The effectiveness of an organisation depends on the contributions and activities of staff at all levels – from those who ensure efficient running of ‘front line’ operations up to senior managers who need to make the right strategic decisions about the direction of the organisation.
Performance management is therefore about maximising all of these contributions, from each employee, their teams and ultimately the whole organisation. It is the activity of setting targets and tracking performance against them and identifying opportunities for improvement. While reviewing past performance is important, the real focus of performance management should be on the future. What is it that your employees need to be able to do and how can they do it better?
Managing performance is essentially about managing results, it should demonstrate that each employee:
- Knows what the organisation is aiming for.
- Understands how their targets fit with the overall aims of the organisation.
- Knows what they have to do to meet their targets.
- Recognises how progress against targets is measured.
- Understands the consequences for achievement or non achievement of targets.
Ultimately, performance management should deliver improved bottom line performance which might be better customer service, improved productivity, or increased sales.
Critical factors for success!
There are a number of factors that are critical for the success of performance management in an organisation.
- Understanding what the organisation is and trying to achieve, and what it needs from its performance culture
- Being clear with all staff what is meant by performance (e.g. achievement of targets, behavioural standards etc).
- Being very focused on how individual employees will benefit and play their part in the process.
- Understanding that performance management is a tool for line managers and its success will depend on their ability to use it effectively – therefore it is important to provide the relevant training and development.
- Focusing on outcomes that meet business objectives, rather than tasks and inputs.
- Relating individuals’ reward and remuneration with achievement of outcomes.
- Managing performance by cascading down from the top and building capability from the bottom-up.
Critical factors for failure!
Conversely there are number of factors that will almost certainly cause the failure of a performance management in an organisation.
- Implementing a highly ‘comprehensive’ performance management system.If it is too complex or takes too long it will not be used.
- The organisation assuming performance management is a ‘one off’ isolated event that happens on a annual basis.
- Managers failing to document performance, follow up or take consequential action.
- The organisation assuming that people will automatically know what is expected of them.
- Being unclear with individuals about actual performance and how they can improve.
- Ranking employees.It may be that the only way an employee can improve their position in the ranking system is to sabotage the performance of their colleagues!
Finally, and probably the most important factor is to recognise that the behaviour of any manager will dictate the behaviour of others within their team. For example, if a senior manager doesn’t spend the time to develop the performance and capability of his own managers, he cannot expect them to do develop the performance and capability of their staff!