What is performance management?

Performance appraisal Possibly piecemeal formal or informal May be unfair depending on how conducted May link to remuneration Feedback Tool for training and development and improvement 1 review per year- often separate from operational plans

Performance management Benefits of performance management relationship between Strategic and operational plans and individual performance plans

2 main purposes of operational plans Set out how strategic objectives will be achieved Provide a starting point if strategy needs to change/ respond quickly to various changes which affect the business from time to time

Role of operational plans in performance management Strategic plans are implemented through operational plans which are implemented through performance objectives or standards of staff

History of performance management MBO-Management by objectives- takes advantage of theory Y- people’s willingness to work.

Strategic plans are implemented through operational plans which are implemented through performance objectives or standards of staff

Early Performance Management was known as Management by objectives MBO is a total management system in which superiors and subordinates set and agree upon specific objectives to be accomplished within a set time frame for which the subordinates are directly accountable.

MBO systems have the following Commitment to the program Top level goal setting Individual goals which are realistic Participation and mutual goal setting Individuals are autonomous in implementing their plans Review of performance (periodic review with concrete measurement of goals and resolution of problems)

Strengths Individuals- teams know what is expected They get feedback Aids in planning. Targets and target dates are set Improves communication Makes individuals more aware of organisation’s goals More equitable performance evaluation process-(not subjective) Identifies training needs Improves performance appraisal

Weaknesses Initially requires considerable time and effort Training needs for managers and staff in interpersonal skills Goal setting appears difficult at first Problems occur if others let you down in the completion of your goals (or goals are achieved by unethical means) Fails due to inadequate training/ explanation/ management support Staff often have the perception that it makes you work harder.

In summary its purpose then is to: Link staff’s work with performance Motivate Increase feedback on performance and results Develops management potential

Why are key performance indicators needed? KPIs are needed to focus all the individuals in an organisation on the vital aspects of its operation in order to achieve its desired and often publicly stated results. KPIs can be used in a number of ways:

1. To assess the current performance level of an organisation; 2. To support a framework within an organisation that will foster best practice; 3. To focus effort on particular areas of the organisation; 4. To empower employees to make decisions and take appropriate action; 5. To underpin performance standards and objectives for the next business cycle; 6. To produce consistent and reliable management information on which to base decisions; 7. To provide data on which to base training and development activities; 8. To identify areas in which interventions need to be made; 9. To identify and define new organisational purposes or directions; 10. To provide criteria for job evaluation. 

Common reasons why KPIs are developed ·      Process improvement ·      Benchmarking ·      Strategic and business planning ·      Enterprise bargaining ·      New remuneration systems ·      Supporting the introduction of self-managed teams Increasing productivity

Steps in developing key performance indicators

Step 1 Gather existing data ·       Identify and gather copies of the organisation’s vision, mission and values statements. ·       Review the organisation’s strategic plan and the critical success factors that are contained in the strategic plan. ·       Establish priorities

Step 2 Understand the critical success factors     Understand the CSFs Identify why they are important and how they fit into the strategic and operational plans of the organisation.

Step 3 Draft the key performance indicators ·      Draft between 5-7 KPIs for your area of responsibility that can be directly linked to the CSFs. Involve staff.

Step 4 Check that the KPIs fit with the organisational objectives ·       Check that KPIs fit with the strategic and operational objectives of the organisation Are they are clear enough for staff to develop team or work group KPIs for their areas?

Step 5 Adopt the key performance indicators       Adopt them. Disseminate them and expose widely to staff.

We also need to look at the Critical success factors (CSFs) for the planning cycle. CSFs indicate the factors that must go well for its success i.e. areas that must do well or have special attention.  

An organizational plan focuses on the means. A key performance indicator is usually written from the point of view of the means or actions having been completed An organizational plan focuses on the means. ·      Means (how do you get to the end result?) eg Developing new PR materials for distribution ·      Ends (the end result) e.g.% increase of public awareness of the Org’n

What is performance ? Relates to carrying out a work task, duty or objective. There is an implication that it is carried out to a satisfactory level

Performance includes Inputs -skills, knowledge and expertise which individuals have and which they apply to their work processes- behaviours that individuals exhibit while doing their job Outputs- specific, measurable results that the individuals achieve Actions are the means through which individuals perform

Performance standards written to reflect · Why does the job exist? What does the org'n require of me in the next period?

Advantages Motivating Confidence to do job Improve in the job Satisfaction from a job well done Directs energy Self motivator

Without Misdirected No effort Uncaring about work Loss of interest Lack of autonomy Reduced job satisfaction perhaps safety

Definition of performance standards A standard should be measurable, which means it can be seen, heard and or counted. A performance standard is a specific statement of result with a measure of that result eg no errors in wages Through put of work from 15-18 files per day

Performance Standard formula PS =R+M Result + Measure Reduce the number of errors in daily processing from the current level of 54 daily average to 20 daily average Reduce the number of telephone calls relating to processing from 15% to 7% of total calls.

Principles of setting standards Validity Agreement Realism Stretching Clear definition Measurability Limitation Linkages

What skill does the manager need? Communication and supervisory Communication skills written and oral Feedback Listening, counselling, coaching, paraphrasing, reflecting, problem solving Conflict resolution, mediation, interpersonal skills On the job training g. Developmental opportunities, delegation