What is Performance Management
Performance management and appraisals are almost universally applied practices in any organization. Although various organisational practices have improved and performance management has evolved over the years, the basis of performance management has remained unchanged. However, research has revealed several evidence-based approaches that increase the impact of performance management processes in organizations. It was also found that reliance on sophisticated analytical techniques and regular management techniques can help make the process more business focused. The mechanics of the performance management and appraisal tool has been extensively researched.
“Performance management is the process of identifying, measuring, managing, and developing the performance of the human resources in an organization.”
Performance management refers to the steps taken by the organization managers to help an employee become better in their development and thus, become increasingly better in their performance to help achieve the goals of the organization. Performance appraisal is evaluating the progress being made by an employee working for the organization, and assessing or measuring their actual performance on a regular or day-to-day basis.
What does the word “Job Performance” mean?
Research done over the years has failed to reach a consensus on what the word job performance actually constitutes. Some researchers referred to it as the behavior that is aimed at achieving personal as well as organisational goals. This reference focuses on the behavior of the employees and not on the final business outcome because of the employees’ behaviours. However, some researchers then argued that the difference between the behaviours that are goal oriented and the effectiveness of those behaviors is critical as some of the business outcomes of an employee’s job performance are not completely in their control. Hence, any negative business outcomes cannot directly be attributed to the employee and their performance on the job.
For example, sales associates are responsible for a number of tasks on the job such as calling potential clients, building new relationships with them on behalf of the company, keeping the company’s existing clients abreast about the new and upcoming products and schemes, resolving customer complaints, questions, doubts and concerns etc. These behaviours of the sales personnel are part of the job profile as an intended way to generate sales revenue, thus producing the desired outcome. However, while the behaviour of a sales personnel towards the client is an essential element in generating sales, it is not the only factor that will result in a positive business outcome. Economic conditions, billing issues, any change in client preferences, product demand are a few factors that may influence the sales revenue generated. Many researchers have also defined job performance as the behaviour of the employees while on the job and the various ways in which these behaviours can contribute to the achievement of business and organisational goals. This definition states that both, the behaviours themselves and the results of those behaviours are contributing factors that influence the success or failure of the organisation. This definition best describes how performance management is conducted with focus on objectives and competencies.
Once the term Job Performance has been understood and defined by organisations, the next step is to understand how the performance management and appraisal process affects the employees’ feelings and how it is perceived by them. Most of the time, performance management and appraisal tends to bring up feelings of unfairness as employees are being judged and rated, and compensations are involved in the process. Hence, researchers have managed to find a few techniques in order to improve perceptions of fairness in the performance management and appraisal process.
These techniques are as follows:
• Offering more frequent appraisals to the employees.
• Encouraging better performance on part of the employees by engaging joint goal-planning between managers and employees of the company.
• Taking steps to improve the managers knowledge of what the job profile of the employees is and what is truly expected of them.
Rating Scales for Performance
There are a number of rating scales that are used to decide performance ratings. There are two well-validated approaches:
• Behaviorally Anchored Rating Scales (BARS)
• Behavioral Observation Scales (BOS)
Behaviorally Anchored Rating Scales (BARS)
Behaviorally anchored rating scales focus on the actions that might be taken by an individual in a hypothetical situation with descriptions for high, low, medium levels of performances. For eg: Rating the quality of work and accuracy of the employees.
Behavioral Observation Scales (BOS)
Behavioral Observation Scales is a much more relevant approach which requires an individual (the rater) to mark employees on how frequently their actions have been observed by the senior management, peers, subordinates and co-workers. Eg: Whether or not they would go out of their way to assist their co-workers and help their teammates, or constantly coming in late to work and leaving early etc. Such actions are rated on a five-point scale, the options of which range from ‘Almost Never’ to ‘Almost Always’.
Rating Distortion in the Performance Appraisal Process
A large amount of research has investigated a rating distortion in the process of performance appraisal. While it is meaningful to identify the types of distortions that have occurred or might occur in the performance management and appraisal system in the future, understanding and knowing how to fix those distortions is more of an advantage.
The key distortions are as follows:
• Halo Error – Raters allow positive performances in one area to inflate the ratings positively in other areas
• Severity Error – Raters give a rating that is too low across the board
• Central Tendency Error – Raters use the midpoint to rate a performance
• Leniency Error – the Raters give ratings that are too high across the board
It is highly crucial for HR practitioners to be aware of these distortions. Thus, a well-designed performance and appraisal management system with competencies that are clearly defined and goals that are clearly set would reduce any problems that may arise due to the rating distortion.
Research also suggests that employees should be included in the development and implementation of the performance management process. Researchers believe that improving employee performance is not the sole objective of the performance management process. According to them, the goal is to improve organisational innovation, thus maximizing long-term growth. Performance management is seen as a partnership and group bonding experience between the management and the employees, in which both sides are responsible for identifying the goals and working towards the steps that need to be taken in order to achieve those goals. However, in many organizations, performance management is still a one-way street where the managers set the goals with little or no input from the employees.
Effective Execution
Although the specific practices might vary from organization to organization, the basic performance management process is consistent across most organizations. The basic process helps the managers to assess individual performance, increase productivity among their employees, and make sure that the employees day-to-day actions are aligned keeping in mind the organization’s goals and deadlines.
The best performance management practices can be summarized in the following steps below:
• Establishing organizational strategies and ensuring proper alignment of individual goals, and overall strategic objectives, responsibilities and goals to the employees or teams from the corporate, division and other sections of the organization
• Identifying performance measurement parameters and performance expectations from the employees, clarifying the process of accountability and measuring competencies and results
• Providing constant coaching and overseeing employee responsibilities and tasks
• Differentiating performance ratings in order to avoid chaos and confusion among the employees of the organization
• Providing incentives to the employees with high performance ratings.
• Documenting and keeping track of individual performances regularly
• Observing employees performing tasks and providing them with job relevant feedback to perform better in anyway that is seen fit
Even today, an effective process for a majority of the organizations would be as follows:
• Senior team sets strategic organizational goals which are then shared with all the managers
• Departmental and individual goals are drafted by the managers
• The goals are then confirmed with the reporting supervisor
• The goals, which are aligned vertically and horizontally, are then finalized through an alignment exercise and equity review
In every organization, it is essential to measure not only the performance results but also the behavior, competencies and standards of performance that are required to obtain the results and attain organizational goals. This approach manages to capture all the key elements of a quality performance plan that is consistent with all the practical and research recommendations. It is imperative to give employees and managers a specific idea of what the actual evaluation process looks like.
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