This is the second in a series of three articles on Performance Management. In the last article we looked at the overall Performance Management process and the key elements associated with the process. We will discuss these elements in more detail below.
It is vital that managers know what’s expected of them if they are to maximise their own and the businesses performance. Most organisations set expectations, in terms of what managers need to deliver by setting personal objectives and targets. Many organisations simply set financially based objectives, (for example by setting revenue and profit targets), while more enlightened organisations set ‘balanced’ targets and objectives that are linked directly to the overall business strategy. For example, objectives and targets might be set around customers, market share, product development, the community, the environment, learning and growth. The targets need to be clear and readily measurable.
In addition to the above, many organisations also set expectations about how targets should be delivered. For them it is unacceptable to deliver a target at ‘any cost’. By setting these expectations the business clearly communicates how managers should behave on a day to day basis. Typically these expectations are set using leadership and management ‘standards’ or ‘competencies’, which are derived form the organisation’s values. For example a business might set out competencies describing how its managers should lead, drive improvement, work together, communicate and develop themselves and their teams. The competencies can also have a hierarchy to represent how managers at different levels within the organisation need to behave. Competencies can also be tailored to a specific country/geographic area by setting slightly different behavioural expectations that are in line with local cultural ‘norms’.
Reviewing Performance – continual or ‘informal’ review
While most organisations formally review performance on a six monthly or annual basis, those who operate best practice do so continually on a rolling monthly or six weekly cycle. This involves a 1:1 meeting between reviewer and the individual and is focussed on reviewing business performance and progress against targets and any issues that might have arisen in the previous period. Resolutions to problems are identified and corrective actions agreed. In addition progress on personal development objectives are also be reviewed. This is not a formal appraisal, and as such the only record of the meeting is an agreed action list which is reviewed at the following meeting. By reviewing progress in this way the manager not only demonstrates to the individual the importance of performance management, but it also enables problems to be addressed early and provides the ‘base data’ for formal reviews.
Reviewing Performance – annual or ‘formal’ review
Formal performance reviews are conducted on either a six monthly or twelve monthly bases and recorded using a set procedure and documentation. Best practice organisations review performance both in terms of What has been achieved as well as How it has been achieved.
What has been achieved. This is fairly straight forward to review and is measured by achievement/delivery of the ‘balanced’ targets/objectives set at the beginning of the year.
How the targets have been delivered. This is determined by ‘measuring’ an individual’s behaviour against the organisations competencies/standards. Managers therefore need to collect evidence of behaviour for their review to be valid. While some of this evidence can be collected from their informal reviews and observations made throughout the year, evidence can also be collected via a 360 degree appraisal.
In this article we have discussed setting expectations and reviewing performance. In the final article will look at a specific aspect of Performance Management, the 360º Appraisal as well as ways to improve your performance management process.