Performance management

Contents

Our approach 1

What is performance management? 2

People as assets (‘Human capital management’) 2

Defining the job 3

Improving competence 3

Setting targets 4

Motivation and attitude 4

Performance management ‘tools’ 5

Appraisal 5

Appraisal systems 5

So why do organisations have appraisal systems? 6

High challenge, high support environment 6

Components of performance management 7

Consultancy support 7

Using the Hersey-Blanchard ‘Situational Leadership’ model 8


1

Our approach

It is not easy to set up and run an effective system for managing performance.

The starting point is to decide what the strategy for the business actually is.

What is its broad context? What are its longer-term goals? This will shape

how it wants to manage people and teams.

There are three imperatives.

� To be clear about the accountability of each job. What is expected

from it? There must be measurable outcomes.

� To make sure that each jobholder understands those accountabilities,

expectations and outcomes.

� To set out agreed measures of success for the person in the job, and

the controls necessary to review progress such as formal and informal

reviews.

Performance management should be pivotal, as it drives organisational

performance, pay (usually), training and development, promotion, and

dismissal (sometimes).

But most organisations are dissatisfied with the way they operate it.

Most systems have some form of annual appraisal. But all too often it is seen

as bureaucratic – as a burden imposed by Human Resources (HR) rather than

as a spur to the business.

Operational andfinancial measures and

controls

Core processesand systems

Organisationalstructure,

accountabilities andjob design

Businessstrategy

Culture

Values Knowledge


2

Annual appraisal is not necessarily appropriate, unless the ‘cycle’ of work is

best measured annually. But some work may have a shorter (or longer) cycle.

Project-based team working, for example, needs more frequent review. Not

all working groups have the same timeframe.

If this is not taken into account, the system for managing performance will not

be fully effective, because it is not synchronised with the business.

Nor should ‘appraisal’ be an isolated event, whatever the timescale. It is a

continuous process – and a fundamental part of a manager’s job.

‘Appraisal’ is not only the formal review. It has other components, such as:

� a pat on the back, for a one-off success

� the opposite of this, for a lack of success

� a performance/disciplinary process

� coaching.

Any system for managing performance must fit the particular organisation

and its parts. There is no template.

� It should not be complex or create lots of paperwork.

� It must be initiated by the senior managers and owned by the

business, not by HR.

� It must be synchronised with the business cycle.

� It must measure the things that are important for business success.

What are they?

� Skills in managing performance (the ‘how’) are more important than

the system (‘the ‘what’). So start with the people who will do the

managing.

What is performance management?

The term ‘performance management’ wrongly implies that it is a discrete

activity, like setting budgets or introducing new products.

Managing performance is what managers do. If they do it well, the people

who report to them will do their own jobs more effectively.

Managing performance is about getting the best out of people – motivating

and helping them to achieve the objectives of the organisation.

People as assets (‘Human capital management’)

When a business acquires new assets, such as plant and equipment, it usually:

� evaluates different options, specifications, reliability and payback


3

� monitors operating performance, schedules regular maintenance, and

instals upgrades to improve productivity

� decommissions and replaces the plant at the end of its operating life.

But when a business acquires a new employee, all too frequently it:

� offers only a vague job description or instruction

� goes through a subjective and unstructured selection process or the

random formation of a team

� provides no clear objectives

� sets up no proper review of performance or development.

What influences the performance of people?

� Clear accountability and targets

� Competence

� Motivation and attitude

� Organisational factors.

The manager’s job is to provide the ‘environment’ in which people can

perform.

Defining the job

� Start with the business strategy.

� Establish the organisational structure.

� Determine the jobs required.

� Agree on the accountabilities.

� Ensure that the main processes and systems are in place.

� Provide operational and financial measures and controls.

Improving competence

Understand the skills required of the job.

� Technical/professional skills and ‘behaviours’.


4

What are the standards that must be met? Can you describe them?

� Develop the appropriate skills.

� Offer training, coaching, and mentoring, et cetera.

� Measure the improvement – how?

Be prepared to remove anyone who cannot achieve the required standards.

Setting targets

Targets should be SMART: specific, measurable, achievable, realistic, and

time-related; and consistent with the strategy for the business.

Seek improvement, beyond day-to-day activities.

� ‘Continue to operate the plant efficiently’ is not a target

� ‘Improve process efficiency by [x%] by [date]’ is a target.

Ensure that achievement does not detract from the performance of others.

Motivation and attitude

These are matters of ‘conduct’, not of ‘capability’.

Factors that might influence motivation are:

� pay and benefits (absolute, or relative to others)

� pay progression

� non-monetary recognition

� career opportunities

� the attitudes and cooperation of others

� relationship with the manager

� respect

� communication

� job security

� discipline

� organisational constraints (such as lack of autonomy)

� personal or domestic situation

� inherent personality traits.


5

Performance management ‘tools’

� Performance appraisal systems.

� Competence frameworks.

� 360-degree feedback.

� Situational leadership model (Hersey-Blanchard).

� Matrices of skills.

� Managerial audits.

� Assessments of personality, ability and aptitudes.

� Organisational analysis, such as labour turnover, grievances or

absence.

Appraisal

Appraisal should be a continuous process.

An appraisal review should be a ‘health-check’. It provides an opportunity:

� to recognise achievement

� to review the ‘environment’ (competence, motivation, et cetera)

� to plan training, development and succession

� to reset objectives.

Annual might not be the appropriate frequency. It depends on the cycle of

work (project-based jobs?)

Appraisal systems

Generally do not work well, because they:

� are bureaucratic, complex and inflexible (structure, frequency)

� provide no follow-up between formal reviews

� spotlight the performance of the manager as well as of the employee –

causing discomfort all round.

The qualities we seek in leaders (initiative, flair, vision) are generally not

consistent with making them follow formal, structured, detailed systems.

That is why senior managers often ignore them.

Appraisal systems try to apply scientific rigour to the measurement of

performance. But human nature gets in the way.


6

Managers ignore the concept of normal distribution. There is little

differentiation of performance ratings.

Appraisal reviews rarely produce new information. They are often just an

exercise in fitting preconceived views into the categories for rating

performance.

‘It is remarkable how often the first interpretations of new evidence have

confirmed the preconceptions of its discoverer’.

(John Reader, Missing Links, referring to anthropologists).

So why do organisations have appraisal systems?

� As a control mechanism for senior managers.

� To justify the distribution of salary rises (PRP).

� To convert information on people into quantitative data (many

managers prefer numbers to people).

� To force managers to sit down with their employees at least once a

year.

� HR sees it as part of its ‘intellectual capital’.

High challenge, high support environment

High

HighLow

CHALLENGE

SUPPORT

AntagonismIsolation

ContributionHigh Performance

ComfortLow Esteem

ApathyLaziness

Low

High

HighLow

CHALLENGE

SUPPORT

AntagonismIsolation

ContributionHigh Performance

ComfortLow Esteem

ApathyLaziness

Low


7

Components of performance management

Consultancy support

Collinson Grant can help:

� to set the business strategy and establish the organisational structure

� to define the jobs and competences required

� to design the process for managing performance

� to introduce tools or methods

� to design mechanisms for reward

� to coach managers (individuals or teams)

� to measure performance

� to change the culture (where the ‘environment’ inhibits high

performance)

� to restructure the organisation.

There is a need to review how performance is managed when:

� the current system has fallen into disuse or disrepute

� an acquisition necessitates the integration of two systems

� money for salary rises is restricted to high performers

� a new Managing Director wants to introduce new values and measure

compliance

Building Blocks

Foundations

Individual

Trust

RespectManager

DeliverablesGoal setting Accountabilities

Monitoring Improvement

Reward Sanctions

Building Blocks

Foundations

Individual

Trust

RespectManager

DeliverablesGoal setting Accountabilities

Monitoring Improvement

Reward Sanctions


8

� the company wants to select high performers for senior positions, or

poor performers for redundancy

� there is no ‘system’ and the organisation feels the need to start one.

Using the Hersey-Blanchard ‘Situational Leadership’

model

Managing people singly or collectively is made easier when managers and staff

can refer behaviour and style to a commonly understood model, of which

Hersey-Blanchard is one.

Its main principle is that managers or leaders should adapt their style to the

follower’s development (or 'maturity') – how ready and willing (that is,

competent and motivated) the follower is to do the required tasks.

The four leadership styles (S1 to S4) match the development levels (D1 to D4)

of the followers.

The emphasis that leaders place on the task in question, and/or on the

relationship between the leader and the follower, depends on the development

level of the latter.

How leaders adapt their style to suit followers

The Hersey-Blanchard Situational Leadership Model

Leadership style in response

to follower’s development

Low Task/directive High

behaviour

Relationship/

Supportive Behaviour

R4 R3 R2 R1

High

S3 Participating S2 Selling

Low

S4 Delegating S1 Telling

S1: Telling/directing

Follower: (R1) Low competence, low commitment/unable and unwilling or

insecure.

Leader: Focuses on the task rather than on the relationship.

When the follower cannot do the job and is unwilling or afraid to try, the

leader takes a highly directive stance, explaining what to do but with no great

concern for the relationship. The leader may also provide a working structure

for the job and for how the person is controlled.


9

The leader may first find out why the person is not motivated and if there are

any limitations in ability. These two factors may be linked. A lack of belief in

personal capacity can sap confidence and reduce ability.

If the leader focused on the relationship, the follower might become confused

about what must be done and what was optional. So the leader takes a firm

stance – 'Do this' – which makes all the required actions clear.

S2: Selling/coaching

Follower: (R2) has some competence, variable commitment, but is willing or

motivated.

Leader: focuses on the task and on the relationship.

A follower who can do the job, at least to some extent, and who may even be

overconfident, might be demotivated or resistant if ‘told’ what to do. So the

leader needs to 'sell' another way of working – to explain and to clarify the

decisions.

So the leader spends time listening, advising, and, where appropriate,

coaching the follower in the necessary skills.

S3: Participating

Follower: (R3) is competent to do the job but is unwilling because of insecurity

or a lack of confidence.

Leader: focuses on the relationship rather than on the task.

A follower who is able to do the job but is unwilling to take responsibility or

lacks confidence. The leader needs to encourage their participation in

decisions about how tasks should be done.

By engaging the follower and sharing ideas, the leader builds a greater

understanding of the task and fosters confidence.

S4: Delegating

Follower: (R4) is able, willing and confident in doing the job.

Leader: turns over the decisions over to the group, with little focus on the task

or the relationship.

A follower who is very capable and willing to take responsibility for making

decisions and being accountable for the results.

By allowing the follower, or the group, to take responsibility for decisions

about the task, the leader's intervention is kept to a minimum.

120313

Costs

People Organisation

Productivity

Performance Restructuring

United

Kingdom

Mainland

Europe

United States

of America

Complexity, Direct costs, Employee relations,

Employment law, Implementing change, Integrating organisations, Lean,

Managerial controls, Organisational design, Overheads, Performance management,

Pricing, Process improvement, Procurement, Reward, Supply chain,

Transitional management, Value chain analysis, Workforce planning

collinsongrant.com collinsongranthr.com

33 St James’s Square London SW1Y 4JS United Kingdom Telephone +44 20 7661 9382 Facsimile +44 20 7661 9400

Ryecroft Aviary Road Worsley Manchester M28 2WF United Kingdom Telephone +44 161 703 5600 Facsimile +44 161 790 9177

Web www.collinsongrant.com www.collinsongranthr.com

Performance management

Business

Transcript of Performance management