Big ideas & public sector performance management: Linking PM with organisational effectiveness

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1 Big ideas & public sector performance management: Linking PM with organisational effectiveness Presented to the IPAA Conference September 2012 Professor Alan Nankervis Curtin Business School

2 Performance management is... All about meeting the organisation s goals while driving high levels of performance and employee engagement

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4 Methodology The survey is a part of larger Australian research study exploring the relationship between performance management systems and organisational effectiveness which has been undertaken for more than 15 years. Administered to a stratified random sample of 313, the survey comprised 5 sections, with 27 questions.

5 Aim To identify the role of performance management in contributing and adding value to organisational strategies and goals, and hence to develop improved systems.

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7 Organisation and participant details Executive/ Senior management Middle management 8.90 Line management/supervisory HRM professional or 54 of respondents were Executive/Senior management 68 or of participants were HRM professionals 48 or 15.3 were line management//supervisory 28 respondents or 8.90 were middle management.

8 Organisation and participant details cont Industry sector Private sector Public sector Almost 42 of respondents were from organisations with more than 1001 employees, 60 (or 128) were from the private sector, and approximately 40 from the public sector.

9 Organisation s current performance management system Formal performance management system Yes No (256) of the respondents stated that their organisation uses a formal performance management system.

10 Organisation s strategies, values and culture Organisation has a mission and/or vision statement Yes No Explanation Percentage () SD D N A SA Mission/Vision statement is widely known and supported by employees in this organisation Mission and/or Vision statement is important in performance management in this organisation

11 Organisation s strategies, values and culture cont.. Organisation has wriiten core values (Approx. 247) of the respondents (313) stated that their organisation had written core values. This suggests that almost 8 out of every 10 participants think that their organisation has written core values Yes No Explanation Percentage () SD D N A SA The core values are widely known and supported by employees The core values are important in performance management in this organisation

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13 This organisation has a high performance culture characterised by: Explanation Strongly disagree Disagree Neutral Agree Strongly agree Customer care Quality Flexibility Competence Skills/learning targets Business awareness Working relationships Contribution to team Financial awareness Productivity Aligning personal objectives with organisational goals Achievements of objectives

14 Your views on performance management systems Explanation Strongly disagree Moderately disagree Moderately agree Strongly agree The most important aspect of PM is setting of challenging and stretching goals PM is a chore PM will only succeed if it is part of an integrated approach to the management of people PM will only succeed if it integrates the goals of individuals with those of the organisation It is essential that line managers own the performance management system Performance-related pay is an essential part of performance management The focus of performance management should be developmental PM should be a continuous and integrated part of the employee line manager relationship The main objective of performance management should be to motivate individuals Performance management is an essential tool in the management of organisational culture The effectiveness of performance management is easier to measure in qualitative rather than quantitative terms Everyone must be trained in performance management techniques for PM system to be successful Performance management distracts people from more important core activities It is essential that performance management is accompanied by extensive communication to ensure its aim are fully understood Performance management should be distanced as far as possible from payment systems Quantifiable measures of performance are essential to successful performance

15 Organisation s current performance management system Yes No No response More than 50 or (180) of the respondents stated that individual, section, team and organisational objectives are linked in the performance management system in their organisation. Whereas more than a third responded negatively. This indicates that almost 6 out of every 10 survey respondents agreed with the linkage of individual, section, team and organisational objectives in the performance management system in their organisation.

16 Organisation s current performance management system cont Who (if anybody) receives training in performance management techniques (n=313) Explanation Frequency All staff Direct appraisers Head of Department Team leaders Human resource staff No one 5.20 Majority of respondents stated that all staff receive training in performance management techniques. Quite a lot of survey respondents think direct appraisers and team leaders receive training.

17 Performance Management System cont Extent of respondents belief that they have buy-in from senior, middle, and line managers/supervisors for PM system (n=313): Explanation Senior mgt frequency Middle mgt frequency Supervisors frequency HRM professional frequency Most are actively in favour Most generally accept its value Many are indifferent, but go through the motions Many are negative about it

18 Performance Management System cont Explanation Strongly disagree Slightly disagree Slightly agree Strongly agree Pay contingent on performance is an essential part of PM Line managers own and operate the performance-management process PM is an integral part of the employee-line manager relationship PM is integrated with other people management processes The focus of PM is developmental PM integrates the goals of individuals with those of the Organisation PM is an integral part of the people mgt strategy PM motivates individuals PM is used to manage Organisational culture The effectiveness of PM is measured in qualitative rather than quantitative terms PM sets stretching and challenging goals PM is bureaucratic and time-consuming The aims and objectives of PM are well communicated and fully understood PM helps us express the value of the people in the Organisation

19 Performance Management System cont Overall how satisfied with the existing performance management system? Very satisfied Mildly satisied Mildly unsatisfied Very unsatisfied Approximately 73 of survey respondents are satisfied with their existing performance management system, and 27 dissatisfied.

20 Outcomes of Performance Management System How effectively is Performance Management System linked to the following organisational outcomes (n=313): Explanation Very ineffective Ineffective Effective Very effective Quality of goods or service Innovative capacity Cost Market share Return on investment Profitability Quality of workforce Efficiency

21 Outcomes of Performance Management System cont Key factors used to determine whether performance management is effective (n=313): Interpreted by position type with 1 being the most important Explanation Executive/ Senior mgt () Middle mgt () Line mgt/ supervisory () HRM professional () Achievements of financial targets Development of skills Development of competence Changes in employee behaviour Changes in employee attitude Participation rate in PM system Behavioural goals and measures Analysis of quality of objectives Productivity Improved quality Enhanced customer care Motivation Labour turnover Flight risk calculations Employee recognition

22 Some success stories.. The cases of: Daimler Chrysler & South Australian Tourism (Courtesy Peoplestreme.com)

23 Case Study Daimler Chrysler PM System

24 Client Quotations Before implementation of an automated PM system : "It was basically an admin function and nothing more." "each performance review required eight pieces of paper so a manager with 10 staff would have 80 pieces of paper floating around." After implementation of an automated PM system : "We had 98 per cent compliance on mid-year performance reviews." "It s cost effective a two per cent increase in performance from staff within 18 months pays for the system and we re already seeing that. " "We wanted to drive a performance-oriented culture, and this allows us to measure and build on it."

25 Case Study South Australia Tourism PM System

26 Client Quotations Before implementation of an automated PM system: "did not allow for the visibility of our corporate strategies, leaving employees unclear on how their own KPIs were critical to the business and was difficult to track when changes were made." "The intent with the... system is to encourage regular open conversation, provide feedback on performance," After implementation of an automated PM system: "All employees, including our Executives participate. Our Chief Executive is a strong advocate of the process and this flows down through the entire business" "improved communication amongst managers and their teams, increased visibility and understanding of our corporate strategies" "streamlined a previously cumbersome and time consuming process."

27 Thank you?