Performance Management

 

PERFORMANCE MANAGEMENT

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 A Written Output Presented Presented To The Graduate School Faculty of San Pedro College, Davao City

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In Partial Fulfillment of the Requirements for the Course HUMAN RESOURCE MANAGEMENT

by

MICHAEL PHILIP F. CERVANTES, RN  ABIGAIL L. ALAS, RN MAY 2017

 

OBJECTIVES  At the end of this written written report, report, the students students will be able to: 1. Define Performance management as a human resources management tool. 2. Explain the three perspectives of Performance Management System. 3. Analyze the different Performance Performance Management Approaches. 4. Differentiate the models used in Performance Performance Management Approaches. 5. Distinguish the different Performance Measurement System. 6. Apply the principles in Rewarding Performance.

INTRODUCTION Performance Management is a critical human resources management tool. The use of this tool has extended beyond industrialized organizations to non-government organizations, government systems, academic institutions and the like. It has been said that “ what gets measured gets done, what gets managed gets ,” and this may well summarize done better and what gets rewarded gets done sooner ,”

the principles of performance management system. Performance should be managed, measured and rewarded. Performance management is a system that impacts and affects everyone in the organization. It helps the organization achieve business results and maintain its desired culture. Within the context of human resources management, it is used to support other HR systems, such as training and development, career development, succession

 

planning, leadership development, selection, staffing, placement, compensation and reward management. I.

THEORETICAL BASES

 A. Performance Performance Management: Management: A Strategic Strategic and Integrated Integrated Management Management Process Process Despite a wealth of research materials on the subject, there is no consensus on one ideal performance management system (PMS). However, it has been pointed out that any performance management system should reflect the unique requirements of an organization. To better understand performance management, three perspectives on performance management system have been advanced with the objective of putting into context the practice and system of managing individual and organizational performance and linking these two levels of performance. Three Perspectives 1. Performance management as a system system for managing organizational performance 2. Performance management as a system system for managing employee performance 3. Performance management as a system system for integrating the management of organizational and employee performance Performance Management at the Organizational Level The focus is on determination of the organization’s strategy, and the

implementation of that strategy through the organization’s structure, technology, business systems and procedure.

 

 

Employees are not the primary focus, although they will be affected affecte d by changes

in technology, structure, and operating systems. This is normally done by setting corporate policy and resource aims and guidelines, specifying a detailed set of plans, budgets, objectives, targets and standards of performance and regularly and systematically reviewing the performance of all services (Rogers, 1990). `

From an organizational perspective as presented by Bredrup (1995), it includes

the following activities: (1) performance planning, (2) performance improvement, and (3) performance review. Performance planning includes activities such as formulating the organization’s vision and strategy and defining what i s meant by performance.

Performance improvement takes a process perspective, that is including such activities as business process re-engineering and continuous process improvement, benchmarking, and total quality improvement. Performance review embraces performance measurement and evaluation. Employee Performance Management The focus is on engaging employees on planning their goals, managing their performance, reviewing their progress, and developing themselves. It emphasizes the contributions of employees and their behaviors or competencies. In the end, employees who meet their targets and demonstrate exemplary behaviors are rewarded. Schneier, Beatty & Baird (1986) identified the following elements in this perspective: planning, managing and appraising (reviewing, rewarding and developing)   Planning involves establishing performance targets, identifying job

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behaviors, and identifying performance measures

 

  Managing involves monitoring behavior and objectives, reinforcing desired

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behaviors and objectives attainment, and redirecting inappropriate behavior.   Appraising involves formal meeting of employee and manager,

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performance plan document, focus on future and employee’s development

and replanning, and new objective establishment. Integrated Performance Management System It supports a company’s or organization’s overall business goals by linking the

work of each individual employee or manager to the overall mission of the work unit. It is about directing and supporting employees to work as effectively and efficiently as possible in line with the needs of the organization (Costello,1994 as cited by Williams, 1998). In this perspective, performance management aligns the organization’s strategic

direction with individual performance. Performance management can be viewed as a tool used to create and sustain a workplace environment where both an organization and its employees succeed in fulfilling business objectives. Based on the foregoing, performance management is both strategic and integrative. It is strategic because it pushes the realization of the strategic goals of the organization as it encompasses the larger and broader issues and concerns of the organization’s life. It is also in the context that performance management is integrative

because it aligns and links the organization’s strategic direction with individual performance

 

 

In other words, it ensures the fulfillment fulfill ment of organizational outcomes and

individual goals by linking other systems in support of the overall direction of the organization. Data generated from PMS can be utilized for the other HR systems either as basis for program development or for evaluation. This essential links PMS with other HR systems. In reality, it is the third perspective that concretizes the entire principles and processes of performance management. This will be evident in the discussion on the different approaches to performance management.

II.

PERFORMANCE MANAGEMENT APPROACHES Performance management is better understood in terms of the approaches used by the organizations. The fundamental principle prevalent in these approaches is that corporate strategic goals provide the starting point for business and departmental goals, followed by agreement on performance and developmental goals, leading to the drawing up of performance plans between individuals and supervisors, with continuous monitoring and feedback supported by formal reviews. The use of the approaches depends on the unique requirement of the organization. The approaches may be used independently or in combination. Individual or team performance must be capable of being linked in an understandable manner to organizational performance, and there are various approaches to doing this. They include the mixed model, balance scorecard,

 

European foundation for quality management (EFQM) excellence, performance prism and investors in people.  A. Mixed Model Model or Total Total Performance Performance Management Management Approach Approach  A performance performance management management system system that combines combines planning, planning, management, management, and and appraisal of both performance results and competency behaviors is called a “mixed model” of performance management or a “total” performance management approach.

Mixed models assess and reward both performance and competence; what employees actually did and how they did it. Mixed models are particularly appropriate when organizations are in uncertain and rapidly changing environments, where results are not under employee control; for qualitative/ process service jobs, where there are no measurable outcomes of performance; and for jobs intended for development of future performance (Spencer & Spencer, 1993). In this model as in the others, the overall strategic plan is cascaded down so that, ultimately, there is a clear path connecting each employee’s job to that plan. Thus, it links the organization’s objectives with

employee goals and achievements. As such, performance management is and must be shared responsibility of employees and managers. This approach can be divided into four key areas: 1. Planning Performance Planning means setting performance expectations and goals for teams and individuals to channel their efforts toward achieving organizational objectives 2. Performance Monitoring and Coaching

 

Plans should be monitored continually. Monitoring well means consistently measuring performance and providing ongoing feedback to employees and teams on their progress toward reaching their goals. Monitoring performance includes giving and receiving feedback, coaching counseling, motivating, selfmonitoring, day-to-day planning, and monitoring training and development activities. 3. Performance Evaluation and Development Discussion Every now and then, organizations find it useful to document employee performance and this is done by using a performance evaluation form. Within the context of formal performance evaluation requirements, rating means evaluating employee or team performance against the standard s in an employee’s

performance plan and assigning a summary rating record. The rating record is assigned according to procedures included in the organization’s performance

management system. It is based on work performed during an entire appraisal period. Performance Evaluation includes:   Formal review of performance

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  Performance measurement

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  Formal team feedback sessions, individual self-review and peer group and

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upward appraisal

 

 

Fig. 1. Performance Management Process B. The Balanced Scorecard The balance scorecard was originally proposed as an approach to performance measurement by combining traditional financial measures with non-financial measures to provide managers with richer and more relevant information about organizational performance, particularly with regard to key strategic goals (Kaplan & Norton, 1992).  Aims to: 1. Enable organizations to manage strategy by linking corporate objectives, initiatives, measures and targets at all levels in the organization 2. Achieve a balanced set of performance measures and targets that allow managers to track progress in key areas.

 

 

Fig. 2 Balanced Score Card C. European Foundation for Quality Management (EFQM) Excellence Model The EFQM excellence model is a comprehensive organizational development and improvement framework used for assessing strengths and areas for improvement across the spectrum of an organization’s activity. The model is comprised of nine criteria  – five enablers and four results. It is based on the principle that the five key enablers of excellence are leadership, policy and strategy, people, partnerships and resources, and processes. D. Performance Prism The performance prism is a stakeholder centric framework for performance measurement and management. The model was developed by the Center for Business Performance at Cranfield School of Management, in conjunction with Accenture. It evolved from the balanced scorecard, but unlike the scorecard, it acknowledges the full range of

 

stakeholders that an organization has. Principally, these are investors, customers, and intermediaries, employees, suppliers, regulators and communities. III.

Measuring Performance Measurement is a focal point of performance management. Peter Drucker said, “You can’t manage what you don’t measure.” Robert Kaplan, the balance scorecard guru, stated further, “What is measured becomes visible,

what is rewarded gets done.” Measurements are utilized to define how an organization is measuring up to shareholder and stakeholder expectations; tell how the organization is doing in the competitive game and enable the linking of past, present and future outcomes into an integrated whole.  A. The Need Need for Performance Performance Measuremen Measurementt To improve performance, you need to know the current performance. Measurement provides the basis for generating and giving feedback, and thus can build the platform for further success, or identity where things are going less well so that corrective action can be taken.  A performance performance measurement measurement system system fulfills fulfills the following purposes (Bredrup, (Bredrup, 1995):   Decision Support – Ideally, measurement should indicate where to act, perhaps

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how to act and hopefully monitor the effect of the action. Decisions should be based on knowledge and measurement plays an important role in providing information.

 

  Monitor effect of strategic plans – Implementation of strategic plans has to be

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monitored to be able to make the necessary corrections to ensure achievement of long-term goals. Indicators have to be chosen to monitor consequences and achievement.   Performance evaluation  – Evaluation is required for a number of reasons, such

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as tracking improvement potentials, setting new yardstick, satisfying requirement from stakeholders, distributing incentives, etc.   Diagnosis – A company needs indicators with a diagnostic purpose. If business

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achievements are decreasing, the performance measurement systems should be able to give some warnings in advance and provide input to a search for reasons. However, it is difficult to isolate the cause and effect relationship.   Management of a continuous improvement process  – A continuous improvement

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process often provides stepwise “blue savings” like released capacity, reduced

future costs, or increased value for the customer. Measurement is important to  justify further further investments investments and effort in the process, process, to to manage manage the process process and ensure consistency with strategy, and to transform improvements into business achievements.   Motivation – measuring progress is necessary to justify further effort in the

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improvement process. Resistance against change is considerable in most organizations and lacking progress is enough ammunition to kill a project or a process.

 

  Comparison – Evaluation of performance and performance planning depends on

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a reference to identify performance gaps. Comparative benchmarking enables the organization to identify these gaps.   Record development – Documentation of development could be demanded by

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stakeholders, like customers, authorities, and alliance partners or used actively as marketing tool. Measurement to monitor and record suppliers performance to given input to their improvement processes could result in productivity improvement. Performance measurement will significantly ensure equitable treatment of employees based on performance. Performance measurement asks the questions, “What is achieved?” and “How is it

achieved? In other words, performance management measures contribution (what is achieved) and competencies (how it is achieved). Contributions (real and tangible results) are seen in terms of outputs and outcomes, which may come in the form of programs, systems, revenues, target numbers and improvements in turn around time.

B. Performance Measurement System  As stated stated earlier, earlier, an important important aspect aspect of performance performance management management is measuring measuring performance. Measures of performance are defined as the tools for evaluating whether an organization’s goals and objectives are being achieved or n ot. These

measures are focused on different aspects of organizational activities, and to provide the user of the measures with concentrated information, the measurement tools and standards. In the concrete, what is really measured is

 

the performance of individuals in the organization. Individual goals aligned with the organization’s direction, when measured, give us a sense of the overall

performance of the organization.

Over a period of time, the performance management systems have evolve from the usual annual confidential rating to trait appraisal, behavioral measurements, goaldriven (management-by-objectives) appraisal, behaviorally-anchored rating scale (BARS), and the latest trend in appraisal being, the 360-degree feedback 1. Management by Objectives Performance management systems utilizing management by objectives strategies entail the setting of mutually agreed upon, observable, measurable objectives and goals between employees and their bosses. 2. Behaviorally Anchored Rating Scales (BARS) Behaviorally anchored rating scales are “descriptions provided on appraisal forms and surveys which describe a precise level of performance. BARS were developed with the hope of improving rater accuracy by providing job-related behavioral anchors and altering the format of rating scales. 3. Quantitatively Measurable Performance Criteria Quantitatively measurable performance criteria are thought to be objective, reducing “conflict between the employee and the appraiser by restricting the

focus of the appraisal to items that can be measured by number or quantity. 4. 360-degree Feedback Multiple-rater and 360 and 360 degree feedback became increasingly talked about in the 1990’s, and more recently have been widely used. It consists of

 

performance data generated and analyzed from a number of sources: the employee’s immediate supervisor(s); peers, and direct reports, suppliers, and

internal and external customers.

IV.

REWARDING PERFORMANCE Rewarding means recognizing employees, individually and as a members of teams, for their performance, and acknowledging their competencies and contributions to realizing the organization’s strategic goals.