Managing performance is a topic of recent discussions I’ve had over the last week. People have been sharing with me the many different methods they use. Others have shared, to my surprise, that they currently have no system in place to manage this crucial aspect of maintaining an efficient and productive workplace. From a human resources perspective this is one of the key components to building your strategic outline, implementation and evaluation of many of your human resource systems and programs. As a manager this is a vital aspect of employee relations that provides you the grounds to not just evaluate your staff but an immense opportunity to communicate with them and form a positive and promising employee/employer relationship. Your performance management system in fact is so vital to maintaining your competitive advantage in today’s globalized economy in my opinion without it you may be exposing yourself to issues within your business where if left undiscovered could drastically affect your bottom line.
To make my point even more clear let’s take a quick look at some of the areas that your performance management system could or should be connected to:
- Job design – Through performance management it could be discovered that there is a flaw in the design of a particular job. This can lead to further understanding if facing difficulty retaining or recruitment of staff.
- Training – If you have noticed an issue that is commonly occurring amongst your staff it could mean your staffs has not received proper training. Perhaps the training is flawed or not being facilitated in a way conducive to a high level of transference.
- Career development – Without a system in place to manage performance you could be promoting the wrong people to the wrong job based on a bias you may have and not be aware of. Even worse you may be passing right by those who are incredibly talented within your organization and unknowingly contributing to expensive unintentional turnover. This provides a means to give and receive feedback with staff. A vital component to any business.
- Compensation – Many organizations offer compensation plans based in part or completely via a merit system of some sort. This is a crucial aspect of maintaining a sense of internal equity amongst your staff.
- Legal – Documentation collected in a proper performance management system will assist any organization when faced with legal challenges regarding their decisions. This can vary from an accusation of wrongful dismissal or perhaps even discrimination. Proper performance management systems will reduce the subjectivity involved in making decisions based on a biased opinion.
- Productivity – A proper performance management system gives the opportunity to staff, managers and human resources they need to ensure a healthy and productive working environment is being enjoyed by all and continues to be prosperous as well.
So as we can see a performance management system is certainly an important aspect of an organization. If it isn’t functioning properly it can have a drastically negative impact on the entire organization and bottom line.
Now some people after hearing why a performance management system is important may be thinking, “Well my organization is a small business; much too small for such a complex thing as that.” I’ve heard this countless times! Let me reiterate the same response I have provided to many in the past. “Wrong.”
You see the beauty of a performance management system is the best ones “keep it simple”. They are easy to use, they are understood with ease and they are implemented with little effort. Keeping your performance management system easy should not mean losing sight of why you are doing it to begin with though. Measuring something for the sake of measuring something is not a good reason to measure something. There should be a specific reason for measuring anything; otherwise it’s just a waste of time, effort and money. Some elements should be apparent in the system to make it viable to the organization.
- Goals and objectives – Crucial elements of an organizational strategy that aim to meet the vision of the organization. This provides the organization with direction to which the question can be answered, “What do we want to achieve?”
- Performance measures – Understanding “how well did we do what we wanted to achieve?” is essentially what we want to figure out here. There are a variety of areas to look at that conclude how well the organization did towards reaching its targets. Efficiency and effectiveness of processes and decisions are important to look at in this area.
- Quantity and Quality – measure the amount of products, services or perhaps individual tasks you were able to deliver on and what the quality of the work performed or product produced was. In other words consider this, “how much were we able to do, and was it done properly?”
- Validity and Reliability – Make sure you are measuring the right thing for the right reason in an objective way and that you are consistent in how it is done.
- Results – How do the results of systems in place measure in comparison to the targets? On the mark, better or worse? A question to ask regarding this area would be, “did we achieve what we set out to do or could we have done something better?” This is the area where you evaluate how you can improve your current efficiency or effectiveness.
I hope that this helps some of you understand why it is important to manage performance in your organization. If it isn’t a part of your organizational strategy then now is the time to consider changing that.