Balancing people and profit
Managing performance is one of the toughest functions that a manager performs and one of the most difficult ordeals an employee experiences. There is usually tension in organisations around ‘performance rating time’ and this is due to a few underlying factors that form the foundation of whether a performance management system is successful or not.
A successful performance management system which results in super performance is dependent on the following:
- The manager’s level of skill and competence in conducting performance management with an employee
- The employee’s need to have a positive ‘good or exceptional’ performance interaction with the manager
- Whether the organisation’s reward system is linked to the performance management system
- The culture of the organisation which either supports or inhibit great performance
- The values of the organisation are adhered to by all levels of management and not just a few who buys into it
- The individual who sees super performance as a way to get a substantial raise or promotion or any other stratified , ‘hierarchical’ reward as an outcome of the performance and rating discussions
- An organisation is a ‘living’ complex human system which can make incredible profit with sensitivity by management
- Super performance is directly linked to super management and super leadership
- Employees and management must feel personally connected to the cause and the job
- The organisation sees the employees as citizens first and help to build the society of the future
Evidence has emerged that performance management systems’ differentiation of employees is of an inadequate standard to make valid and reliable compensation decisions. They do not necessarily even lead to better performance but instead have become bureaucratic nightmares. So why are most organisations’ performance evaluation and rating discussions considered to be a negative connotation?
Firstly, people are sometimes seen in isolation, whereas the organisation is actually a total performance system working in synergy with people, processes and management. However, people are usually blamed when performance levels drops.
Secondly, people are held responsible for the solutions of performance issues, even if there is no relation to their own performance.
Thirdly, people’s performance should be evaluated more about their future performance than their past performance – a huge mind-set shift.
To address the obvious gaps in any performance management system managers should focus on a new way to manage performance. This is the core of management’s responsibility.
Focus areas for organisations:
- Effective individual performance evaluation is not achieved by a performance management system alone but by a high performing organisation coupled with high engagement managers. Managers should be in touch with employees through continuous coaching and mentoring.
- Create a culture that considers mistakes to be learning opportunities. Managers should often have contact with employees and help to maintain their self esteem.
- Encourage dismissal of employees who continuously perform poorly. The eighty-twenty rule applies here. Often managers see poor-performing employees as a personal challenge, which leads to them neglecting exceptional employees.
- Encourage managers to consistently recognise outstanding performers.
- Re-think the time, energy and effort that HR and line management devote in order to administer performance management systems as these systems probably do not contribute greatly to the effectiveness of organisations.
Values that meet the expectations of employees
Management must continue to emphasise the importance of organisational values and ethical behaviour. Many organisations see benefits when emphasising these ideas as they help employees to focus on the mission of the organisation and to define acceptable behaviour. It is not enough to say what the values are; managers must help to show how values are displayed within the context of employees’ work.
Employees’ expectations have changed
All employees expect to be rewarded and recognised for their efforts. Value systems have changed dramatically over time whereas performance management systems have not. As today’s workforce diversifies, the value individuals place on traditional rewards, such as money and promotions, are likely to differ. The rewards must conform to the employees’ expectations.
Regularly observe employees’ performance
Many employees will not work in the same place as their managers which makes the observation of performance difficult. Employees want regular performance feedback from their managers. When this is absent it may impact performance as employees are unsure whether they are on the right path. Build regular feedback loops into the performance system and conduct frequent performance discussions with employees.
Technology and performance management
Technology is the most notable recent workplace change. It has changed the nature of how
work is performed as well as what and where work is performed. The new generation of employees have been raised using technology tools and the internet. The potential of using technology in performance management systems has not been fully explored, and the ways in which technology can aid both the employee and the manager is not completely realised in many organisations.
In conclusion: audit the organisation’s performance management system and conduct an evaluation of its benefits in order to find the balance between people and profit.
