INTRODUCTION TO PERFORMANCE MANAGEMENT •“ Since my last report, this employee has reached rock bottom and shows signs of starting to dig.” •“ I would not allow this employee to breed.” •“ Works well under constant supervision and cornered like a rat in a trap.” •“ He sets low personal standards and then consistently fails to achieve them.” •“This associate is really not so much of a has-been, but more of a definitely won’t be.”
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INTRODUCTION TO PERFORMANCE MANAGEMENT
•“ Since my last report, this employee has reached rock bottom and shows signs of starting to dig.”
•“ I would not allow this employee to breed.”
•“ Works well under constant supervision and cornered like a rat in a trap.”
•“ He sets low personal standards and then consistently fails to achieve them.”
•“This associate is really not so much of a has-been, but more of a definitely won’t be.”
PERFORMANCE MANAGEMENTSome Perspectives:
•85% of SA companies have a PMS
•95% of these have a strong commitment of the CEO
•In 94% of these organisations, there is a formal communication strategy
•Only 51% believe employees and managers are adequately educated and trained in PMS
•37% uses the Balanced Scorecard methodology
•86% allows employees to jointly set targets and objectives with the manager
•91% have clear PMS policies, procedures and systems in place.
•Most companies measure performance using hard and soft measures
•2001 Deloitte & Touche HCC Survey
PERFORMANCE MANAGEMENT
“So what is Performance Management”? (if 85% of companies apply it, what do they actually do)?
Group Discussion:
PERFORMANCE MANAGEMENT
A Definition:
Performance management is the process of ensuring individual and team effort support the organisational objectives and to realise key stakeholder expectations and wealth creation in all the identified value drivers of the organisation.
Thus:•Planning is crucial•Stakeholder expectations are key drivers•Management and employee buy-in and involvement are paramount•Link to and alignment with strategy
PERFORMANCE MANAGEMENT
Performance Management is the process of:
•Planning Performance (setting KPA’s, objectives and standards that are linked to corporate strategy, development plans).
•Maintaining Performance (monitoring, feedback, coaching and mentoring, regular interactions re goal achievement)
•Reviewing Performance (formal feedback and ratings – evaluating performance)
•Rewarding of performance (increases, bonuses, incentives, etc)
Performance Management Model
Planning Performance:-Setting objectives-Outlining development plans-Getting commitment
Measuring, evaluating and rewarding Performance against individual
objectives
Reassessing KPA’s and adjusting Objectives to reinforce strategy
PERFORMANCE MANAGEMENT
Benefits:
A well implemented performance management process is beneficial to the company, its managers and employees. The advantages being:Integration
Open Communication Improved Performance Training and Development Clarity of Standards/Requirements Placement of Individuals Increased Objectivity Remuneration Promotability Career planning
PERFORMANCE MANAGEMENT
Selecting and evaluating a Performance Management System:
•Level of employee participation and involvement?•Competency-based?•Is it form-driven or REAL performance management (daily)•Is linked to rewards AND development?•Does it focus on both the “what” and the “how” of result achievement?•Does the process incorporate training (both process and soft skills)?•Is it generic, and can it be customised to your organisation’s needs and culture?
PERFORMANCE MANAGEMENT
Success factors in implementing Performance Management:
“If you are not managing performance, what are you managing?” Some Key Building Blocks
Competencies Goal Setting Strategy Focus
Review Process
Feedback
Reward & Compensation
Training
Process Design
PERFORMANCE MANAGEMENTSuccess factors in implementing Performance Management:Fundamental Requirements/considerations:•Relevance
•Link to strategy, clear job goals, up-to-date job profiles•Reliability
LINK TO PAY:Why does it often fail?•Lack of objective and quantitative measures•Poor link between pay and performance (no immediate reinforcement)•The aspects that get rewarded are not linked to strategy – the “wrong” behaviours and achievements are sustained•Poor communication re objectives, benefits and procedures (the “rules of the game”)•Level of performance-based-pay not proportionate to effort•Resistance to change •Union perceptions and involvement
PERFORMANCE MANAGEMENT
The Psychology of INCENTIVES:
VariablePackage
FixedPackage
KEYIMPACT
KEYOBJECTIVE
Motivational DriveBehaviour
• Return on Bottom Line
• Reward specific behaviour/results
HygieneFactors
Competitivein Market
• Internal Equity• Cost
Management• Flexibility
SECONDARYOBJECTIVES
PERFORMANCE MANAGEMENT
Guaranteed Package
Short-Term Incentives
Long-Term Incentives
X X X
X X X
X X
Attra
ct
Reta
in
Perfo
rman
ce
Skills
REMUNERATIONCOMPONENT:
PERFORMANCE MANAGEMENT
How do you link Performance Management to Training & Development Initiatives?
The “Link”:Desired performance
Actual performance
Measurement
Development
VisionMissionStrategyValue Drivers
PERFORMANCE MANAGEMENT
PERFORMANCE MANAGEMENT IN SMME’SKey Challenges:•Strategy not always clear, defined or formalised•Decisions are not taken to lower levels (“family business” syndrome)•There often are:
•Little time•Few resources and finances•Little support•Not adequate skills•The “we do fine” syndrome