The effectiveness of an organization in terms of whether or not it is meeting its mission or goals can be determined by engaging in performance management. According to the U.S. Office of Personnel Management, performance management consists of five components: “Planning work and setting expectations, continually monitoring performance, developing the capacity to perform, periodically rating performance in a summary fashion, and rewarding.”
What is Performance Management?
The phrase “Performance Management” was coined in the 1970s by Dr Aubrey Daniels, a clinical psychologist. At the time, he used it to describe technology and the importance of managing behaviour and the result of the behaviour. Effective management would ensure proper behaviours are being executed, which would, in turn, produce favourable results. He later associated this approach to the interactions of people whether in a formal or informal setting.
With the proper training, management can manipulate the conditions of the workplace (e.g. policies and procedures, available skills to train and motivate employees) in order to measure the true success of the business – that is the financial standing of a company as well as the individual success of its employees.
How Does Performance Management Work?
The drive to implement a performance management system is not sufficient. Management, as well as employees, must put forth the effort necessary to make it happen. With “all hands on deck” and the observation of the following, organizations can build a successful program.
- Clearly identify the job’s purpose as well as the duties associated with it.
- Determine goals and how to measure outcomes.
- Rank job priority.
- Characterize the standard of performance for critical aspects of the position.
- Discuss employee performance and provide feedback. This should at least be done on a quarterly basis.
- Keep track of performance records.
- If necessary, create an improvement plan to better employees’ performance.
It is unrealistic to expect employees to perform at an optimal level without providing them with the tools to succeed. The following tools are crucial to the achievement of the system.
Model of standards: Creating a model that clearly defines employee performance standards helps the company and employees avoid ambiguities in what is expected. It also enables employers to provide their employees with specific feedback, which is greatly beneficial because it potentially increases job satisfaction.
Whether in writing or delivered verbally, performance standards are enforceable. It is, however advisable that they are captured in writing to avoid questions in the future.
There should be a set standard for every aspect of one’s position. For example, an employee who is a Customer Service/Sales Representative may be expected to take and sufficiently answer the service questions of 10 customers an hour. This employee may also be required to upsell products to 50% of the clients he talks to.
There are several factors to keep in mind when developing this model. Performance standards should:
- Be realistic in terms of whether or not it can be attained as well as whether or not employees have adequate training.
- Be measurable with regard to quantity, quality, time, etc.
- Be clear in defining the proper method for gathering performance information and how it measures against the standard.
Annual Employee Appraisal Document: While employers monitor employees’ performance throughout the year and provide feedback and coaching during that interval, employers are also responsible for conducting an employee appraisal, which is generally done on an annual basis. The appraisal allows the employer to summarize the employee’s performance, gauge job satisfaction, as well as prepare for the future.
Coaching: Once the standard has been set and performance feedback has been provided to the employee, it is critical that the employer offer some type of coaching. The purpose of coaching is to strengthen areas of improvement as well as enhance areas where the employee is currently successful. In order to accomplish this, coaching must be done in a positive manner. The words used must build and not destroy. Diplomacy is important when providing coaching. Coaching promotes employee motivation as well as continued success.
Sinclair Knight Merz (SKM), one of the leading professional services companies in the Asia Pacific region, was looking for ways to increase its ability to manage and grow its workforce capabilities. In this industry, companies compete largely on the basis of their people—their skills, their ability to provide excellent client service, and therefore the ability of the company’s HR function to effectively acquire, develop and retain top talent. In part, because it is employee-owned, the company is intensely focused on its people, emphasizing an open and independent culture.
Yet it is this independence that posed a challenge. SKM knew that it must keep a finger on the pulse of its culture at all times. What could the company do better? How could it identify and retain its best people? How could workforce planning be done effectively so the right workforce skills could be developed and marketed to clients? SKM had always been a leader in its industry, but company executives knew that maintaining that position would take constant vigilance.
SKM asked Accenture to implement the Accenture Human Capital Development Framework to help its HR function identify ways to enhance human capital capabilities. The framework is an assessment and analytic tool that draws on best practices and Accenture experience in the fields of human resource development, learning, and knowledge management, along with state-of-the-art measurement techniques.
The Accenture analysis affirmed the strength of many of SKM’s human capital processes. Seven of the thirteen human capital processes scored in the top quartile of results. The company also exhibited strong financial results: its capital efficiency and return on invested capital were among the highest of the companies that have thus far used the framework.
However, the Accenture analysis did more than just confirm existing strengths. It also identified a number of areas in which further improvements could provide the company with vital competitive advantages in terms of workforce performance.
Although the HR function had many best practices in place, there were a number of important discoveries for continual improvement of HR’s impact on the business. One was the importance of workforce planning and recruitment. Data collected from the framework revealed, for example, that those organizations with more effective recruiting capabilities have superior workforce performance and employee engagement. As a result of working with Accenture on this initiative, the HR department further reviewed its methods of recruiting top talent and put in place an internal capability in key geographies. The initiative has been immediately effective; it has reduced time to recruit key staff, increased the firm’s ability to handle large recruiting assignments, and significantly increased the satisfaction of managers with the HR recruiting service. The initial pilot program has been expanded to more geography.
The employee engagement results from the framework implementation echoed a number of things the company had found in its own internal surveys. Leadership development continues to be a focus item to improve employee engagement, as do rewards and recognition.
According to SKM’s vice president of HR, “The Accenture Human Capital Development Framework has delivered important insights about aligning human capital processes with business results. The framework provided us with an effective method of determining where we should most focus our resources and energy to have the best impact on the business.”