Key Steps to Implementing a Performance Management Process
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1 Key Steps to Implementing a Performance Management Process
2 COPYRIGHT NOTICE PPA Consulting Pty Ltd (ACN ) You may only use this document for your own personal use or the internal use of your employer. Without limiting the foregoing, you may not, without the express written permission of the copyright owner, on-sell or commercialise the whole or any part of this document. Except as expressly authorised, and subject to the conditions prescribed under the Copyright Act 1968 (Cth), you may not, in any form or by any means: (a) copy, adapt, reproduce, store, distribute, print, display, perform, publish, communicate to the public, make available to the public or create derivative works from any part of this document; or (b) commercialise the whole or any part of this document without the express written permission of the copyright owner. Disclaimer THE INFORMATION CONTAINED IN THIS DOCUMENT IS OF A GENERAL NATURE ONLY AND IS NOT INTENDED TO CONSTITUTE ADVICE 2
3 Overview These key steps are designed to provide a documentation template which can be incorporated into an organisation s performance management and development process. Performance management is one of the key employee management systems in a business. It should bring together what the business plans to achieve and what individual people are to achieve, as well how they are to do it. It should provide a continuous process of setting targets and providing feedback. Feedback should be two way: in addition to learning how they are progressing, the employee should be able to provide information on progress, resources necessary, training and development required, aspirations, and their overall level of satisfaction. In brief, performance management is about improving performance and satisfaction. If you wish to use this process with a group of your colleagues you may find the workshop manuals and materials available for purchase on our website of interest. Benefits A well thought through, fully integrated performance management and development program, which is actively supported at all levels in the organisation can deliver many benefits: Alignment of employee activity with achievement of company goals. Alignment of employee behaviour with company culture the way we do things around here. Effective use of people and their skills, knowledge and competencies to the advantage of the business and the individuals: enhanced return on the people investment. Greater chance of keeping the good people and attracting more good people. Effectively identifying and meeting learning and development needs. Less drain on company resources as performance and satisfaction issues are dealt with promptly before they become big issues. Contributes to sustainability of the business through an effective tool for succession, career and resources planning. Provides an input to knowing what to reward and how both financial and non-financial. Gives line managers techniques to create environments where employees can be motivated. Establishes an effective methodology for company communication. 3
4 Scope This process can be adapted for use at all levels within the organisation. Key Steps 1. Clarify Objectives A vital first step is identifying some major objectives for the program. Clarifying the need for a performance management system, what and who it should include, what it will deliver and agreeing measures of what a successful implementation will look like. Some organisations choose to complete this step collaboratively with input from various employee groups; others delegate this as an HR Department responsibility; some organisations have a particular champion from anywhere within the business; others will involve outside consultants. Any of these methodologies can work. Whoever is involved in clarifying the objective, a good start is to use the definition above: improving performance and satisfaction. It is also vital to consider the business benefits rather than presenting the concept only from an employee s perspective. Many systems fail because they try to do too much and become too complex. Once a system is running effectively and delivering the expected results, it may be possible to add additional objectives when all parties have confidence in it and can see the value. Experience suggests that a business needs to complete a self examination before committing to implementing a new performance management system: Do employees believe the work we do here is worthwhile and that their individual jobs make a contribution to this? Do we have clear organisational values which we demonstrate consistently? Do we walk the talk? Are employees confident that if they do the right thing they will be recognised for that and appropriately rewarded? If the organisation cannot confidently answer in the positive in each of the three areas, then it helps to be aware of where there may be shortfalls and seek to address such issues concurrently with implementing the performance management system to increase its chances of success. A clear and communicated company vision, supported by clarity in people s jobs helps deliver the first element; Documented, communicated and demonstrated core competencies helps with the second; Formal and informal rewards which are seen as transparent, consistent and fair will help deliver the third. 4
5 2. Secure Senior Manager Buy-in Once the objectives are set with associated expected business outcomes, then the agreement of the senior management team is required before any implementation steps are taken. Most systems fail because they are seen as outside of a manager s day-to-day responsibilities, rather than integral to them senior managers must believe in the process and be seen to actively support it, talking it up at every opportunity and leading by example with line managers who report to them. It is important for senior managers to have a realistic understanding of how much management time will be required to implement and then integrate this system on an ongoing basis. Experience tells us that more time is required in the first year and, conversely, the first year usually delivers the poorest results. Understanding of the system, how it works and what it will deliver; and developing the skills necessary to carry our effective performance management often take time more time than expected. Having a clear understanding of the potential benefits is vital to securing the necessary support of senior managers. 3. Prepare system and supporting materials and documentation Develop a process and documentation to support the system. A template for this is attached. The format of the documentation is less important than the prompts included for managers and their staff to confidently address the key areas. The minimum prompts must include opportunity to: Review performance against the key parts of the job. Review performance against any specific goals or objectives which have been set. Review performance against the organisation s core competencies if they have been defined. Identify any learning and development needs for both short and longer term. Set goals for the next period. Allow for feedback on progress on an ongoing basis. Ensure job descriptions are current and in a form that provides clear and measurable results required. See our website for Key Steps to Writing a Job Description. If they are to be used, ensure core competencies are defined with associated behaviours and are communicated to all staff. See our website for Key Steps for Using Core Competencies. Determine how direct the link will be with pay review will there be an overall rating system or not? The main advantage of a direct link is enhanced objectivity in the pay review process. The main disadvantage is a risk that the rating may become disproportionately important during the process and focus is lost on the other objectives of the performance management and development program. Make the documentation easy to use providing hard copy or electronic or web-based. 5
6 Consider the system as a cycle with goal setting, progress reviews and recognition/feedback on achievement and then determine a calendar for the key elements of the cycle. For example: Will goal setting be completed annually or six monthly? Will progress reviews be every month or two months? Will the formal achievement review the formal performance management and development interview be annually or six months and how will it fit with the pay review timetable and the annual business plans? The timing of the calendar should meet your organisation s specific needs. Experience tells us that more frequent progress reviews save time in the long run and help the process deliver better results. Decide who signs off on the process each cycle and who retains copies of the documentation and why. 4. Ensure managers are trained When the process is agreed and supporting documentation in place, training is the next key step. Most performance management systems fail because of lack of training of the people involved. Managers should be trained in the following: The objective of the system. The benefits of effective performance management for them, for the business and for their staff. Their responsibility for the system. The particular process you are going to use and why. Setting objectives why and how Measuring results do the hard work up front. Providing feedback what and how. Addressing performance issues why and how. Identifying development needs why and how. Managing performance is often an assumed skill in practice many line managers find this difficult and welcome development in this area. The development should include a mix of soft skills and process management as suggested above and should focus on this being an integral element of the line manager s role not an additional or administrative burden. Their own success will be impacted by how well they carry out this vital responsibility. If a manager cannot articulate a simple and common reason for using the performance management and development process, and be supportive of it, then it is unlikely the program will be a success. A typical training workshop to achieve this may run for one and a half days for each small group to allow understanding and skills to develop to the required level. Experience suggests that refresher sessions should also be scheduled. See our website for performance management workshops available. 6
7 5. Ensure all participant employees are trained Most performance management systems fail because of lack of training of the people involved. For the employee groups selected to be included in the program, training should include the following: The objective of the system. The benefits of effective performance management for them individually and for the business. Their responsibility within the system linked to delivering the expected benefits. The particular process you are going to use and why Preparation what they need to do to make the most of the process. Setting objectives why and how. Measuring results doing the hard work up front. Indentifying development needs and own aspirations. Such training sessions can be completed with groups and each may run for a couple of hours or so this can be included in the induction program for new staff after the initial launch of the program. 6. Launch with champion A senior management champion for the process should be identified and should take responsibility for launching the program in an appropriate forum, outlining the major objectives and expected benefits. Subsequent to launching the program, the champion should continually seek opportunities to explore how the program is working, address opportunities to enhance it, talk it up and set the expectation that this is a core element of the organisation s business process. 7. Monitor and review success A schedule should be set and followed for reviewing the implementation of the program against key milestones and against the success measures which were determined in Step 1. Most systems require some adjustment during the first couple of years those which had clear objectives in the first place and were supported by appropriate training and senior management endorsement, are most likely to succeed. It is quite usual for other employee management processes to be reviewed during this time also to ensure full integration of the materials, techniques and supporting mechanisms. We strongly recommend using our training workshop manuals for training both managers and employees in the process of performance management to ensure a greater chance of success. 7
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