The annual employee performance appraisal process continues to be fraught with serious challenges. I've highlighted what I see as the major reasons for performance appraisal failures here and elsewhere. However, the appraisal cycle is an important component of an effective performance management system. It's easy enough to pick out what's not working. It's a much more difficult task to articulate what components are needed in a well-functioning system. Keeping that in mind, I would now like to take a positive approach and talk about what I see as the seven essential elements of an effective performance management system. See if you agree. 1. The goal-setting process aligns all individual goals with team and functional goals. It is a participative event, involving input and agreement from manager and employee. 2. Ongoing and regular communication is critical. The manager has meetings with the team and with each individual employee on a regular schedule. It might be once in 5 or 10 working days. The focus of the discussion is progress updates, with identification of constraints and solutions and future actions. 3. The employee performance appraisal cycle is in alignment with the goal-setting process. 4. The performance appraisal includes feedback from relevant stakeholders, which covers input on performance and behavior (the ‘what’ and the ‘how’). Typically, stakeholders would be customers and suppliers (internal and external), colleagues and managers. 5. Managers and employees are trained in goal-setting and the giving and receiving of feedback, in order to ensure constructive two-way conversations during goal-setting and performance appraisals. 6. Performance ratings are designed to reflect the quantitative and qualitative aspects of goal-attainment, rather than simple numerical scoring. 7. Performance is recognized and rewarded by an array of intrinsic and/or extrinsic rewards, rather than solely via the payment of a monetary award. There are many highly effective performance management systems out there. I wonder what you would add to this list. What do you think of the factors I have highlighted here? I would appreciate your input.
3 Responses
Feedback and flexibility in managing performance
Hi Leslie
I like your summary of the key things that make performance management effective, and would include all those elements!
In particular, research is showing that regular goal setting and reviewing, plus feedback, is much more effective than the dreaded once a year appraisal meeting.
Feedback of course is a critical tool for both the employee and their manager in getting a more rounded view of the employee’s activities and performance when the manager is not there to observe. It’s like a compass; regular checking with feedback gives an indication of progress and can help to re-align activities when necessary. 360 Degree Feedback, from various stakeholders, in a structured format, is helpful.
We have found that another very useful form of 360 Degree Feedback is for colleagues to be able to ‘post’ instant feedback online when they observe their colleague in action. People are encouraged to notice their colleagues doing things right, and to post up their observations as soon as they make them. This is motivational for their colleague, but also feeds into the regular goal reviews and discussions with the employee’s manager. It’s a nice angle, particularly as it works a bit like Facebook, so fits into the more interactive, social model of performance management.
The other key point I would make is that the performance management system needs to be both tailored to the goals and processes of the individual organisation, whilst being simple enough for people to use and understand.
Of course, the more employees and managers use the system, the easier it becomes, so a good performance management system should create a virtuous circle of activity and engagement.
Some further points to add
Performance Management
Hi Joayoubi. Thanks for sharing. I do think 360s are helpful in many circumstances. With peers posting feedback online, have you witnessed any collusion? Similar to Facebook, you can get the "I’ll Like you if you Like me" syndrome. Having the number of positive comments that an employee gets feed into their performance appraisal can drive some dysfunctional behaviors. What can you do to mitigate these kinds of distortion in the feedback system?
Hello Sinead. Thanks for your additions. Your research projects sounds very interesting. To pick up on your first point, I can see that a good relationship between manager and employee is conducive to an effective PMS. What do you say when an employee likes to freeload on the efforts of others, is rude to their peers and hates management per se. Sure, the manager needs to act professionally at all times and treat the employee with respect. However, we wouldn’t ordinarily describe this as a "good" relationship. What then do we do with performance managing this employee?
Re your second point on goal-setting, I would like to see more managers take the lead here. I’ve seen some very woeful attempts at setting goals. If a manager can’t set a SMART goal and track its achievement, then where does that leave the employee? I’m not a big fan of leaving goal-setting entirely with the employee. I would like to see it as a collaborative exercise from the start. What do you think?
Re your third point, I’m with you 120%. The PMS must link with strategic planning, operational goal-setting, training, continuous improvement, recruitment and engagement. Thanks for your great additions to my list. Who else can add some items? Or should we even take one or two away?
Leslie Allan
Author: Training Evaluation Toolkit