Performance Management / Appraisal System Design

Convert your business plans and strategies into a framework of balanced performance indicators (or KPI's). Indicators that focus you and your people on what makes your business tick.

Performance Management (the successor of Management By Objectives or MBO) is the essence of managing, and the primary "vehicle" for getting the desired results through employees at all levels in the organisation. In the absence of such a system, staff members are unclear as to the employer's expectations regarding performance objectives and standards/targets, leading to low productivity, costly mistakes, stress, de-motivation, and conflict. A sound Performance Management Process/System subscribe to the crucial Principle: "What gets measured gets done".

The days of having a "one-set-of-measures-fits-all"  Performance Management System are long gone and inherently flawed. Performance objectives and measures need to be specific to job categories and individual roles.

They should also clearly link to Organisational Strategic Goals. We subscribe to the Balanced Scorecard KPI technology to ensure a proper balance in the types of measures (based on four perspectives of the business) used at corporate level, and cascaded down to the lowest position. This ensures vertical and horisontal alignment and integration of the key performance measures throughout the organisation to ensure optimal productivity and bottom-line results.

The Performance Management Cycle involves Four Stages:

1. PLANNING PERFORMANCE:
   Formulating Objectives, Key Performance Indicators (KPI's: Input and Output-based), and Performance Standards (Quantitative, Qualitative, Behavioural) and Targets for each position/employee, using a suitably designed Performance Agreement Form.
   
   
2. MANAGING PERFORMANCE:
   Performance observation, measurement, recording, feedback and coaching, as well as managing the performance environment. This stage includes Performance Coaching and Counselling whenever employee performance or behaviour is not up to standard/expectation.
   
   
3. APPRAISING (REVIEWING) PERFORMANCE:
   Using a suitably designed Performance Appraisal Form that facilitates the smooth running of appraisal interviews (See our Constructive Performance Appraisals Workshop).
   
   
4. REWARDING PERFORMANCE:
   Linking actual performance to appropriate rewards/remuneration to reinforce excellence in performance. (We assist organisations in designing suitable reward/incentive systems or schemes for their employees.)     

Merit Pay / Bonuses

Specific problems include perceived inequity, lack of fairness and transparency, bias, stereotyping, subjective judgements, rating errors, favouritism, etc.

Reasons for this typically include poorly identified and formulated performance measures, poor performance tracking and reporting, lack of performance feedback, coaching and training, poor timing of merit rewards, poor linkage between merit pay and actual performance, and a host of other factors.

The result is frequently conflict during Performance Appraisals. No small wonder that both line managers and staff members generally hate Performance Appraisal time!

One thing managers will always tell you they need is to have a Performance Appraisal System where the subjectivity regarding actual performance is largely removed. HR and line also crave to have a system where the calculation of merit bonuses for all staff is easily understood, perceived as being fair, and devoid of potential unhappiness and conflict.

 
While probably the most widely used approach to reward employees for excellent performance, merit pay is also fraught with dangers if not applied properly.

We have many years experience working with these Performance Management and Human Behaviour principles, and can assist you in the design of a Performance Management System that addresses all the issues mentioned above - reinstating its main purpose, namely to increase staff performance and motivation, and to impact on the organisation's bottom line.