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Performance Management: Processes AND People - Tools for performance management

In addition to this training approach and linking this to the Performance Management model shown in Figure 1, a number of tools that may be used in performance management are outlined below and discussed in more detail in, Essential Tools for Operations Management:

• Performance and development reviews: Whilst Performance and Development Reviews (PDRs) may be used in the management of an organisation’s performance, even those companies without performance management systems tend to operate staff appraisals, in which managers regularly review staff performance, potential and identify their development needs. Those organisations with PDRs use this time to also reflect on the individual’s past performance as a basis for making development and improvement plans.

At the same time as reviewing competent technical performance, some organisations may also choose to conduct an assessment of the individual’s behavioural competencies as part of their performance management system.  Such a behavioural assessment can provide another tool for measuring individual performance and for providing development activities to help employees further reinforce their technical skills and interpersonal competencies to reflect the organisation’s required practice standards.  

• Objectives and performance standards: In a typical performance management process, both the manager and the individual need to agree on a number of objectives or goals that can be undertaken by the individual, department and organisation over a period of time (usually a one year period in line with the appraisal or performance review time-scales). These objectives can be both work-related, referring to the results to be attained or personal objectives, taking the form of developmental objectives for individuals. In both cases, however, they must be regarded as ‘SMART’ (Specific, Measurable, Achievable, Realistic and Time Bound) and may be expressed as targets to be met or tasks to be completed. Setting SMART objectives, reviewing performance and providing feedback to individuals are stages of the typical performance management process shown in Figure 2.

Figure 2:A typical performance management process.
(From: The Essential Management Toolbox: Models, Tools and Notes for Consultants and Managers. Published by John Wiley and Sons, UK. January 2008.)

• Learning and development: In almost every business, the main route to improved organisational performance is the development of the skills and competencies of its staff. This requires an understanding of the processes and techniques of organisational, team and individual learning. The Performance and Development Review is often the best time for this as individuals can be encouraged to think about how they wish to develop. This can lead to establishing a personal development plan with agreed actions, budgets and support requirements, according to which staff can develop themselves in line with the company’s business objectives.
• Coaching:  For some staff ‘coaching’ is an important tool in learning and developing an individual’s skills and knowledge, resulting in improved job performance and the achievement of wider organisational objectives. This is increasingly being regarded as the responsibility of an individual’s immediate manager and can often link in well as part of the individual’s learning and development and as a part of their PDR. Unlike the performance review process, coaching usually takes place throughout the year and whilst it may come naturally for some managers, others often need training to improve their skills.
• 360-degree feedback: This review mechanism consists of performance data generated from a number of sources and almost always includes those staff whom the individual reports to, their peer group, their staff and very importantly, their customers. The 360-degree feedback approach is commonly used as part of a self-development or management development programme where a more rounded view of the individual is required and with less bias than if such an assessment was conducted only by the individual’s manager.
• Performance measurement approaches: Individual and team performance need to be capable of being linked to an understandable reporting model, one of these is the use of a 'balanced scorecard' that comprises a set of measures that examine the business from customer, internal, learning and financial perspectives; another is the EFQM Excellence Model that indicates that employee satisfaction, customer satisfaction and the company’s impact on society are achieved through leadership and other financial performance indicators.
• Teams: For many organisations teamwork has become an important part of contributing to its business success. In instances where projects justifiably allow for team membership to be long-term, team performance (output, customer service and satisfaction and financial results) can be measured. However, these will require team members to agree on their objectives and receive feedback on their individual contribution to the team and/or project.

This section would not be complete without mentioning the topic of pay as part of performance management. Whilst many organisations believe that when performance management is linked to an individual’s pay, the quality of the performance discussions at the review time deteriorates. Even for those trying to separate these two topics, performance management is often linked to performance-related pay (PRP) at the more senior staff levels of an organisation. It has to be said that PRP is widely regarded as an important element in many performance management schemes, because it strengthens the message that performance and competence are important and offers a mechanism to reward people according to their performance, contribution or competence.

On the other hand, there is also the view that performance-related pay inhibits teamwork because of its individualistic nature, and as such can lead to the demotivation of other team members through their perceptions of the performance and reward of other team members. For the process of performance management to provide tangible benefits, there must be a common acceptance across an organisation that this topic is a serious business feature.  

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