This article is designed to give you a good overview of the background, aims, considerations and best practice that you need to know when implementing or restructuring your performance management procedures. Whether you are thinking about a different approach to performance management, or simply curious about its history or implementation, this document should be useful.
It is not designed to be an exhaustive source, and the aim is not to tell you exactly how you should be running every aspect of your process. That should vary from organisation to organisation depending on what is best for you.
However, we aim to offer some sound advice, much of which we have learned through years of HR experience.
Performance management covers many areas, so we have split this document into three parts, and divided it into easy to view sections. If you have any questions or comments, feel free to get in touch.
You can read Part 2 of this paper here.
What is Performance Management?
Why is Performance Management so useful?
Who benefits from Performance Management?
Most modern businesses now incorporate some form of Performance Management structure, but the type, the degree of importance placed upon it, and even whether or not it is referred to as Performance Management differs from organisation to organisation. It is also not uncommon for companies to have differing understandings of what the term itself means.
This document is designed to equip you with useful information about the nature of Performance Management, tell you a little about how it came to be so widely implemented, and to give you some helpful advice on how you can make it work best for you.
1. What is Performance Management?
The term itself was first coined by Aubrey Daniels, a clinical psychologist who is often referred to as ‘the father of Performance Management’. He was the first to make use of behavioural analysis in business due to his belief that;
“People are the most important element of every organization. With the complex challenges facing American business leaders every day, the science of human behaviour cannot be ignored. Rather, it must be the starting place for every decision we make, every new technology we apply, and every initiative we employ.”
– Aubrey C. Daniels, Ph.D.
Since this initial idea, Performance Management has been adopted by businesses across the globe, and various systems of implementation have been adopted by a vast range of organisations. Performance Management gained popularity in the eighties, and that popularity has grown steadily ever since due to the fact that it is applicable and useful in any situation where people interact.
It can be applied to the performance of an entire organisation, an individual employee, the performance of a department, or indeed, all of these things. The implementation of Performance Management has also changed, and numerous tools and related processes have been developed, which we will look at in section 4.
At its most basic level, the term performance management covers any activity that aims to ensure that goals and targets are consistently set, and met, in the most efficient and effective way possible by utilising and improving upon the skills of staff.
2. Why is Performance Management so useful?
The really useful and overarching application of Performance Management is that it ensures that individuals within any organisation take responsibility for their own actions within that organisation, and for their continual improvement and development of skills. Good Performance Management ensures that employees effectively engage with the goals and objectives of the business as a whole.
Good Performance Management structures are flexible, and applicable to any business. They should give both managers and employees the opportunity and ability to really get involved within the organisation. Individuals are able to communicate their expectations concerning management and workload, and that means managers can be sure their departments and teams are clear about what they should be doing. This on-going communication process means employees are more likely to take pride in their work as well as strive to improve.
According to the CIPD factsheet on Performance Management
’At its best, performance management is a tool to ensure that managers are managing effectively’.
Performance Management has rapidly gained popularity as companies and the way they recruit have changed over time. Many organisations have realised the potential of implementing a solid Performance Management structure as it means their staff are encouraged to continually improve and develop. This increases loyalty to the organisation, and nurturing existing talent within the company often makes better economic sense than recruiting externally. Staff retention and engagement both saves the company money, and ensures employees are working at their most productive. It also means there is much more communication on all levels, ensuring company visions and values are made clear and are being worked towards in a way that pervades all levels of the organisation.
3. Who benefits from Performance Management?
If Performance Management is implemented effectively, it should be of benefit for every organisation that chooses to use it. Whether a company is large or small, has global offices, or simply works from one location, if you have employees and wish to reach business goals and targets, then performance management will provide a huge benefit. The only thing to consider is in in which way you will use it - Performance Management structures are flexible, but you must choose the best fit for your organisation and workflow.
It is a holistic process which should permeate the entire organisation. Performance Management engages employees, which is hugely important in the success of any business. It is a positive process which benefits organisations by improving communications, reinforcing company values, highlighting problems quickly and enhancing employee engagement.
The MacLeod Report – ‘Engaging for Success; Enhancing Performance through Employee Engagement’ found;
‘Engagement is about establishing mutual respect in the workplace for what people can do and be, given the right context, which serves us all, as individual employees, as companies and organisations, and as consumers of public services’.
(P.6 Crown Copyright – a report to government by David MacLeod & Nita Clarke)
Once you have chosen to implement a Performance Management System within your company, you will need to ensure all management are on board, and also that everything is communicated clearly to everyone involved. Without doing this, the system cannot be implemented successfully. Performance Management procedure also works best if the process is transparent, ensuring that all employees are treated equally throughout the entire process.
The Acas booklet on how to manage performance stresses that you must;
‘Make sure you provide opportunities for feedback. You must not discriminate against employees in the way you manage performance because of their age, race, sex, disability, religion or belief or sexual orientation’ [and that] right from the start, you must make communications a priority’.
That is the real benefit of Performance Management. If managed properly, it ensures not only the on-going improvement of your organisation, but that staff are happy, loyal, and problems are both discussed and ironed out quickly and effectively. It also breeds a positive atmosphere that makes the absolute best out of the staff you have. Properly run performance management means that;
HR can go beyond its traditional organisational role and become a strategic partner in most organisations’
(The Impact of Human Resource Management on Organisational Performance: Progress and Prospects – Brian Becker, State University of New York & Barry Gerhart – Vlanderblit University).
It should be holistic, inclusive, and make sure all the departments within your organisation communicate with each other and work together for the overall good of the company, working towards agreed visions.
White Paper on Performance Management Part One
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