Performance Management - Getting it right

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1 Performance Management - Getting it right What is performance management? Performance management is an ongoing process for planning, reviewing and developing performance so that business goals and objectives are more effectively achieved. Businesses need to proactively manage the performance of their employees to have a strategic advantage over competitors by ensuring that individual employee performance is focused on the needs of the business. Often successful businesses implement a system that assists them in managing employee performance. The system usually includes a regular review of employee performance, often done on an annual basis. It is important to note that this annual review is just one component in an effective performance management system that assists businesses to manage employee performance. Performance management needs to occur on an ongoing basis to be effective. These are some of the components of a successful employee performance management system: Plan Develop job descriptions and performance standards for each position in your business that are linked to your business plans/goals. Review Establish a performance review system to assess employee performance at least annually, and a process for reviewing and addressing poor performance. Develop Establish a process for reviewing current employee knowledge, skills and abilities against those required to achieve your business plan / goals. Training and development can then be provided to fill any gaps. When developing performance management systems, processes or tools to use in your business, you should ensure that they are in line with your business objectives and goals. This can be done by considering how to: Use the system, process or tool to create a shared vision of the business strategic objectives; Establish performance objectives for individual employees that are aligned to the business strategic objectives; Evaluate employee performance to ensure performance objectives are being met; Provide appropriate training and development where a need is identified; Link performance evaluation, employee development and rewards to motivate and reinforce desired behaviour. CMSolutions 2013 Phone: Fax: (07) Page 1

2 Why does a business need to manage an employee s performance? Businesses need to manage employee performance to ensure that: Conduct and behaviour is in line with business requirements; Employees are encouraged to work to full potential; It is a high performance workplace with motivated staff; It avoids potential problems with unfair dismissal, unlawful termination and discrimination claims. There are many benefits to a business and its employees in ensuring that employee performance is effective. Some benefits of ongoing performance management include: Business objectives are known to all team members who understand required outcomes and behaviours that are valued by the organisation; Business information is shared which builds trust and facilitates a strong tea, spirit resulting in highly motivated employees; Employees receive regular feedback ensuring they are working in the right direction and have greater job satisfaction from knowing they are doing a good job; Business owner/manager gets to know more about employees and what motivates them to excel; Poor performance is dealt with in the early stages and the risk of receiving an unfair dismissal claim is minimised. This identifies and allows a business to deal with: Training/development needs; Any weakness in performance; Problems/grievances; Employee suggestions on workplace improvements. What performance management tools can a business use to effectively manage employees? There are a number of management tools that businesses can incorporate into their performance management systems to assist in planning, reviewing and developing employees to maximise performance and avoid problems. Job Description Define the role setting out duties and performance targets. Rewards Understand what motivates them to do a good job. Performance Review Assess performance and provide feedback regularly Training Needs Analysis Review knowledge, skills and abilities required for the role/business. There are a number of performance management tools that businesses often use to better manage employees. The most commonly used tools are: Job description; Training needs analysis; Performance reviews; Rewards. CMSolutions 2013 Phone: Fax: (07) Page 2

3 What is a performance review? A performance review is a performance management tool that businesses can develop and use to assess and improve an individual employee s performance. A performance review generally involves: reviewing and updating job descriptions; assessing whether or not performance standards/objectives set for an employee have been achieved (performance standards are sometimes known as Key Performance Indicators (KPIs) or goals/objectives); identifying any aspect of any employee s performance that requires improvement; setting new performance standards/objectives for the next review period; recording the review and agreed outcomes. Reviews record an assessment of an employee s performance, potential for advancement and training and development needs. The process usually involves a review of what has been achieved during the assessment period. You should ensure that a performance review process is established that suits the needs of your business. What are the benefits of reviewing an employee s performance? A business can benefit in many ways from implementing a performance review process whether it is a small or large business. Some benefits include: clear standards in line with business objectives are set and agreed; good performance is identified and rewarded; employees feel valued, are motivated by regular positive feedback and have greater job satisfaction; getting to know more about an employee and what motivated a particular employee can increase productively and ensure business objectives are met; builds trust with employees and encourages them to share information and make suggestions for improving the business; poor performance is dealt with and the risk of unfair dismissal claims are minimized; training/development gaps are identified and filled; facilitates career planning/progression; problems/grievances are aired and resolved; employees understand what behaviours are valued by the organization. Prior to implementing a performance review process you should consider what resources are necessary and ensure that you are committed to successfully implementing the process. What do I need to do to establish a performance review process? There are three essential steps you should take to ensure you design a suitable and effective system: review the needs of your business and determine the purpose of the process; design the process to suit your business; implement the process. CMSolutions 2013 Phone: Fax: (07) Page 3

4 The following section details what is required at each step. Step One Review your business needs and determine the purpose of the process The purpose of the review process should be determined prior to the actual design of the process. Generally the objectives of a performance review process are one or more of the following: review performance with a view to recognizing good performance and / improving poor performance; identify the future potential of an employee; highlight any training and development needs; identify any career planning needs; provide input for salary reviews/bonus payments. Once you have identified how a review process can assist your business and have determined the purpose of the process you are ready to progress to the next step. Step Two Design the process to suit your business There are many methods that a business can use to assess the performance of an employee. The key to successful processes is that they are user friendly, relatively simple to implement use and produce the desired outcomes for everyone involved. The main considerations in designing a process are: how often will reviews be conducted? What method of assessment will be used? Who in the business is to be reviewed? Who should carry out the review? Whether an employee should be able to access their review information or not? How often will reviews be conducted? Remember that performance management is an ongoing process of planning, reviewing and developing performance to meet business goals and objectives. The performance review is a formal process during which a business makes a record of the performance management that has occurred over the review period. There should be no surprises in the performance review process because any issues that have arisen should already have been discussed at the time they occurred. Many businesses choose to conduct a formal review on an annual, bi annual or quarterly basis. Most annual review processes incorporate a mid-year review where necessary. Sometimes a monthly review is appropriate, for example if you have sales people who are required to achieve monthly sales target. How frequently you review performance will depend on the needs of your business. CMSolutions 2013 Phone: Fax: (07) Page 4

5 What methods of assessment will be used? Performance Management Getting it right There are many different types of performance reviews. Reviews can be done by s supervisor, peer or coworker, the employee in a self-assessment or a subordinate to obtain upward feedback. Each of these methods has advantage and disadvantages, and businesses should consider what is most appropriate for the specific business. Larger organizations combine these methods and design a system that involves getting input on an employee s performance from a range of different sources. In deciding who should provide input to an employee s review you need to consider what resources you have to gather information and who can provide valuable information to assist in developing an accurate reflection of what has been achieved over the review period. When selecting and designing a system you can select from a range of different evaluation methods. The most commonly used methods include: Ranking Scales: Rates each employee form the highest to lowest level of performance and is generally most suitable for a business that has a small number of employees who are all doing similar work. Ranking employees is generally a subjective process and it can be difficult to distinguish between performance levels. Rating Scales: Employees are rated against a preset scale based on certain aspects of their work performance. Rating scales are generally numeric or descriptive: Numeric (e.g. 1 to 5 with explanation how to grade for each number) Descriptive (Unsatisfactory marginal acceptable good outstanding) Competency Scales: A profile of specific levels of competency is developed to evaluate employees against specific criteria: Sometimes makes mistake when typing simple documents Usually types simple documents without making mistakes Always types documents accurately It may also be appropriate to include a section in your review that enables you to set performance standards or Key Performance Indicators (KIPs) for employees that are linked to your business plan. If KPIs are established they should be evaluated and reviewed on at least an annual basis. Involving employees in the development of performance review documentation will ensure that the business ends up with something that suits their needs and is also relevant to employees. A sample performance review form is enclosed at the end of this information sheet which can be used at the basis for designing a system for your business. CMSolutions 2013 Phone: Fax: (07) Page 5

6 Who in the business is to be reviewed? Generally all employees in a business are included unless there are specific reasons for not reviewing performance. A business may need to consider developing different types of reviews to ensure that they are relevant for all positions. Reviewing the performance of a manager may involve a process where you gather information and feedback from a range of different sources, but the manager may be the only person who can provide input to another employee s review because of the nature of their work. Should an employee be able to access their review information? Employees are entitles to access certain information related to their employment (eg. time and wages records as specified in the Workplace Relations Regulations 1996). There are no specific legal requirements that allow an employee to access performance review documentation. Generally employers should establish a policy that informs employees what their rights are in terms of accessing information related to their employment. Many employees allow an employee to take a copy of the documentation related to their reviews at the time they are completed. Step Three Implement the process If a business has consulted with employees about the design of the documentation then implementation is a straight forward process. During the implementation phase it is important to communicate with all staff and ensure that they have sufficient information to use it appropriately. Generally this involves: Training for managers/supervisors in how to fairly assess employees and use the system; Training for employees to ensure they understand what their obligations are and the purpose of the system; Providing sufficient documentation to refer to on an ongoing basis; Getting feedback from everyone involved in the process with a view to making continuous improvement to the system. One of the most critical factors in operating a successful system is to make sure that everyone fulfills their accountabilities. It is essential that someone in the business makes sure that reviews are completed for all employees and if this does not occur they follow up with the relevant person to ensure it is done. This gives creditability to the system and sends the message that it is important to the success of the business. A sample performance review form is follows which can be adapted to suit the needs of your business. DISCLAIMER: This is information has been provided by Community Management Solutions as general guidance and should not be treated as advice. Please contact Community Management Solutions for further advice. CMSolutions 2013 Phone: Fax: (07) Page 6

7 (INSERT COMPANY NAME / LOGO) ANNUAL PERFORMANCE REVIEW Name: Position:... Date:... Review Period from to.. Supervisor:. ASSESSMENT OF PERFORMANCE GENERAL INDICATORS COMMENTS RATING Customer service Job knowledge technical skills Quality of work Quantity of work Time management Communication (oral & written) Safety awareness Team work Interpersonal Kills Initiative Acceptance of responsibility / reliability RATING SCALE: 1. Unsatisfactory (Not meeting the requirements for the position) 2. Marginal (Meeting some but not all of the job requirements) 3. Acceptable (Meeting all of the requirements for the position) 4. Good (Some aspects of performance exceed requirements) 5. Outstanding (All aspects of performance exceed requirements) KEY PERFORMANCE INDICATORS COMMENTS ACHIEVED OR X Note: Insert specific Key Performance Indicators relative to the position and business plans/goals and specify timeframe for achievement CMSolutions 2013 Phone: Fax: (07) Page 7

8 OVERALL SUMMARY OF PERFORMANCE Supervisor:.. (Signature) Date:... EMPLOYEE COMMENTS OF PERFORMANCE Employee:. (Signature) Date:. CMSolutions 2013 Phone: Fax: (07) Page 8

9 PERFORMANCE DEVELOPMENT PLANT COMPETENCY REQUIRED/DEVLOPMENT OPPORTUNITY HOW WILL IT BE ACHIEVED? TIMEFRAME FOR ACHIEVEMENT Performance plan discussed and agreed: Employee:.. (Signature) Date:.. Supervisor:. (Signature) Date:.. DISCLAIMER: This is information has been provided by Community Management Solutions as general guidance and should not be treated as advice. Please contact Community Management Solutions for further advice. CMSolutions 2013 Phone: Fax: (07) Page 9

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