Definition of Related Performance Management Systems

It is quite interesting to learn that finally the employees are heard and answered to their rightful demands of incorporating the idea of having a personal life too. Hope you understood the new age practices and developments on the side of working culture. Now, let us come to our focus here – performance management. With these new practices, it becomes quite evident that the perception on performance and how to manage the performance is also under a scanner. A system of performance management, which will strategise the procedures in such a way that, the organisational strategies are also related to it, is the concept.

Instead of accepting a generalised performance management system that prevails in the country or in the industry, it is important that an organisation specific system is created. Organisations have different culture, different leadership, different products, different management styles, different process and so many other differences when compared to any other organisation. Not to mention, the uniqueness of employees, (they are individuals with their own self identities), within the organisation. Hence, it becomes important that a performance management system which includes space for all these differences is essential to any organisation in need of excellence.

We will be discussing the performance appraisal methods in detail in our forth coming Unit, under the topic, “performance appraisal Methods”, which are commonly used around the world in current scenario. In this topic, let us explore the possibilities of creating a custom made system with a little out of the box thinking.

Strategies of the Organisation and Performance management system

Calling for a specific system is often combined with more effort. The organisations strategies and policies are to be taken into mind, so that, they don’t contradict with the Performance management and appraisal policies. For example,

If the company has a policy to identify young talents on research and development, then the performance management system should have space to analyse and evaluate the contributions of employees out of their area of job. In traditional system, “the thinking “of other areas of work is unnoticed often, and for worse, even called as unwanted, unwarranted and waste of work time. Confinement of physical work place is not as worse as confining the mind and thoughts only to the job of the employee.

If the company has a quality control policy on curbing the produc-tion floor spillage of raw material, then Performance Management system should include space for bench marking, appreciating or commenting on this regard while appraising the floor workers.

Strategy based performance Management

Performance management systems are getting a makeover all over the world through incorporating Strategy based systems of performance management. This calls for a holistic and rationalistic approach to take all the human resource practices and emerge as an overall organisational strategies oriented system. Instead of looking with magnifying glasses the individual performance or accomplishment of job, this takes into account the contribution to the organisation, even in other areas other than the job allotted.

Ok, now let us move on to some successful strategy based perfor-mance management systems. First, we are going to discuss, Information processing Based Performance Management.

Information processing based Performance Management

Quite often, the appraisals go with heavy bitter feelings because of undocumenting of the nuances of achievement of the employee throughout the appraisal period. The employee is not supposed to keep a journal of good things he is doing at quite lengthy intervals.

But, he will retain the thought that he is contributing something additional to the organisation remains in his subconscious mind. Finally, when his appraisal report comes with regular grading or negative remarks for what he has not accomplished, he builds bitterness thinking on “how they forget all the other good things I have done?”, unable to voice out or mention with details of date and particulars of his good deeds.

Let us see a small case to understand this concept further.

Let us take the example of the spillage of raw material on production floor with a small change that, company doesn’t have any policy on cutting down the spillage. Still, Murugan, one of the 50 machine operators in the production floor, makes it a point of his work culture that he never spills the materials like his co-workers. The remaining 49 workers do not care about the spillage and hence the production shop floor is always a mess with spilled raw materials. It doesn’t exhibits the careful input of materials into the machine by Murugan. He too doesn’t have given a thought to it as a very high valued deed, as he has grown up with the simple art of cleanliness and perfection of work. He is like that everywhere, be it is his home or restaurant or work place, and he never wastes anything or spills.

The performance appraisal report for that year came as a shock to Murugan, as it was bearing a negative remark on his absenteeism. He fell ill some four months before the appraisal and he took leave for that. He is not very sure about the absenteeism remark, as he is unable to understand how his absence has caused loss to the organisation. But he felt for sure bad, and grumbled to his wife, justifying his bitterness with the following reasons:

He has been regular to work in all his 14 years of service in the organisation.

He took leave for a genuine health reason

He has been sincere to his work all this time

Above all, when all his co-workers were not concerned about the spilling of materials, he is the only one who has saved a little bit of raw material daily for 14 years.

As a lay man and a common worker, he doesn’t know the calculations of the monetary value of the material he has saved all these years, but he has that neglected feel of his good deeds gone unnoticed and that stayed in his mind. Neither He knows how to keep journal of his additional contributions nor does the company care for the additional contributions in the appraisal system.

What do you think was the outcome of the performance appraisal report? The following day, Murugan started developing an attitude of being careless towards the input of materials and joined the team of his “raw material spilling” co-workers in a due period. As usual, this also went unnoticed during his next appraisal.

An information processing system comprising of log books or journals for data collection, appropriate processing of collated data, analysing and interpretation of the processed data is a good suggestion. Log book of job may be kept by the employee as well as by the immediate superior, or the immediate superior may just acknowledge the entry in the log by the employee himself. A job journal may be a hand written book, a printed format sheet where entries are made, or excel spread sheets where entries are added into the computer. The activities in the job are noted with time, date and place. Well-designed software, custom made digital tabs and other gadgets with technological developments are available in the global market for professionals and people in different industries like, transporters, pilots, marines, service industry etc.

A well designed information Processing System can bring a lot of changes and development to the organisation, the major reason behind being – human memory is limited for immediate and spontaneous recollection, and hence when collected data properly processed can reveal important statistics. In the above case, the details of amount spillage of all the workers, when collected and processed, may reveal as a big hole in the pocket of the organisation. When properly managed, may even lead to expenditure cost cuts and improved profits, in return improved bonus to the workers.

Reward Based Performance Management

The word ‘money’ by itself has gained power in the human world. It is for this sole basic reason, majority of the work force in the global industries join organisations. The other essential items like motivation and satisfaction comes next. Monetary benefit is thus a basic building material in the performance management architecture. Along the same line, rewards management is a vital part in the further development and success of the performance management.

The purpose of rewards is to motivate the employees. It also satisfies the need of a step of motivation. It pushes to higher needs of rewards.

In short, we can say the reward based performance management system is a specialised strategy based system which ensures the fulfilment of employee’s monetary and non-monetary needs and recognition and appreciation needs, combining both, to achieve the performance improvement goals along with organisational goals.

Rewards can be

Monetary

Non-monetary

Indirect monetary

Monetary rewards refer to monetary compensation, most often calculated as a percentage of the compensation or pay of the employee. In many organisations, the policy will rule out any monetary rewards in cash will not exceed 50% of the salary.

Indirect Monetary rewards are rewards that can be estimated into monetary terms. For example, Paid and sponsored vacations, any esteemed Social club membership, canteen tokens (like Sodexho Vouchers), group insurance schemes paid by employer etc,

Non-monetary rewards refers to the wide category of awards, appreciations, recognitions, performance certificates, more challenging and rewarding assignments, flexibility in work time etc. Usually the employees those who are not driven through monetary motivation and those who gets sufficient monetary benefits to not to get stimulated by further monetary rewards are motivated for better performance in this kind of rewards.

A reward based system can be built on the basis of the following:

Job evaluation

Analysing the present rewards system

Understanding the impact of present rewards on performance

Finding the gap between the above two points

Designing a new strategy based system to fill the gap

Introducing new strategy in reward system to achieve the desired performance

Obtaining direct and indirect Feedback from the employees

Redesigning the system if necessary

Evaluating the new system through the quality of performance improvement

Refinement of the system

Team Based Performance Management System

We have seen about team building and its performance nature in Unit II. I hope you remember. In this topic we are going to see, how a Performance management system can be built on team base.

Teams are a natural source of improving performance. But there are some points that can spoil the team performance if not properly managed. When a team is created, the following should be noted:

The individual tasks are clearly defined

The tasks so assigned are interdependent

The team goal is clear and unambiguous

Common goal achieved with performance contribution from all the members

No loop hole for social loafers

No duplication of task is done

No independent task outside the team is assigned.

Now, the team is ready for performance evaluation.

A team based system should bring out all the positivity in the team concept. Hence, the following are to be included while deciding the team based PM System.

The performance management system should look at the commitment of team players towards the organisational development.

Then, the accomplishment of team objectives has to be monitored and evaluated.

The team leadership and the effectiveness has to be evaluated, and for the other team members, the commitment and cooperation to the team leader is the measurement objective

Periodical Team audit reports has to be analysed

Individual contributions of the team members towards the achievement of team goal as well as organisational goal has to be evaluated

Thus, a holistic approach of taking into account the overall activities of the team combined with the individual accomplishment forms the system.

Competency Based Performance Management System

In this systems, Core competencies are looked with appreciative eyes - Every individual employee may have different core competency – like leadership, learning ability, strategic thinking, quality consciousness, knowledge about organisation, melding easily with people and cultures are all seen as competencies, no matter whether they are related to the job description of that employee or not. A transport department in USA tried a method. Instead of defining what the above terms mean, they described the behaviour one would likely exhibit, if were a master performer. For example, for their core competency of “Organizational Knowledge,” instead of defining what was meant by the phrase, they described how to identify an employee who has organisation knowledge. Here it goes

Organizational Knowledge: Understands organisations’ culture.Accurately explains the organizational structure, major products/services, and how various parts of the organization contribute to each other. Gets work done through formal channels and informal networks. Understands and can explain the origin and reasoning behind key policies, practices and procedures. Understands, accepts and communicates political realities and implications.

In normal circumstance, in a traditional appraisal system, the competency or talent described here may not be appreciated, never mind appreciating, even will not be noticed as a talent. But, when we term the talent as “Organisational Knowledge” and attach some job value or knowledge value to it, it becomes a skill to be estimated and utilised at the right note.

Let us see how they describe the behaviour of Learning and strategic systems thinking:

Learning and Strategic Systems Thinking: Accepts responsibility forcontinued improvement/learning. Appreciates and can explain the mission of each individual work unit and the importance of the tie between them to make the entire operation whole. Acquires new skills and competencies and can explain how they benefit the organisation. Regularly takes all transportation forms (i.e., bicycle, light rail, highways, etc.) into account in planning and problem solving. Seeks information and ideas from multiple sources. Freely and intentionally shares ideas with others.

Got an idea of how the core competency can be identified and utilised?

A strategy of identifying these competencies and providing a platform of performance management system to utilise and improve the competencies is the concept. Let us see the steps to build a model system.

Describing the core competencies to help identify one through the behaviour of the employee

Building competency models.

Assessing the competencies for a period to bench mark them

Creating a HR system, which includes the core competencies to be identified and accepted as an important tool to place and replace employees

Evaluating employees who are managed through the principles of core competencies

Describing the core competencies, if necessary, based on the employee performance

Redesigning the competency model, based on the performance evaluation.

Freezing the Competency based system

Based on the success of the described core competencies, finding new core competencies in the other parts of the organisation.

Adapted from Cummings and schwab, 1973:2

The success of an organisation depends on the leader’s ability to optimise human resources. A good leader understands the importance of employees in achieving the goals of the organisation, and that motivating these employees is of paramount importance in achieving these goals. A successful organisationrealises the need to inspire the employees, stimulate them to achieve the fixed missions. Inspiration and stimulation would be effective only if there is a leader who can inspire in real. The relationship among the people in the organisation is important to make it a effective organisation. A good leader can do that.

Hence, this strategy of performance management takes the leadership as the core competency and identify the leadership talents, thus creating a better performance management system.

It is widely accepted that, performance and leadership is directly related. When an organisation doesn’t realise this, the performance will suffer. Democratic and participative leaders usually find it very easy to manage their team’s performance.

Dear learner, If you are an employee, you would have noticed the difference in behaviour of the employees, productivity, quality, morale, motivation, overall performance – everything undergoes a change when the leader or manager changes. When a leader is understanding, strong, democratic and participative, they are often seen as visionaries and their charisma can bring a sea change in the performance of employees.

The definition of leadership has changed through decades from tyrants to people’s leaders. The changing competitive business environments call for new styles of leadership who can embrace and adapt the diversified work force, their varied cultures and work competencies. The shift in the areas of business due to globalisation has opened the doors for new breed of leaders who can handle the competitive intensity, understand the value of the work force and broad minded to take in the employees into participative management styles.

The system of Leadership based performance management has to be framed under the following;

Developing leadership objectives into operational areas

Describing the competency of leader skills based on accomplishing organisational goals

Monitoring systems to identify the leadership competency in the employees

Monitoring the existing leaders (of teams or departments)

Evaluating the performance of existing leaders individually and though the employees performance under him

Finding the gap and understanding the differences and advantages in difference leadership styles

Comparing the framed description of organisations leadership competency to that of existing levels of competency

Redefining wherever necessary to set a pattern of identifying leadership skills

Conducting Leadership development programmes to groom and develop the original skills

Evaluation of leaders after the development programme and freezing the successful model.