Module 13: Performance Management, Evaluations and Feedback

13.1 History of performance management

Performance management has been used in companies around the world for more than 60 years. It was used as a way to justify income and would also be used to identify employee wages based on their performance within the company. Companies used this to drive certain behaviours from their employees and to get particular outcomes.

While it did work well, it was never the main draw for employees. Employees showed that they were more driven by developing their skills, so performance management failed. Companies that relied on performance management to determine wages struggled terribly, and then in the 1980's, it became clear that a comprehensive approach was needed in order to manage and reward performance moving forward. The approach was developed in the UK before being adopted in the US and Australia.

Managing people within a working environment has become specialised, which is probably why you are taking this HR course right now. Appraisal methods play a role in performance management and specialised employees and managers are responsible for the entire employee process. Some of these have developed how performance management is seen by employees and how it directs employees to meet the company's objectives and goals.

The development of today's performance management was determined by the following:

-Introducing human resource management into companies as a strategic approach

-Understanding performance management is completed throughout the year and not only

annually.

13.2 Annual appraisals as part of performance management

Many companies have an appraisal system that they use to evaluate their staff. Performance management and annual appraisals are different and yet annual appraisals can be a part of the performance management structure. While this may be confusing, it is important to realise that any employee activities that embrace the company's objectives will be seen and rewarded under both of these strategies; therefore, they can easily be part of one programme.

An effective performance management system will include:

-The link of employee objectives to the company's mission. Clear performance objectives set using actions, results, and behaviours within the company

-Development plans defined as part of this process

-Discussions held throughout the cycle to mentor, provide feedback, and assess employees

Performance appraisal is the process where you judge past performances and don't measure the performance against any objectives. Performance management, on the other hand, is an ongoing process which focuses on objectives and performance.

Outcomes

Staff and managers often find that staff reviews are painful and unwelcome. There are no objectives

to work to when it comes to appraisals and, therefore, it is not easily welcomed or understood by

anyone within the company.

Misdirected bonus

The first outcome of an annual appraisal is the misdirected bonus which is seen so many times when a manager and employee feel that they have given a favourable review, even if the company has not reached its objectives or goals. The company may be losing money and yet they still find themselves paying out good money to employees and managers who have not met targets, goals, and objectives over the stated period.

Emotional experience

Staff members often find that annual appraisals are a stressful experience which can leave them emotional, feeling judged, and uncomfortable. In most instances, an annual appraisal is actually more destructive than constructive. This is due to the fact that there are no objectives to base the employee review on and the employee's future at the company and their wages are at stake. In some instances, an employee and manager that don't get along can result in the employee not getting the increase that they deserve, even if they have performed well, because of personal differences.

Expectations not understood

A poorly communicated appraisal system can result in low confidence levels of employees. This is because there are no rules and how the appraisal process is approached may be inefficient. The process only happens once a year so the overall productivity of the employee is not taken into consideration at any time. The employee has a chance to discuss their salary and the possibility of a promotion in the future, but other than that, the appraisal system doesn't really focus on thecompany's goals and objectives moving forward, giving the employee something to work towards.

Poor timing

Annual appraisals are usually carried out on the anniversary of the employee joining the company, as this is normally the time when increases and bonuses are to be considered. This means that employees feel that this is only being done to reduce their chances of a salary increase, rather than aligning their duties with the company's objectives and ensuring that both come out on top in the end. Appraisal systems are not automated so they don't have much impact on the company moving forward.

Subjective opinions

The problem with annual appraisals is the future of the employee is resting on their manager's opinion. In most instances, the CEO and upper managers don't deal with each employee directly so they rely on the information provided through the appraisal to give them clear insight moving forward.

Performance and promotions are not aligned

Annual appraisals are as good as their name and are completed once a year, which means that managers only think and plan once a year. This should be a serious concern for companies. The majority of these appraisals are completed on paper, which means that most employees who have worked hard and deserve a promotion are overlooked for many years.

Development opportunities are poor

Many employees will leave a company because they don't have any developmental opportunities. The appraisal system does not give an accurate assessment of the company's developmental plan and the employee's duties and skills. Staff members are left disillusioned and end up leaving the company because there are no developmental opportunities for them.

No participation = no consequence

The majority of annual appraisal systems are done manually, which means that the reporting structure is very weak and often the compliance is not visible. What this means is that managers learn how to do the reviews and don't have anything concrete to work to. Employees also learn that there is no consequence for not being reviewed, which can result in them losing faith in their managers and looking for new employment in the long run.

FACT

45% of HR leaders don't think annual performance reviews are an accurate appraisal for employees' work

Source: officevibe.com

13.3 Performance management outcomes

Performance management, once it is implemented properly, can focus on the outcomes the company is hoping for in the long run. The plan needs to be linked to the operational and strategic planning of the company, along with any specific objectives the company may be looking towards. In the event the objective is to increase margins by three percent, then this would be calculated through each department, team, and person within the company that has the ability to influence the margin. Those who prove to be useful and assist in the increase and helping the company achieve this objective will get a favourable review, whereas those who did not play a role and did not focus on helping the company achieve their goal will not get a good review.

Communications are improved

Employees and managers are able to communicate clearly and often regarding objectives that meet the employees' skills and abilities. This includes the employee in the process and ensures that they are aware of what is expected of them at all times, eliminating the risk of an entire year being wasted. The employee should have a performance diary which will be reviewed in management meetings to include in performance notes. This ensures the employee is prepared, they know what is expected of them, and the stress of the review is greatly reduced.

The rules are known by all

A well-structured performance management solution means that communication is effective between manager and employee and the process provides confidence on what the rules are and what the objectives are for the period ahead. Employees are assessed based on how they have achieved their goals and this is based on what has been agreed to by management. Managers will, therefore, be able to appraise staff accurately rather than being based on personal choices and preferences. The entire performance management process is an informed discussion focusing on a certain element, making it easier and more comfortable for both parties.

Open line of communication through improved recording

A company using a performance diary as part of the system will help both of the parties be prepared with what needs to be discussed in the meeting. They will have notes relating to performance during the period and this will help improve confidence and lower stress levels. The parties will both feel more comfortable throughout this process.

Lowers stress levels

Performance reviews happen more often than annual appraisals, which means that you don't want them to be a stressful experience for employees or managers. The objective should be to focus on what the employee needs to complete their jobs to the highest standard, along with confirming the company needs are being met at all times. This means that the manager and the employee will need to be able to communicate in an effective manner in order to achieve the best outcomes.

Appraisals are relevant for everyone

Having reviews on a more frequent basis will ensure objectives are understood and even modified based on the company's unique conditions. This increases the ability to make objectives relevant and helps employees act upon these throughout the performance period.Frequent performance reviews help to improve viability within the company and enable the company to focus on areas where non-performance is achieved. This way, problems can be dealt with quickly and effectively. The performance management system relies on the reporting of those who have and have not achieved their objectives, and then solutions should be provided to ensure that objectives are met moving forward. Frequent review means that plans can be set and executed daily and results are easier to achieve.

Learning and development implemented

Performance management is the start of the learning and development process which is imperative to the motivation and commitment of your employees across the board. Having a set development plan in place will help employees become engaged with the company. Feeling part of the company will help them be more committed moving forward and in time this will provide the company with objectives and development plans for each and every employee.

13.4 Research into performance management

Many companies still rely on the annual appraisal methods to assess their employees. Most employees - up to sixty percent - will have a performance review each year. But in order to help the company achieve its goals in the future, as a HR member, you are going to want to incorporate performance management, setting goals, reviewing the process, and then enabling employees to give their own feedback. Surveys have revealed that managers often still do their own appraisals, which are not objective setting or performance reviews.

Managers don't target the team in order to achieve a strategic goal. This is usually something carried out by the human resources department, providing insight into how the employee is performing when compared to what is expected of them to help the company achieve its own objectives for the performance period. Performance management is the continuous focus on improvement, development, and work systems, while appraisals are the evaluation of the work submitted by employees during the agreed period.

13.5 Guiding Principles

You will find that a majority of the employees working at the company want to contribute to the success of the company. In order to do this, they need to know what the company expects from them and how they can achieve their duties effectively. Performance management is a process that involves working with an employee to help them establish and manage the company goals effectively, helping employees get a good understanding of their value in the success of the company. In order for performance management to be effective, you must:

Provide each employee with the duties they are expected to complete. Communicate what job knowledge and skills are needed to succeed in a chosen position. Ensure each employee has the skills needed, and if not, that there is a plan to help them get the skills they need to complete their duties to the highest standard. Provide regular feedback on how the employee is using their skills to help the company achieve its goals. Put an effective rewards programme in place. There are going to be times where the performance doesn't meet the company's requirements and this is where corrective methods need to be put in place in order to help the employee improve performance and productivity accordingly.

Know their job

You are going to want to take the time to ensure that each employee has an updated job description, so they know exactly what is expected of them at all times. Competencies should be listed based on each person's position. Some employees may not possess the competencies needed, which means you are going to have to incorporate development and training to help them improve their productivity and performance moving forward. You will need to identify the best method to provide each employee with feedback on their performance, ensuring that they understand the methods used to identify how they are achieving goals.

Provide feedback

You must provide feedback in a timely manner. You will need to acknowledge good work and address areas that require improvement. Taking good performance for granted is very easy, but employees need for you to be honest and fair.

When reviewing employee performance, you need to focus on accomplishing the following:

-Identify how work has been completed over the period, giving an overall assessment.

-Identify the goals that were met and possibly where further effort is needed.

-Identify if the employee's competencies match their job description, and update if needed. Identify performance, goals, and achievements expected for the next performance period.

-Give the employee an opportunity to provide their own feedback.

Poor performance

Employees are not always going to excel, which means that you will find yourself dealing with unsatisfactory performance from time to time. This means that you need to take corrective actions to ensure you provide the employee with the training and coaching they need to meet the company's goals and objectives moving forward.

Observe

Observing employee performance should be completed once objectives and standards are established and communicated. It is your responsibility to ensure performance is effective for each and every employee. You need to encourage improvement and identify problems. You will be required to provide each employee with feedback and ensure that they continue their success. Observing strengthens communications and helps you share performance and improve the chances that employees will work hard to meet expectations at all times. Use coaching sessions to work with the employee and focus on establishing goals and standards. These sessions can be one on one and focus on review and performance.

Principles

Effective coaching sessions can help improve communication between HR and employees. It can give the employee what they need to meet their performance objectives while improving motivation and commitment. It can also help improve employee self-esteem and is a chance to provide support.

13.6 Elements of coaching

In order to ensure a coaching session is effective, there are key elements you need to understand:

Only use coaching when you need or want to focus on certain aspects of an employee's performance. Always observe work behaviours and get feedback from others. Ensure you understand why an employee is successful in terms of their performance. Advise the employee in advance of what is going to be discussed in the coaching session. Together you can discuss different options and solutions. You can agree on how to move forward. Schedule a follow up meeting. Take the time to recognise any improvements. Document the elements of the session.

Coaching questions

In order to give feedback that is effective, you need to understand the performance of the employee and there are some questions you are going to want to keep in mind to help you do this:

-How do you expect this employee to perform?

-Have you explained this to the employee; do they understand what is expected of them?

-Is the employee aware of what successful results will look like?

-What obstacles are there which are outside the employee's control? Can these be removed?

-Has the employee ever managed to perform this particular task in a satisfactory manner?

-Is the employee eager to learn and improve?

Coaching behaviours

There are certain coaching behaviours you can use when working with an employee:

-Always focus on the employee's behaviour and never on their personality.

-Ask the employee for their input to identify the problem and find a solution, showing you

understand.

-Set goals.

-Shape behaviour using reinforcement techniques.

During a coaching / observance session

During the coaching session, you should be detailed when it comes to describing good performance. You should always encourage employees to share their ideas, opinions, and feelings. Discuss with the employee how they can continue to produce positive results moving forward and always show how appreciative you are of their continued positive results. If you are conducting a session in order to improve performance, then you will want to ensure that the problem is described in detail along with any causes.

Solutions should be identified and action should be decided on. From here, agree with the employee on a follow up date. In the event your coaching session is about poor work habits then ensure that the problem is described in detail, identify your concerns and ask the employee why this has occurred. Remember to be non-judgmental. Offer your assistance and agree on the action to be taken.

Follow up discussions

The following steps should be taken into consideration when conducting a follow up discussion:

-Review all previous discussions

-Identify any insufficient improvement and discuss in detail, making sure to ask why no improvement has taken place.

-Identify any continued lack in performance, remembering this is not an oral warning and

therefore you cannot threaten. This is purely to identify the issues and come to a solution.

-Discuss possible action to be taken.

-Advise the employee that you are confident in their abilities.

-Document the discussion for later review.

13.7 Performance standards

Expectations are what you will use to identify the performance of an employee. Written standards will be easier to work with and will help you identify how the employee has performed. Written standards will also help reduce the risk of understanding the expectations and providing effective feedback. Performance standards are still a relatively new concept. On observing how an employee performs, you can usually make your own judgment and identify whether their performance is acceptable or not.

But how do you identify what is or is not acceptable? This is why written standards should be in place, reducing the risk of judgment and ensuring that performance acceptance is given where good performance has been carried out. The performance standards will be used as a base to measure performance now and moving forward. The standards can be used by the HR department, supervisors, managers, and employed to ensure performance expectations are being met. It can also identify any gap between actual performance and what is expected moving forward.

Principles

Having effective performance standards can provide you with the following:

-They can be used as a basis for performance communication in an objective way

-They help the employee identify the difference between acceptable results and unacceptable results

-They can help to improve job satisfaction in that employees know when they have performed tasks well. They can be used to provide new employees which what is expected from them in terms of job performance

-They can encourage a trusting and open relationship with all employees at all times.

13.8 Areas of responsibility

Writing performance standards means writing responsibilities for each key area for each employee's job description. This is a long and tedious task, but getting the employee involved will help with the process and with their development moving forward. Standards should be established based on assignment, once the employee's job description has been updated. The discussion should also include a performance review.

Characteristics of performance standards

Performance standards should always describe the conditions that need to exist before performance is rated. This means that a performance standard needs to be:

Realistic and attainable. It needs to provide resources and authority to help the employee achieve the desired goals. The conditions should be described along with what is needed for performance to meet the expectations of the company. The standard should be clearly expressed based on quality, quantity, cost, time, performance, method, and effect. It needs to be measured effectively.

Expressing standards

Expressing performance standards need to be as follows:

Quality will determine how well the work needs to be completed in order of appearance, accuracy, effectiveness, and precision. An example is a document that is submitted without the need for revision 95 percent of the time. Quantity will determine how much work needs to be completed within a set time frame.

An example is a person working in a factory needing to complete 1,000 units in one working day in order to reach the company's goal. Timeline will determine how soon, by when, and within a set period. It will identify what work needs to be completed within a set time period. Resources need to be used to assess performance. This will help reduce waste, save money, etc.

Resources will include equipment needed, lighting, and more. Efforts will be based on performance statements and their effectiveness. This will be determined by the efforts of the employee to meet the company's requirements, such as maintaining a 100 percent storeroom inventory at all times. Performance management will be the employee's behaviour and its effect on their performance. Do they help others in completing assignments, for example? Performance assignments are the requirements that are expected in order for the employee to complete their duties in an acceptable manner.

Performance management

Performance management identifies that while performance standards can be measured, employee performance still needs to be identified. Performance is measured on the responsibility which is assigned to assist the employee to manage their own progress effectively, while assisting you with future discussions regarding performance.

Monitoring and verifying performance can be done using the following methods:

-Observing the employee

-Identifying results of their word

-Focusing on reports including financial, inventory, attendance, etc. Identifying any comments received on how the employee has worked, positive or negative comments received from fellow colleagues or managers.

Module summary

This module focused on performance management, giving you an insight into the history of performance management, the outcomes of using this performance system and the guidelines you may want to follow to ensure a successful programme for the company and employee. You learned about performance standards, written standards, and guidance principles.