Big ideas & public sector performance management: Linking PM with organisational effectiveness Presented to the IPAA Conference September 2012 Professor Alan Nankervis Curtin Business School
Performance management is... All about meeting the organisation s goals while driving high levels of performance and employee engagement
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.
Aim To identify the role of performance management in contributing and adding value to organisational strategies and goals, and hence to develop improved systems.
Organisation and participant details 22.80 Executive/ Senior management Middle management 8.90 Line management/supervisory HRM professional 15.30 54 169 or 54 of respondents were Executive/Senior management 68 or 22.80 of participants were HRM professionals 48 or 15.3 were line management//supervisory 28 respondents or 8.90 were middle management.
Organisation and participant details cont.. 60.40 Industry sector 70.00 60.00 50.00 40.00 30.00 20.00 10.00 0.00 Private sector 39.60 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.
Organisation s current performance management system Formal performance management system 81.80 81.80 90.00 80.00 70.00 60.00 50.00 40.00 30.00 20.00 10.00 0.00 15.00 Yes No 81.80 (256) of the respondents stated that their organisation uses a formal performance management system.
Organisation s strategies, values and culture 100.00 80.00 60.00 Organisation has a mission and/or vision statement 91.70 40.00 5.40 20.00 0.00 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 5.5 19.2 6.7 43.5 25.1 6.1 21.4 5.8 41.9 22.8
Organisation s strategies, values and culture cont.. Organisation has wriiten core values 80.00 70.00 60.00 50.00 40.00 30.00 20.00 10.00 78.90 78.90 15.70 78.90 (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. 0.00 Yes No Explanation Percentage () SD D N A SA The core values are widely known and supported by employees 4.5 15 11 49. 7 19. 8 The core values are important in performance management in this organisation 4.2 13. 9.6 45. 6 27. 2
This organisation has a high performance culture characterised by: Explanation Strongly disagree Disagree Neutral Agree Strongly agree Customer care 2.9 9.6 5.8 49.1 32.6 Quality 1.0 7.7 7.0 54.6 29.7 Flexibility 1.3 17.3 11.5 48.8 21.1 Competence 0.6 9.3 4.8 56.2 29.1 Skills/learning targets 1.6 20.1 15.0 49.9 13.4 Business awareness 1.9 17.9 17.9 50.8 11.5 Working relationships 1.3 8.3 6.4 52.7 31.3 Contribution to team 1.3 10.9 5.4 56.8 25.6 Financial awareness 3.2 17.9 13.4 49.2 16.3 Productivity 1.6 16.3 8.6 52.4 21.1 Aligning personal objectives with organisational goals 3.5 19.5 14.7 41.2 21.1 Achievements of objectives 1.9 7.3 9.9 54.4 26.5
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 1.3 18.5 59.8 20.4 PM is a chore 20.8 50.8 23.3 5.1 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 0.6 1.0 43.8 54.6 0.6 1.0 43.8 54.6 It is essential that line managers own the performance management system 1.0 3.2 50.4 45.4 Performance-related pay is an essential part of performance management 5.8 23.3 52.1 18.8 The focus of performance management should be developmental 1.3 9.9 60.7 28.1 PM should be a continuous and integrated part of the employee line manager relationship 0.6 0.6 56 42.8 The main objective of performance management should be to motivate individuals.6 15.0 63 21.4 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 1.0 3.2 63.5 32.3 3.5 30.0 58.5 8.0 2.8 14.4 54 28.8 Performance management distracts people from more important core activities 26.4 15.2 55.5 2.9 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 0.6 4.5 55.3 39.6 9.6 30 55.3 5.1 5 15.3 58 21.7
Organisation s current performance management system 5.10 36.40 57.50 Yes No No response More than 50 or 57.50 (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.
Organisation s current performance management system cont Who (if anybody) receives training in performance management techniques (n=313) Explanation Frequency All staff 60.90 Direct appraisers 50.20 Head of Department 10.80 Team leaders 32.50 Human resource staff 20.80 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.
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 45.32 25.30 15.65 44.52 Most generally accept its value 49.52 28.70 15.33 52.06 Many are indifferent, but go through the motions 20.76 30.78 28.30 18.93 Many are negative about it 15.54 25.62 14.96 20.36
Performance Management System cont Explanation Strongly disagree Slightly disagree Slightly agree Strongly agree Pay contingent on performance is an essential part of PM 17.90 22.00 32.6 27.50 Line managers own and operate the performance-management process 12.50 19.20 41.5 26.80 PM is an integral part of the employee-line manager relationship 4.80 8.90 42.2 44.10 PM is integrated with other people management processes 5.40 11.80 47.3 35.50 The focus of PM is developmental 4.80 10.20 53.1 31.90 PM integrates the goals of individuals with those of the Organisation 5.40 7.00 44.5 43.10 PM is an integral part of the people mgt strategy 2.60 7.30 35.5 54.60 PM motivates individuals 4.80 10.20 54 31.00 PM is used to manage Organisational culture 1.5 3.5 85 10 The effectiveness of PM is measured in qualitative rather than quantitative terms 7.70 28.80 47 16.50 PM sets stretching and challenging goals 5.80 15.70 53.9 24.60 PM is bureaucratic and time-consuming 29.40 33.50 30.7 6.40 The aims and objectives of PM are well communicated and fully understood 10.50 22.40 46 21.10 PM helps us express the value of the people in the Organisation 7.00 10.50 52.1 30.40
Performance Management System cont Overall how satisfied with the existing performance management system? 60.00 57 57 50.00 40.00 30.00 20.00 15.70 15 12 10.00 0.00 Very satisfied Mildly satisied Mildly unsatisfied Very unsatisfied Approximately 73 of survey respondents are satisfied with their existing performance management system, and 27 dissatisfied.
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 7.7 31.6 50.8 9.9 Innovative capacity 15.3 37.1 43.1 4.5 Cost 10.5 38.7 44.7 6.1 Market share 21.1 31 40.9 7.0 Return on investment 19.2 34.1 40.6 6.1 Profitability 18.25 32.63 37.19 11.93 Quality of workforce 7.3 27.2 53.4 12.1 Efficiency 16.6 29.7 42.8 10.9
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 25 25 25 25 Development of skills 13 19 24 Development of competence 20 30 30 20 Changes in employee behaviour 13.40 27.6 28 29 Changes in employee attitude 15 25 20 Participation rate in PM system 10 15 20 Behavioural goals and measures 20 18 22 40 Analysis of quality of objectives 20 15 15 Productivity 23 25 27 25 Improved quality 25 25 25 25 Enhanced customer care 20 30 30 20 Motivation 18 17 20 Labour turnover 25 10 20 Flight risk calculations 0.00 0.00 0.00 0.00 Employee recognition 15 20 25 44 40 55 50 45 45 40
Some success stories.. The cases of: Daimler Chrysler & South Australian Tourism (Courtesy Peoplestreme.com)
Case Study Daimler Chrysler PM System
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."
Case Study South Australia Tourism PM System
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."
Thank you?