Price and prize of performance

It gives me a sense of pride and satisfaction to write my 50th ‘Humane Results’ column. There was a price I had to pay in committing time and perhaps letting go of some ‘nice to do’ things. The prize of such action was regular positive feedback I got from the readers by way of emails and chats. It was a case of me experiencing price and prize of performance.

 

Performance matters

Performance has always been a buzz word in business circles. This time of the year is the typical preparation time for a wave of performance appraisals, particularly in organisations where the appraisals are linked to the calendar year.

What is performance? The dictionary meaning is that it is the execution or accomplishment of work. Moving beyond, it can also be regarded as achieving a planned set of objectives utilising the available resources in an efficient and effective manner.

Performance can happen at three levels in a typical organisation. I would call them triple Is.

Individual level: This is the core where a person should deliver what he/she is expected.

Interactive team level: This is the spill-over from the core. When performing individuals collaborate, the interactive team becomes a performing team.

Institutional level: When such collaborative teams perform, that impacts the organisation. Hence, the institution becomes a performing one.

There is one solid “I” needed in order to link the above three Is. That is Integration. I have seen individuals getting rewarded for their performance, while the institution is not performing well. Also, the institution may do extremely well, yet depriving the rewards for individual performance. Both these cases highlight the lack of integration. The solution is to have a properly designed performance management system, with the needed inputs from all involved.

Past and present of performance

Performance management began around 60 years ago as a source of income justification and was used to determine an employee’s wage based on performance. According to www.peoplestreme.com, organisations used performance management to drive behaviours from the employees to get specific outcomes. In practice this worked well for certain employees who were solely driven by financial rewards. However, where employees were driven by learning and development of their skills, it failed miserably.

The gap between justification of pay and the development of skills and knowledge became a huge problem in the use of performance management. The realisation that a more comprehensive approach to manage and reward performance was needed came in 1980s. This approach of managing performance was developed in west, spearheaded by US.

In recent decades, however, the process of managing people has become more formalised and specialised. Many of the old performance appraisal methods have been absorbed into a broader performance management system which aims to be a more extensive and comprehensive process of management.

Some of the developments that have shaped performance management in recent years are the differentiation of employees or talent management, management by objectives and constant monitoring and review.

The development of performance management systems was accelerated by the introduction of human resource management as a strategic driver and integrated approach to the management and development of employees. Also, understanding started to grow that the process of performance management is something that’s completed by line managers throughout the year and not a once off annual event coordinated by the personnel department.

Performance management system

Performance management can be regarded as a systematic process of doing few things. They are:

• Planning work and setting expectations
• Continually monitoring performance,
• Developing the capacity to perform,
• Periodically rating performance in a summary fashion, and
• Rewarding good performance
• Let’s go into details of the above key aspects.

Planning

This is the starting point. In an effective organisation, work is planned out in advance. Planning means setting performance expectations for groups and individuals to channel their efforts toward achieving organisational objectives. Getting employees involved in the planning process will help them understand the goals of the organisation, what needs to be done, why it needs to be done, and how well it should be done.

A lot can be improved in Sri Lankan organisations in this respect. I have seen in some cases how the organisations wait till the months of October and November and convert what they have done as objectives. It is just for the sake of having a set of objectives in order to link with their annual appraisals. Ideally, there is a need to set performance measurements and standards at the outset.

Performance elements and standards should be measurable, understandable, verifiable, equitable, and achievable. Through critical elements, employees are held accountable as individuals for work assignments or responsibilities.

Employee performance plans should be flexible so that they can be adjusted for changing program objectives and work requirements. When used effectively, these plans can be beneficial working documents that are discussed often, and not merely paperwork that is filed in a drawer and seen only when ratings of record are required.

Monitoring

Monitoring well means consistently measuring performance and providing ongoing feedback to employees and work groups on their progress toward reaching their goals. This should be a vital component of performance management.

Ongoing monitoring provides the supervisor the opportunity to check how well employees are meeting predetermined standards and to make changes to unrealistic or problematic standards. By monitoring continually, supervisors can identify unacceptable performance at any time during the appraisal period and provide assistance to address such performance rather than wait until the end of the period when summary rating levels are assigned.

I have heard how managers complain about the lack of time in conducting periodic reviews. What they fail to understand is the importance of keeping their team members on track. Being proactive pays off rather than waiting till the end of the period to react in giving negative feedback for undesirable results. The point here is to devise a simple mechanism for the managers to give informal feedback efficiently. It can be a case of a chat over a meal.

Developing

Employee developmental needs should be evaluated and addressed, in order to manage their performance. Developing in this instance means increasing the capacity to perform through training, giving assignments that introduce new skills or higher levels of responsibility, improving work processes, or other methods.

Providing employees with training and developmental opportunities encourages good performance, strengthens job-related competencies, and helps employees keep up with changes in the workplace, such as the introduction of new technology.

There is a positive trend of people development can be seen in the local organisations. The concern however is the integration. Training and development can go at a tangent without properly linking with performance improvements. What is required is a holistic view and a well-integrated approach.

Carrying out the processes of performance management provides an excellent opportunity for supervisors and employees to identify developmental needs. While planning and monitoring work, deficiencies in performance become evident and should be addressed. Areas for improving good performance also stand out, and action can be taken to help successful employees improve even further.

Rating

This is the critical juncture. From time to time, organisations find it useful to summarise employee performance. Such a course of action helps with comparing performance over time or across a set of employees.

Organisations need to know who their best performers are. Within the context of formal performance appraisal requirements, rating means evaluating employee or team performance against the elements and standards in an employee’s performance plan and assigning a summary rating of record. The rating of record is assigned according to procedures included in the organisation’s appraisal programme. It is based on work performed during an entire appraisal period.

Sri Lankan organisations are increasingly getting used to objectively rate their employees. Sound performance management systems have been established at least in multinationals and high-performing local organisations. The constant challenge is to manage expectations of employees.

Rewarding

This is the thorny task. Employee satisfaction or dissatisfaction largely depends on how rewards are linked to performance. Rewarding means recognising employees, individually and as teams, for their performance.

A basic principle of effective management is that all behaviour is controlled by its consequences. Those consequences can and should be both formal and informal and both positive and negative. Many conflicts both overt and covert were evident in Sri Lankan organisation with this regard. My version is either it is a case of misunderstanding or a miscommunication.

Rewards do not need to be monitory always. Good managers don’t wait for their organisation to solicit nominations for formal awards before recognising good performance. Recognition is an ongoing, natural part of day-to-day experience. A lot of the actions that reward good performance — like saying “thank you” — don’t require specific regulations.

Checklist for performance

Having discussed the details of performance management, it will be worthwhile to look at a checklist to ensure the inclusion of all the elements.  T.V. Rao has attempted to do so, and the following list is what he advocates:

• What is the current system of performance appraisal?
• What are the components?
• What are the objectives?
• What is it currently used for?
• How is it linked to other systems in the organisation?
• Are the line managers taking it seriously?
• Are the line managers adequately trained by it?
• Are there efforts made to constantly keep educating the line managers?
• Are the objectives clear to all?
• Are there too many perceived biases if it is linked to rewards?

Following a structured approach is essential for both the development of a suitable performance management system as well as to operate it with the consent of all involved.

Improving performance management

Based on the discussion so far, the status of performance management in Sri Lankan organisations appears as far from satisfactory. From the current state of being a routine custom with less impact on organisational success, it should rapidly evolve to be a critical contributor for organisational progress. Figure 1 contains the details of impelling forces that drive such a forward path. Also, it highlights the details of impeding forces that hamper the way forward.

As the figure clearly indicates, the only way to improve the performance management is to strengthen the impelling forces to overcome impeding forces. Professional and committed HR managers is one strong factor in that respect.

Way forward

We have come a long way in discussing the details of performance. The time demands us to act. Knowing clearly should lead to doing cleverly. It is up to individuals, interactive teams and institutions to make a difference for them as well as for others. That is the essence with regard to the price and prize of performance.

(Dr. Ajantha Dharmasiri is a learner, teacher, trainer, researcher, writer and a thinker in the areas of Human Resource Management and Organisational Behaviour. He can be reached on [email protected] or through his website www.ajanthadharmasiri.info.)