communication process between

To establish clear expectations about performance (by Setting Goals & criteria) and understand

about Performance (by Conducting Performance Appraisals)

Objectives of PMS - Employees want to know

Key Features of a Performance Management System

● Planning – Setting Clear Goals and Objectives


Merlin B Joseph, Asst. Prof., BIMS

It is important to define performance plans and objectives clearly. At the beginning of the PM

cycle managers meet with their employees and set clear goals and objectives for them. In

this phase, managers plan on ‘how’ their employees should fulfill their goals and accomplish

results. These goals should be SMART and challenging.

● Motivation and Coaching

Managers align employee goals with organizational goals and motivate employees to achieve

them. Employees are motivated by intrinsic and extrinsic rewards. If motivation doesn’t get

the desired results and there are performance problems, coaching is the next step. Regular

coaching and developing employees is part of performance management when other

incentives don’t work.

● Monitoring Performance

Performance as part of performance management requires observation, information gathering,

discussion, active listening and measuring progress toward goal achievement. If any problems

are identified, then discuss it with the employee to find out the reason and provide

motivation and resources if necessary. Verify sources of performance problems and discuss

solutions to get the employee back on track. This also helps managers keep track of

employee progress from time to time and give them suggestions to improve their

performance

● Review – Performance Review And Suggestions

An ideal performance management system aligns everyone in the organization with the

company’s mission and vision. The manager and the employees meet for their performance

review where the employees assess their own performance first. Then the manager reviews

the performance of the employees over a period and gives them suggestions on where to

improve and how.


Merlin B Joseph, Asst. Prof., BIMS

● Leadership

Leaders are responsible for creating and communicating expectations. Performance

management systems are the framework to develop and manage those expectations to

achieve goals.

Significance of PMS

1. PMS helps in objectively differentiating between performers and non performers

2. Increased focus on driving business results. Since all goals are aligned, an employee’s

day-to-day work supports the company’s mission. This promotes year-round focus on key

business results and driving profitability.

3. An empowered and engaged workforce. Companies can deepen employee engagement

by creating a culture of shared accountability for career growth and development.

4. Foundational knowledge of talent. With insight into your workforce’s skills and abilities,

you can ensure all employees are getting the direction, feedback, and development they

need to succeed. You can identify high and low performers, and track and evaluate the

effectiveness of employee development activities.

5. Ensures consistency in the selection of employees for promotion, transfer, or other action

should be more consistent.

6. All the organization’s employees (as well as supervisors and managers) should be more

highly motivated. Objective performance appraisal will identify those who are

outstanding, and many will be encouraged to improve their performance.

7. Morale and retention - More highly motivated employees are likely to be more loyal, as

well, so that management will have better success retaining valuable employees even as the

nation’s workforce becomes more mobile. In addition, morale should improve, making the

workplace more pleasant, and output per hour worked should increase, cutting labor costs.
Merlin B Joseph, Asst. Prof., BIMS

8. Training needs - Evaluation can spot employees who need training

9. Firing risks - Finally, employees who are sufficiently weak that they should be dismissed

can be spotted with more certainty under an evaluation system.

Developing a PMS
Performance management involves more than simply providing an annual review for each
employee. It is about working together with that employee to identify strengths and
weaknesses in their performance and how to help them be more productive and effective
worker. Learn how to develop a performance management system so that you can help
everyone in your organization work to their full potential.

1. Evaluate your current performance appraisal process.


Look at what type of feedback you are providing to your employees. Determine if there is
anything you need to change or add to the evaluation itself. You may decide to build on
what you already have or to develop a new system altogether.

2. Identify organizational goals.


Performance management systems help rally staff members around your organization's goals
because they help staff know how they are to be involved in reaching that goal. Take the
time to clarify what your goals are for the next year as a company.
● Identify processes or procedures that could be simplified or done more effectively.
● Declare your sales goals for the next year or new products you would like to develop.
● Share your hope for better communication between departments and staff members.
Merlin B Joseph, Asst. Prof., BIMS

3. Set performance expectations.


As you sit down with each employee, clearly lay out your expectations for them.
● Acknowledge what they are already doing well. Use this to encourage them.
● Share some weaknesses that you have observed in them and in their work habits, and how
overcoming those would help their performance in the company.
● Identify specific things you would like them to accomplish over the next year, or whatever
time frame works best for you. Prioritize these so the staff member knows which is most
important and make sure to give them a deadline for each task.

4. Monitor and develop their performance throughout the year.


As employees begin to work on their performance, keep an eye on how they are doing. If they
appear to be struggling to meet performance expectations, talk with them and see if you
can offer any support or coaching.

5. Evaluate their performance.


At each performance review, let the employee know how they are doing. It is often helpful to
assign a numeric value on a scale, rating the employee from "not meeting expectations" to
"meets expectations" to "exceeds expectations."
● Provide feedback on their performance. Be as specific as possible, noting key examples of
when they demonstrated a certain quality.
● Talk about the consequences or rewards of their performance. Let them know if they are on
probation, are getting a raise in pay, changes in vacation days, or any other relevant action.

6. Set new performance expectations for the next year.


Some items may be the same. However, since these are also based on organizational goals, you
will need to re-examine your goals for the upcoming year.
Merlin B Joseph, Asst. Prof., BIMS

● Discuss any problems they may be having. Listen to their concerns or worries as you talk
through potential solutions.

Implementing PMS

1. Clarify objectives
A vital first step is identifying the major objectives for the program. Clarifying the need for a
performance management system, what and who it should include, what it will deliver and
agreeing measures of what a successful implementation will look like.
Some organisations choose to complete this step collaboratively with input from various
employee groups; others delegate this as an HR Department responsibility; some organisations
have a particular champion from anywhere within the business; others will involve outside
consultants. Experience suggests that a business needs to complete a self examination before
committing to implementing a new performance management system

2. Secure Senior Manager Buy-In


Once the objectives are set with associated expected business outcomes, then the agreement
of the senior management team is required before any implementation steps are taken. Most
systems fail because they are seen as outside of a manager’s day-to-day responsibilities, rather
than integral to them – senior managers must believe in the process and be seen to actively
support it, “talking it up” at every opportunity and leading by example with line managers who
report to them. It is important for senior managers to have a realistic understanding of how
much management time will be required to implement and then integrate this system on an
ongoing basis.

3. Prepare system & supporting materials & documentation


Develop a process and documentation to support the system.The format of the documentation
is less important than the prompts included. The minimum prompts must include opportunity
to:
▪ Review performance against the key parts of the job.
▪ Review performance against any specific goals or objectives which have been set.
Merlin B Joseph, Asst. Prof., BIMS

▪ Review performance against the organisation’s core competencies if they have been
defined.
▪ Identify any learning and development needs for both short and longer term.
▪ Set goals for the next period.
▪ Allow for feedback on progress on an ongoing basis.
Ensure job descriptions are current and in a form that provides clear and measurable results
required.
Make the documentation easy to use – providing hard copy or electronic or web-based.
Consider the system as a cycle with goal setting, progress reviews and recognition/feedback on
achievement and then determine a calendar for the key elements of the cycle.
For example:
▪ Will goal setting be completed annually or six monthly?
▪ Will progress reviews be every month or two months?
▪ Will the formal achievement review – be annually or six months and how will it fit with the pay
review timetable and the annual business plans?
The timing of the calendar should meet your organisation’s specific needs. Decide who signs off
on the process each cycle and who retains copies of the documentation – and why.
4. Ensure Managers are trained
Most performance management systems fail because of lack of training of the people involved.
Managers should be trained in the following:
▪ The objective of the system.
▪ Their responsibility for the system.
▪ The particular process they are going to use – and why.
▪ Setting objectives – why and how
▪ Measuring results – do the hard work up front.
▪ Providing feedback – what and how.
▪ Addressing performance issues – why and how.
▪ Identifying development needs –why and how.
Merlin B Joseph, Asst. Prof., BIMS

The training should include a mix of soft skills and process management. A typical training
workshop to achieve this may run for one and a half days for each small group to allow
understanding and skills to develop to the required level. Experience suggests that refresher
sessions should also be scheduled.

5. Ensure all participant employees are trained


For the employee groups selected to be included in the program, training should include the
following:
▪ The objective of the system.
▪ The benefits of effective performance management – for them individually and for the
business.
▪ Their responsibility within the system – linked to delivering the expected benefits.
▪ The particular process they are going to use – and why
▪ Preparation – what they need to do to make the most of the process.
▪ Setting objectives –why and how.
▪ Measuring results – doing the hard work up front.
▪ Identifying development needs and own aspirations.
Such training sessions can be completed with groups and each may run for a couple of hours or
so – this can be included in the induction program for new staff after the initial launch of the
program.

6. Launch with champion


A senior management champion for the process should be identified and should take
responsibility for launching the program in an appropriate forum, outlining the major
objectives and expected benefits.
Subsequent to launching the program, the champion should continually seek opportunities to
explore how the program is working, address opportunities to enhance it, “talk it up” and set
the expectation that this is a core element of the organisation’s business process.

7. Monitor & review Process


Merlin B Joseph, Asst. Prof., BIMS

A schedule should be set and followed for reviewing the implementation of the program
against key milestones and against the success measures. Most systems require some
adjustment during the first couple of years. It is quite usual for other employee management
processes to be reviewed during this time also to ensure full integration of the materials,
techniques and supporting mechanisms.

Maintaining a PMS
1. Regular feedback is good for everyone
Ensure regular feedback. All feedback is good feedback as it helps to do the job better and to be
more successful in the Company. Keep communication lines open and build a good relationship
with the employee.

2. Keep good records throughout the year


Keep regular records of the performances, achievements and challenges throughout the year.
Without good records, performance reviews can often suffer from a “recency” effect where the
focus is on activities and performance during the previous 3 months.

3. Own your own performance


A good relationship forms the basis of great (and easy) performance management. Even where
you have strong relationships with your manager, make sure your meeting is booked in. Stick to
the process, complete the meetings and document the outcomes.

4. Ask for support


If you need help or support in delivering a particular aspect of your job, discuss this with your
manager. Don’t wait for a formal meeting to bring it up. Be proactive and identify possible
solutions and take the opportunity to discuss and resolve with your manager in a timely
manner.

5. Be open
Don’t focus on the negatives. Listen for the positive feedback and consider how you can develop
these skills further. If you are getting constructive feedback, ask for examples. Work with your
manager to develop solutions and discuss what support you need from them to better achieve
your objectives. Be sincere and honest, treat each other with respect.
Merlin B Joseph, Asst. Prof., BIMS

6. Participate
Listen to your manager, be ready to discuss their feedback and develop solutions. Prepare
feedback for them too where appropriate. Communication is a 2-way process and forms the
basis of a good relationship with your manager. Regular, on-the-job feedback, both positive and
constructive, should be encouraged both ways!

Performance Gaps
A performance gap is the difference between the actual or present performance and the
optimal or future performance. Performance gap analysis helps a business identify how far it
has come toward reaching its goals and how far it still needs to go to attain them.

Performance Improvement Plans


A Performance Improvement Plan is a formal process used by supervisors to help employees
improve performance or modify behaviour to fill the performance gaps. The performance
improvement plan, or PIP, as it is sometimes called, identifies performance and/or behavioural
issues that need to be corrected and creates a written plan of action to guide the improvement
and/or corrective action.
Fundamentally, a PIP is a structured communication tool designed to facilitate constructive
discussion between the employee and the supervisor.

An effective PIP will:

▪ Specifically identify the performance to be improved or the behaviour to be corrected.


Merlin B Joseph, Asst. Prof., BIMS

▪ Provide clear expectations and metrics about the work to be performed or behaviour that

must change.

▪ Identify the support and resources available to help the employee make the required

improvements.

▪ Establish a plan for reviewing the employee’s progress and providing feedback to the

employee for the duration of the PIP.

▪ Specify possible consequences if performance standards as identified in the PIP are not

met.
When an employee is not performing or meeting expectations, supervisors have at their
disposal several options to correct the behaviour. They can rely on corrective actions such as
oral and written warnings. In more serious cases, they can move to suspension, demotion, or
dismissal. The PIP, in many cases, can be used in place of these disciplinary processes. A PIP can
be given at almost any point in performance discussions with the employee.
Merlin B Joseph, Asst. Prof., BIMS

(Raţiu Patricia, Suciu Leonina, 2013)

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