Performance Management (PM) Process Design

Performance management is the vehicle for translating organisational goals into team and individual deliverables, and sits at the heart of many other HR activities, including performance-related reward. It works in different ways for different organisations. They must develop the right performance approach that fits with their unique organisational culture and business needs to develop solutions that work for them. These approaches can range from rethinking current performance management strategy or simply enhancing the existing approach by making small innovative changes right through to working to become a learning organisation.
There are five main approaches:

  1. Total Performance Management
    This probably represents the most structured approach – comprising all the elements usually associated with PM: role profiles (role purpose accountabilities, success measures, competencies etc.); individual objectives or targets (usually written in SMART terms); personal development plans (covering specific development needs and activities as
    2.1 Train relevant groups and individuals to monitor performance, identify performance gaps, provide feedback and manage talent
    2.2 Work with line managers to ensure that performance is monitored regularly and that intervention occurs as required and in line with organisational
    policies and legal requirements
    2.3 Support line managers to counsel and discipline employees who continue to perform below standard
    2.4 Articulate dispute-resolution processes where necessary, mediating between line managers and employees
    2.5 Provide support to terminate employees who fail to respond to
    interventions, according to organisational protocols and legislative requirements
    2.6 Ensure recorded outcomes of performance-management sessions are accessible and stored securely according to organisational policy
    2.7 Regularly evaluate and improve all aspects of the performance-
    management processes, in keeping with organisational objectives and policies
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    well as longer term career aspirations); and appraisals, with varying degrees of self-assessment and/or feedback from the manager and others.
    The emphasis here is on balancing the ‘what’s’ and the ‘how’s’ of performance
    – focussing the individual both on the business result required and the preferred way to achieve that result. Another aspect of the structure is a strong alignment with higher level business objectives that emerge from the business plan: all part of the cascade approach to achieving the organisation’s goals.
    Competencies in this model are seen as offering a standard framework with which to assess the strengths and weaknesses of the whole workforce and to plan individual and workforce-wide development programmes – often carrying a strong sense of ‘stock take’ and ‘gap analysis’. In doing so, it assumes that competency assessment is being carried out accurately and consistently by the many managers and individuals involved.
    When carried out well it is the type of approach that supports ‘total quality’ initiatives, including the Business Excellence model as well as providing evidence of the links between business plans, individual appraisals and personal development that underpins the Investors in People framework. It is also demanding and can appear complex, especially when combined with ‘balanced scorecard’ approaches and a myriad of performance measures. As such, it can run the risk of ‘losing the plot’ in terms of motivating individuals and improving relations and effectiveness within teams.
  2. Skills or Competency-Based
    The second approach can be viewed as a cut down version of the first, with more emphasis on competencies as a structuring and measurement framework often with strong links to pay progression. It may start from the view that the traditional management-by-objectives is not appropriate for the staff in question and that the key to successful performance is the demonstration of existing skills and the acquisition of new skills.
    This may be especially suitable for certain professional and technical groups for whom it is important to plot an individual’s career (possibly in parallel with the career ladders for similar groups outside the organisation). For such groups, also sometimes called ‘knowledge workers’, the performance that counts, and which offers competitive differentiation is often best thought of in terms of competencies and behaviours, rather than targets and outputs. It could be helpful where the organisation is aware of a skills deficit or is facing recruitment and retention difficulties in
    Business College at International House
    RTO Code: 91109 CRICOS 02623G
    Level 1, 203 Clarence St, Sydney NSW 2000 | Floor 1, 237 Oxford St, Bondi Junction NSW 2022
    3 Searcy St, Darwin NT 0800 | Level 6, 601 Bourke St, Melbourne VIC 3000|
    key areas and wishes to highlight that its collective skills are fundamental to its success.
    The obvious risk is that too much attention may be paid to inputs and behaviours and too little to business results, with for example pay systems being increasingly supply-driven as staff climb competency ladders in much the same way as they progressed up traditional incremental pay grades. The clear connection between competency assessment and reward can strain the integrity of the assessment and may jeopardise the developmental purpose of the manager and the individual reviewing and discussing competency openly and honestly.
  3. Team-Driven
    The third approach is based on a team process of thinking through a business plan or set of goals and addressing questions like “What does that plan imply for us? What can we commit to achieving? What will make the big difference to the team achieving the plan or making a real breakthrough in performance?” From there the process becomes more individually focussed: “What does all this imply for me? What will I need to bring to the party for us to succeed? What new skills do I need to acquire? How do I need to change in order to deliver my part?”
    As an approach it can be very useful when establishing a new section or business unit with specific goals to be achieved, or when significant change is anticipated or required and a different PM approach would signal and reinforce the ‘change’.
    It really only works when there are genuine team goals that need to be shared and jointly ‘owned’. As such, it can help a new management team to form and articulate their plan. Potentially it can provide both the framework for PM and the basis of raising team effectiveness in one process.
  4. Continuous Learning and Coaching
    The fourth approach is the most individually-based. It emphasises that improving performance comes from learning and that individuals learn best from experience. Here the process begins with looking back and discussing with a manager or coach what went well and not so well and coming to conclusions about the individual’s strengths and development needs.
    Business College at International House
    RTO Code: 91109 CRICOS 02623G
    Level 1, 203 Clarence St, Sydney NSW 2000 | Floor 1, 237 Oxford St, Bondi Junction NSW 2022
    3 Searcy St, Darwin NT 0800 | Level 6, 601 Bourke St, Melbourne VIC 3000|
    Looking forward, the individual commits to working on two or three key areas (which can include greater use of strengths as well as addressing weaknesses). While this conversation might use competencies as an aid, the focus is on taking the individual forward from where they are, not on purporting to compare them with others or produce a ‘stock take’.
    So it may be a helpful approach in dealing with individual cases where particular improvements are required. It helps the individual gain confidence by focussing on one or two particular skill areas which will produce quick wins. It may also be useful during or just after particular episodes that exposed development needs, or at the start of a new assignment when making a conscious effort to learn from the past.
    It lends itself to being used regularly (not just annually) especially when an individual is new to a role or where the circumstances are changing rapidly. This coaching style of PM brings substantial benefits when used by skilled, sympathetic coaches.
  5. Project-Based
    A common difficulty with PM is that it is based on the formal roles and reporting lines of the organisation chart rather than the way work is actually done. In extreme cases this can mean that the main contribution an individual makes (via projects) seems to cut across what they are formally there to do. As a result, many organisations are trying to re-focus their PM processes around project working. One result of this is renewed emphasis on the skills and attributes that an individual brings along with their progress and success depending on how well those talents are known in the organisation and how well they are deployed. The key here is proven and validated skills, with project managers being assured that what they buy is what they get.
    For the individual, the key aspects are understanding what skills and attributes they bring and will need to deploy; how these will fit the team’s needs and how the project will help in developing new skills and building personal value. For the project manager it is important to integrate the performance of the individual in the team, to take time to give regular and constructive feedback and at the end of the individual’s assignment to offer an overall assessment. There is often an additional role here: the ‘resource manager’, whose job is to match people to projects in a way that develops the individual, builds the organisation’s capability and deploys resources to best effect. The ‘resource manager’ will play a key role in the longer term development and progression of the individual.
    Business College at International House
    RTO Code: 91109 CRICOS 02623G
    Level 1, 203 Clarence St, Sydney NSW 2000 | Floor 1, 237 Oxford St, Bondi Junction NSW 2022
    3 Searcy St, Darwin NT 0800 | Level 6, 601 Bourke St, Melbourne VIC 3000|
    Client-driven professional service, civil engineering or consulting firms are the natural home for this approach. For them, and organisations like them, the approach is useful in signalling the significance of projects and ensuring that project work is given the right priority (not tacked on to ‘business as usual’ activities). It is also helpful when there would otherwise be a risk that individuals’ achievements and development needs would be lost or unrecognised as a result of managers concentrating purely on individual project goals – helping to balance up the ‘people’ aspect alongside the ‘task’). Similarly it helps in ensuring that the organisation focusses on building long term capability and productive capacity (skills base) rather than solely delivering project goals.
    For project managers a conscious PM process helps to ensure that the people and team aspects of projects are not ignored. Where performance related pay applies, the approach offers a mechanism for justifying individual pay decisions, especially where the individual’s contributions to a series of business outcomes needs to be understood by more than their immediate or current project manager.
    Looking across the five approaches there are clearly large areas of overlap, so electing for one does not mean ignoring all aspects of the others. For example, a good manager may fill the role of coach in almost any PM approach. It is nonetheless useful in designing the right PM approach to consider all the options in the context of the circumstances of the enterprise, especially the skills of managers involved. There are real choices to be made in finding the right PM approach. There can be a risk that organisations can sometimes ‘end up with’ a style that reflects the personal preferences or previous experiences of one or two individuals or, worse(!), be driven by a consultant’s pet style or the latest fad.

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