Task and Purpose Human Resource Management (HRM) is essentially getting things done through people. Almost all firms today have an established specialist division to provide an expert service, which is dedicated to ensuring that the human resource function is performed efficiently. The market place for talented, skilled people is competitive and expensive. Taking on new staff can be disruptive to the firm and to existing employees and not to forget, costly to the firms. It also takes time for new staff members to develop corporate cultural awareness, gain experience and firm specific knowledge regarding process, product etc. o ultimately retention management is strategically important in the sense that a firm retains the current human capital it has build up through staffing and performance management. 1 Essentially the task and purpose of this assignment will cover performance review as a key function within HRM as a direct result of trying to improve the employee job performance and the firms overall productivity. Topics that will be covered include: 1. A current performance review model in a an organisation that is familiar to me; 2. A suggested best model to achieve performance reviews that will increase employee satisfaction and motivation; 3.
Brief analysis and conclusion of Performance Reviews in general. Obviously the HRM functionality will vary between firms which are different in nature, size, goals, functions, complexity, structure and the product or service it provides. But ultimately the purpose of the HR function is to: “ensure that at all times the business is correctly staffed by the right number of people with the skills relevant to the business needs”, that is, neither overstaffed nor understaffed in total or in respect of any one discipline or work grade. (Human capacity in the long run) Introduction to Performance Management People are our most valuable asset” or “A company is known by the people it keeps” are cliches which no member of any senior management team would disagree with. Today the rate of change facing firms has never been greater and firms must absorb and manage change at a much faster rate than ever before. In order to face these challenges, firms must ensure that they have the right people in the right positions capable of delivering the right strategy. Not only is employee recruitment and selection important for this but also performance management of the firm’s employees.
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Armstrong and Baron define performance management as a “strategic and integrated approach to increasing the effectiveness of organisations by improving the performance of people who work in them and by developing the capabilities of teams and individual contributors. 2 What is Performance Management Review? Performance Management Review is an ongoing, formal and informal process whereby the employee and his/her reviewer communicate and review the achievement of performance expectations and standards over a certain period of time.
This is achieved by: •Ensuring the employee understands the goals of the firm as a whole and those of the employee’s division, business unit and specific work team; •Setting the employee’s individual work objectives and linking these to the Firm’s goals; •Confirming the required performance expectations for the employee and the specific role; •Assessing how the employee has performed against the objectives set previously and ensuring the employee have enough feedback to understand her/his performance, celebrating achievements and extend, maintain or improve the employee’s performance in the future.
The employee should already have a clear understanding of what is expected, day to day, in the specific role. This is set out in the Position Description, which states the key tasks and responsibilities for the role that need to be completed consistently. It is important to ensure these minimum requirements are met as they will be the foundation for overall achievements and results throughout the year. Principles for Successful Performance Management 1 Performance management is a process – People perform best when they know what’s expected of them.
They need regular feedback and coaching. – Performance management is much more than just an annual appraisal session. It’s about finding time throughout the year to meet and discuss how the person is performing – what’s going well and where they can improve. – So think of performance management as an ongoing process. Find opportunities to give immediate feedback and set up regular coaching sessions throughout the year. 2 Shared input – Performance sessions provide a chance for to discuss ideas and issues. It’s important that the employee and reviewer both have input. Don’t be afraid to talk plainly and to share observations. Giving clear feedback is crucial. 3 Employees have significant responsibility Encourage staff members to take responsibility for managing their own performance. This means: – having their say by discussing their performance issues and ideas with the reviewer. – achieving and reporting on the objective that have been set. – identifying learning and development opportunities which will help them maintain and improve their performance. 4 It’s a reviewer’s job to be clear There are times when an agreement with staff member’s assessment of their performance won’t be met. Performance feedback isn’t a negotiation – at times the reviewer need to give clear and firm feedback which doesn’t match their view. – As a reviewer, you need to have the confidence to assess a person’s performance and let them know when improvements are needed. The Performance Review System The Performance Review System is a twelve month process that combines a formal review once a year, with informal reviews or updates through the year.
To ensure the annual review is as effective and rewarding, as possible, it is vital that regular meetings are held with the reviewer throughout the year, to track and recognise performance on an ongoing basis. These meetings are also a great opportunity to review employee development needs and set new learning objectives. How Does the Annual Performance Review Process work? The annual review is the time to formally reflect on the performance over the previous twelve months and to recognise any achievements in relation to the individual objectives set.
These objectives are set at the beginning of the review year and should be monitored throughout the twelve months. Once completed, the Performance Review should be sent to Human Resources for recording and filing. The performance review is based on two key areas: 1. The Best that can be Achieved This section of the Performance Review details the key objectives that need to be achieved or the important tasks that need to be completed in the current role under review. Objectives are set to assist the business unit to achieve its business goals in line with the business plan and strategies.
These were set by the reviewer in consultation with the employee. The focus should be on the specific results or key tasks that are important to be achieve over the review year. Depending on the role, the objectives may have already been set to reflect sales and/or growth targets, which directly support the department/division goals. The objectives can also be individual specific to cater for any development needs or maximise use of employee’s current strengths and capabilities. By having development objectives included, it ensures that focus is put on developing skills, knowledge and competencies, thus enhancing overall performance.
There should be a minimum of four objectives and these should be set at the beginning of each review year. It is important to remember that the key tasks and responsibilities detailed in the position description, set out the daily processes or duties that are required to complete. The objectives focus above and beyond those tasks, to identify the results of work and recognise key achievements. The objectives that are set should be Specific, Measurable, Agreed/Approved, Realistic and Timetabled (SMART). How to write SMART objectives: ? Define a specific, focused outcome that is to be achieved. Identify how the outcome will be measured. Make sure the measure is practical and can be made relatively easily. ?Aim for a balance – the person should have input, but the manager has the final say on the objectives. ?An element of ‘stretch’ is appropriate, to provide some challenge, but make sure the objective is achievable. ?Each objective needs to have a date for completion. Possible objectives could be customer service survey results, business growth, credit quality, profitability and operational quality, accuracy and productivity, self development goals or project deliverables. Why objectives? We use objectives to provide clear goals for people at every level in the bank. – Collectively, the objectives of all our managers and staff combine to ensure that the firms’ overall business results will be met. – As well as objectives related to business results, it’s also useful to have development objectives. These focus on developing a person’s skills, knowledge and competencies, so they’ll be more able to deliver the performance required of them. Objectives need to be measurable – Without some way of measuring each objective, it’s difficult for management and staff member to know whether the objective has been achieved.
Measurable objectives provide targets for the staff member to work towards, and make the job as a performance coach easier. – Writing objectives which are measurable can sometimes be a challenge. A useful technique is to make sure the objectives are SMART. 2. The Best the Employer can be “How” the work is being completed is just as important as achieving results. This section details the important behaviours that should be demonstrated consistently as work gets completed. These behaviours are derived from the identified key competencies essential to everyone for performing at their best. The importance of measurable objectives:
What are they? Competencies are measurable characteristics of a person that are related to their success at work. They may be behavioural skills, technical skills, attributes (which are action oriented), or attitudes (which are about direct reports). Why using them? – Achieving and exceeding our targets and goals is just as important as the manner in which we achieve them. – Competencies give managers and employees a clear understanding of the behaviours that are desirable within the workplace and help build a productive and enjoyable workplace. – It’s not ‘what’ is being achieved, but also ‘how’ it has being achieved.
How to assess them? There are four levels of assessment that a person can be rated on for each of the competencies. – Inconsistently Displays or Overuses – Consistently Displays – Often Outstanding – Role Model A manager will make a selection from these assessments, based on their observations and interactions with their people. To assist managers in making this assessment, a competency ratings guide has been developed. Managers, and staff members, can refer to this guide to gain a mutual understanding of the different types of behaviour that may be demonstrated at each level, for all competencies.
With all competencies rated, the manager can then make an overall assessment of the person’s competency level. This assessment will be a subjective decision made by the manager, but based on the person’s demonstrated behaviours at their work. There are four levels of assessment that can be achieved for each competency and objective i. e. Did Not Meet ExpectationsMet ExpectationsExceeded ExpectationsOutstanding Performance The reviewer should confirm with the employee at the beginning of the review year, what is required to achieve each level.
These levels will not only prepare the employee for annual review, but assist in becoming more effective at work and overall. Overall Assessment The performance in the two areas of the review – “The Best You Can Achieve” and “The Best You Can Be” – will combine to make up overall performance assessment for the year. Based on the results that were achieved and the reviewer’s observations, an overall assessment decision will be made by the reviewer. The employee will have full opportunity to discuss his/her performance with the reviewer; however the final assessment decision will be made by the reviewer.
To assist the reviewer in determining the overall assessment and to provide the employee with a better understanding, there are four overall assessment ratings that can be achieved. The overall assessment will be used in conjunction with a Remuneration Matrix to determine any recommended salary adjustment. It does require Subjective Judgement It is important to remember that the annual performance review is an opportunity for the employee to receive feedback from the reviewer regarding work and achievements, based on the expectations set for the employee and the applicable role.
The assessment will be based on actual results the employee have achieved (reflected in achievement of objectives), observations made by the reviewer and information or evidence regarding the performance obtained throughout the year. The review will therefore be a reflection of how the reviewer believes the employee has performed over the last year and consequently their assessment of the employee will demonstrate this. This will require the reviewer to use a level of subjectivity when making that assessment.
They will have some specific and measurable information or evidence to support their assessment and of course the feedback regarding how the employee believed has performed throughout the year. However some of their assessment will be based on their judgement. Reaching a mutual understanding of performance level and therefore an overall assessment, will be achieved by meeting with the reviewer throughout the year to discuss the employee’s ongoing performance.
Regular meetings throughout the year (on at least a 3 month basis) will allow the employee to receive feedback from the reviewer, to reset performance expectations if required and to identify any assistance or support that may need to assist in enhancing the employee performance. How to manage subjectivity when making an assessment: 1 Key principle We’ve moved away from prescriptive rating-based appraisals to a more open process – which allows room for subjective judgement by managers.
For managers, this requires confidence, and sometimes some courage, to trust observations and give honest feedback. 2 Three key areas of subjectivity Here are the main areas where manager judgement is important: 1 Objectives – When setting objectives for their staff, managers have considerable subjectivity when deciding what performance will be required for the different levels of achievement (i. e. for met, exceeds, outstanding). And even if all the objectives are SMART, deciding whether they’ve been met will still require judgement. Another subjective decision that managers will need to make is the relative importance or weighting of each objective. For example, out of 5 objectives, one may be far more important than the others and therefore have a greater impact on the overall achievement assessment. Of course, it’s important to make these weightings clear from the start. – And finally, there’s likely to be a mix of achievement. Some objectives may be met, others exceeded, or outstanding. Given this range, the reviewer need to use judgement to decide the overall achievement assessment. 2 Competencies For each competency, the reviewer need to decide what level the person is at, based on observations of their work behaviours. – Once again, an overall assessment of their competency, taking into account their mix of performance across all the different behavioural competencies need to be made. For reviewer to make overall assessment: a) Consider overall competency – Consider the person’s overall level of competency generally. Does this person consistently display all the required competencies, are they often outstanding, or would one consider them an overall role model to others? ) Check against the indicators – Identify the level of each individual competency (The Best You Can Be section) and think about what the range and grouping of these indicators tells one about the employee competency overall. 3 Overall performance assessment – This is chosen from the four overall assessment options, using the overall assessment grid as a guide. a) Consider the employee’s performance in achieving the set objectives for their role and how important these objectives were to the employee, the team and business unit’s goals.
Balance this with the person’s overall competency levels and the behaviours they have demonstrated through the year. b) Confirm the overall Performance Assessment. Analysis Few events in corporate life cause employees more anxiety than performance reviews. Raises, promotions and sometimes even continued employment depend on what workers often regard as the subjective judgment of their managers. Employers and employees often come out of performance review meetings having reached completely different conclusions.
There is often a gap between what employees believe they are being told at performance review meetings and what their managers think they are telling them, new research has suggested. 3 A poll of 2,200 employers and 330 HR professionals by talent management website Salary. com has found just two out of five workers believe the performance review process leads to an improvement in performance, compared with more than two thirds of employers. This indicates the need within many organisations to improve the overall performance review process.
The key problems were a lack of proper communication between both sides as well as a suspicion that the review process is not being conducted fairly or there may be other, unrelated factors overshadowing it. For instance, more than four out of five employers believed they provided clear goals to their employees prior to the formal performance review. Yet nearly half of employees felt their goals had in fact not been clearly communicated. While more than eight out of 10 employers felt they included input from their employees in the process, just four out of 10 employees agreed. 4 There is no surprise here for the results.
Reviews should primarily focus on the future. The employee already knows what they did successfully and not successfully. Reviews also should be driven by the employee not the manager. From a manager’s point of view, performance reviews should be seen as an opportunity to get to know their employees and to familiarise them to the team’s goals, with the ultimate goals of retention, increasing morale and identifying opportunities for better goal alignment. The challenge, however, is communicating this to busy managers who may feel less enthusiastic about managing their people than charging ahead to meet their team’s goals.
Conclusion The yearly, sometimes bi-yearly, performance evaluation process definitely has issues. Very much is involved in the yearly process, which is normally a very detailed, very processed based evaluation of past performance, employee development, goal setting as well as compensation and generally there is limited employee feedback. My thought is monthly meetings. This will give the manager more frequent opportunity to align goals to business vision, shorter respond time to the employee’s performance and is active in the coaching of the employee’s performance. Also a thought was that two kinds of managers should exist.
Functional managers who handle the operations and another manager in the department who is skilled at coaching and motivating employees to meet the business deliverables. They can be co-managers of a large department. The current manager is torn between running the department, handling his/her own responsibilities, as well as managing employees. Most of the time, managing employees is a low priority. “People are our most valuable asset” or “A company is known by the people it keeps” and it is true, but how much time are really being spend by managers to review their employees?
Given operational and expectation pressures this is really a fine act. Reference: 1 Macky, K (2008), Managing Human Resources – Contemporary Perspectives in New Zealand Sydney: McGraw-Hill 2 Armstrong, M & Baron, A (1998) “Performance management: out of the tick box’ People Management July pp 38-41. ) 3 Website accessed 26 July 2008 URL: http://www. management-issues. com/2006/12/20/research/communications-failures-blight-performance-reviews. asp 4 Website accessed 26 July 2008 http://www. salary. com/enterprise/layoutscripts/entl_survey. asp? tab=ent&cat=cat001&ser=ser005&part=par018