Effectiveness of a Performance Management System
Speaker: Mr. K. Raj Kumar - CnetG Asia Sdn Bhd
The following is an excerpt of a speech delivered by the writer at the National Conference on HR Best Practices 2001 in May this year at the Crown Princess Hotel, Kuala Lumpur.
Whilst employers have a tough time attracting, retaining and motivating employees, especially during tight labor markets, the performance management system, the most important of the "people management tool" is either lacking in many an organization or if they have one, it is not effectively administered.
FAIRNESS AND SUBJECTIVITY
- one of the vital issues to be considered in an effective performance
management system is fairness and subjectivity. In this regard, measurable
performance objectives and standards shall be pre-agreed. Besides
this, the performance objectives should be linked to the company's
business plan and ideally concluded prior to the annual budget time.
Knowledge ability in the business of the company also contributes
to the successful realization of the issue in case. Once these factors
are considered, attaining the commitment and loyalty of the employee
is crucial.
INVOLVEMENT
- involvement of the employees determines the effectiveness of the
Performance Management System. The standards shall be mutually developed
and realistic. The SMART strategy is recommended here. The Multiple
Rater System (MRS) could also be used to narrow down potential disparities
in rating by different heads within a company, despite using the same
system. The MRS, when implemented, will probably be a forerunner to
the presently popular 360º feedback.
REINFORCEMENT
- reinforcing the system is also crucial. Ken Blanchard - "catch
'em doing right" is appropriate in this situation. Such practice
will provide greater encouragement and builds confidence in the employees
in the short and long term.
DEVELOPMENT
- during the development of the system, desire key outcomes shall
be considered. Weaknesses and new skills or knowledge are exposed
due to failure in incomplete development. Absence of a back-up system
or a follow-up approach further adds to the potential failure of the
Performance Management System. The development stage should also consider
counseling, coaching and mentoring skills to facilitate the achievement
of the targets. Adopting such practice leads to Kaizen, i.e. Continuous
Development, and subsequently turns the workplace into a Learning
Organization.
CARING AND SHARING
- the other nagging issue is the lackadaisical attitude among employees,
wherein nobody cares for the maintenance of the system while in implementation.
The raison d'etre of the system is fast forgotten and the system begins
to loose its virtues when employees go back to their day-to-day activities
doing tasks to the best of their knowledge instead of developing the
"gung ho" attitude.
HOW AM IN DOING?
Employees who are committed to self-development need to know their
level of performance. Constant feedback would certainly provide continuous
improvement and will prevent the static mindset and tunnel vision,
which prevail in some situations. Critical in this respect is, whether
the means or the ends-obviously both.
FEEDBACK
- in the Performance Management System, feedback is an intrinsic feature,
which however objectively it is rendered, poses the concern as to
how many employees are comfortable with it. Is there an honest relationship
with/ among parties involved? How many are comfortable with the feedback?
DOCUMENTATION
- All that transpired in the Performance appraisal needs to be documented.Remember
Edward Deming? - facts not fear. It should cover the facts and it
should be simple.
FOCUSED TO THE COMPANY CULTURE AND PHILOSOPHY
- is the system geared towards these? It is the experience of the
speaker that there are still many MNCs that used the performance development
system developed by their organization headquarters abroad. Local
companies, typically emulate the system of another company, in the
"copy and paste" style. It should be best fit with the whole
paradigm, with a rating scale if appropriate.
PRODUCTIVITY
- many organizations, especially those that are monopolistic, make
profit but their productivity may be suffering - effectiveness suffers
due to complacency or a weak objective system, hence effectiveness
suffers.
VALUE-FOCUSED
- Any system must add value to the organization in terms of the ROI,
time and resources spent and other Key Performance Indicators.
TIMING
- Ideally performance appraisal must be done before budget time. This
is so that, newly set goals that incur cost can be budgeted for, for
the next fiscal year.
TRAINING OF APPRAISER AND APPRAISEES
- to also mitigate supervisory resignations. The succeeding supervisor
should be adequately trained before becoming part of the system. Usually,
only supervisors are trained to solve problems but not the employees.
Since problem solving is part of the system, employees too ought to
be trained in this issue.
EXTERNAL EVALUATION
- the entire PMS and the appraisals need to be audited by an external
consultant or somebody from a sister company. This can augmented by
climate study and opinion surveys, which add value to the system.
CONSTANCY OF PURPOSE
- employees in the same grade level must be appraised around the same
time period as to avoid disparity due to unpredictable business conditions
and the varying temperament of the supervisor. The criteria used for
the measurement can be more universally applied, if done this way.
PROACTIVE HR DEPARTMENT
- As The HR Department has the ultimate responsibility of the system
including access to individual records, the officer in charge needs
to be more vigilant and aggressive to correct any disparities and
inconsistent assessment.
TOP MANAGEMENT
- the discipline starts at the top. The top management should not
only be committed but also ensure consistency in the application of
the system. The two extremes of people management are that of HIRING
and FIRING. Modern management science has yet to find a 100% foolproof
method of hiring and neither firing, especially when "smart"
lawyers are still allowed into the local industrial courts. Performance
Management, if effectively managed and conducted can contribute tremendously
to not only minimize these problems of extremes but also help enhance
the people and organization performance. Remember turning the organization
into one of high-performance is the ultimate goal!
