Performance Development Systems have been introduced in the belief that the system will improve the performance of staff across the organisation and, in doing so, improve organisational performance.
In some organisations it is clear that the system has indeed had a measurable impact on the performance of the organisation. In others this is just as clearly, not the case. So how can you be sure that your system is one that will improve your organisations' performance?
To do that first you need to understand the differences between performance development systems that do improve organisational performance and those that don’t. Armed with that knowledge you can build a system for your organisation that really works.
What Is A Performance Development System?
Very briefly, the performance development process includes five meetings between the employee and manager: At the initial two meetings they agree on the employee’s performance goals and learning strategies and other support that will help the employee achieve them. At mid-year they discuss the first half of performance cycle, the manager gives constructive feedback on performance and documents progress-to-date and at year end the manager formally evaluates performances against each goal and documents the whole process. Many organisations also include informal quarterly meetings that are not documented but do check that progress is made and provide the manager with an opportunity to offer additional support if needed.
Benefits Of A Successful Performance Development System
Features of successful performance development systems are that they: align individual performance plans with the organisation’s strategic goals; help align other HRM policy and practice; motivate employees to perform beyond expectations and reinforce behaviour that is consistent with the organisation’s vision and values. Let's look at these benefits individually.
Successful Performance Development Systems Align Employees Performance Plans With Strategic Goals
It is often quoted that any organisation’s performance is the sum of the performance of all its employees, but this is only true if all employees are working towards achievement of strategic goals. To do this they need to know what those goals are and what they can do to contribute to their achievement.
Most managers are familiar with business planning processes which delegate responsibility for achieving strategic goals by defining what each of the organisation’s divisions and branches need to achieve to make the commitment required of them. Performance planning and development processes simply take this down to the level of the individual employee. The manager uses the business plan of the employee’s unit or branch to define the contribution required of each employee and then reaches agreement with the employee on performance goals that will deliver this contribution.
Successful Performance Development Systems Help Align Other HRM Policy And Practice With Strategic Goals
The focus of all HRM policy and practice is (or should be) all about empowering and motivating employees to achieve the organisation’s strategic goals. The Performance Development System can play a vital role in achieving this focus. Most importantly it can align the organisation’s learning and development function by simply demanding that, (with some legitimate exceptions), employee requests for learning and development can only be approved by the Performance Development System, where its relevance to performance goals and effectiveness can be tested. Similarly, performance data collected by the Performance Development System may indicate a need to review position descriptions or recruitment strategies for some positions.
Successful Performance Development Systems Motivate Employees To Perform Beyond Expectations
A well designed Performance Development System motivates employees by providing them with challenging but achievable goals, management support for goal achievement, an understanding of the importance of their work and opportunities for career development. These are all recognised as very powerful motivators of human behaviour.
Successful Performance Development Systems Align Employee Behaviour With Organisational Values
It has long been known that the best (and often only) means of getting employees to behave consistently with your values is by leadership at every level of management. Simply put, employees tend to mimic their manager’s behaviour. The high levels of face-to-face interaction during implementation of a Performance Development System provide a great opportunity for managers to role-model behaviours that are consistent with organisational values.
What Causes Systems To Fail And How Can This Be Prevented?
The most common cause of failure is that managers do not give sufficient time and / or attention to the performance development process. In some cases they do not conduct the goal setting or evaluation meetings at all, claiming they are just too busy. More commonly, they ‘go through the motions’ of conducting and documenting the meetings while viewing the system as nothing more than a bureaucratic incumbrance that is keeping them from their ‘real work’. Their lack of faith in the system is soon ‘caught’ by their employees and creates an atmosphere that results in performance goals that are neither strategically aligned nor motivating. The system deteriorates to one that is purely used to approve the learning and development strategies requested by employees.
You can prevent this from happening (or continuing to happen) by both supporting these managers and providing a disciplined structure for implementing the system.
Support For Managers In Implementing Performance Development
Support is provided by leadership from the top of the organisation, a sound policy and detailed implementation procedure and by providing training in the skills required to implement the system.
Leadership By Senior And Executive Managers
Because these managers have been intensely involved in development of the organisations strategic goals, they have a clear understanding of their intent and what is required to achieve them within businesses across the organisation. Similarly, they understand why each of the corporate values were chosen and the behaviours it is intended to drive. If these managers enthusiastically communicate this understanding during performance development processes with their direct reports, they will promote both strategic alignment of performance plans and adoption of the corporate values. If they similarly promote the benefits of the performance development system itself and model the behaviour required during performance development processes they will have a major impact on how well it is implemented. Note: if this leadership role does not come naturally to these managers they may need leadership training.
The Performance Development Policy
The policy should describe (at a minimum) how the performance development process can be used to align individual performance with strategic goals, its scope and potential benefits and an outline of the performance development process. It will define the rating scales to be used and provide guidance as to how they should be applied. Most importantly, it will contain a clear, unambiguous statement of the responsibilities of managers and employees in implementing the system.
The Performance Development Procedure
This should operate as a stand-alone document which contains all the information needed to implement the system successfully – even if this means duplicating part of the policy. Ensure it includes the agenda for each meeting and detailed instructions for both managers and employees that explains how they prepare for and follow up each meeting. Performance goals will be set with reference to the employee’s divisional or branch plan, position description and past performance.
Performance Development Training
The performance development process requires skills in goal setting, evaluating performance and providing constructive feedback. Many, otherwise highly competent managers do not have these skills. These managers are also reluctant to admit that they find these tasks difficult. For that reason, this training should be made compulsory for all managers. It should be interactive and provide opportunities for managers to practice each of these skills and receive feedback on their performance. The training should also include an explanation of the policy and rrocedure, particularly as they relate to the need for strategic alignment of performance goals and allow discussion of why this is important, so that any issues with implementation are resolved.
Discipline Required To Ensure Implementation Of A Performance Development System
While we would all like to believe that the above support was all that was needed, most of us realise that discipline is also required to implement a Performance Development System. This can be provided by a highly structured Performance Development Form for documenting meetings, a regular audit of compliance with the system and, if necessary, a directive from top management that it must happen.
The Performance Development Form
A highly structured form means there is a box on the form for every piece of information that needs to be recorded. An empty box therefore makes it very clear that something is missing. At a minimum there are boxes for each goal, the target by which it will be measured and the performance rating it received. You may also record constructive feedback given on performance and the employee’s comments on their performance rating. The form can also record training provided and evaluate its effectiveness at supporting achievement of performance goals.
The Performance Development System Audit
Your system needs to be regularly audited to ensure that it is being implemented correctly and within the required timeframes and is implemented fairly and consistently across the organisation.
Directive Leadership
This has been used successfully when other strategies have failed. The Chief Executive simply directs that executive directors cannot have their own performance evaluated (and thereby receive performance pay) until they have satisfactorily evaluated the performance of all their direct reports. This directive then flows down the organisation.
In summary, a Performance Development System will only improve organisational performance if it aligns individual performance goals with the organisation’s strategic goals and values and motivates employees to achieve their performance goals.
When it fails to do so, it is usually because managers do not devote sufficient time or attention to performance development processes.
You can prevent this failure by:
- Training managers in skills required to implement a performance development system
- Resolving other issues that are causing managers to resist implementation
- Developing a sound policy document and detailed implementation procedure
- Using a highly structured form to record the performance development process and regularly auditing the system