PERFORMANCE MANAGEMENT SHORT REPORT

Performance management short report



Performance Management

Performance management is a promise to employees from organizations to create clear accountabilities linked to key business drivers. According to Payant (2006), by implementing effective performance management, the company's top leadership team can measure strategic performance based upon management and business strategies that were agreed upon. This includes management's commitment to communicate effectively, involve associates in managing their own performances, and to focus as much time on developing people as evaluating them (Randall, 2006). Performance management is a combination of theory and practice. It is widely used in public, nonprofit and private sector organizations to create information for planning, implementing and assessing policies and programs designed to address and solve problems. Improvement opportunities present themselves through various operations criteria such as expenses, assets, risks and earnings (Payant, 2006).

Many companies have used performance management with positive results. Performance management is a continual process. The difference between performance management and performance appraisal is that performance appraisal is a one-time, yearend event during which a manager evaluates a direct report's performance; performance management is an ongoing process. Kotter and Heskett (1992) highlighted areas that contribute to a high performance culture, by defining the components of an effective performance management system. That system requires the manager and the associate to be equally involved in the following activities:

1. creating a performance plan for the associate

2. holding frequent, informal discussions to monitor and track performance

3. coaching to help the associate achieve or exceed performance expectations

4. having periodic summary discussions in which the associate's performance is compared to expectations

discussing future-oriented developmental activities for the associate

Effective performance management requires considerable effort and commitment not only from the human resources department, but also from an organization's senior executives. Senior executives must be committed and actively participate in the performance management plan for success to be possible (Holsinger & O'Neill, 2003). Up to seventy percent of failures are due to inconsistent execution from top leadership (Charan, 1999). If senior management makes frequent changes in direction or goals, management throughout the company will struggle with how to support the performance management plan. This will hinder the success of the plan. If the commitment from senior executives is present, performance management can propel success in almost any direction the organization wants to go (Rogers, Wellins, & Conner, 2002). Successful execution of performance management plans has seen results related to employee retention such as 180 percent increase in internal promotions, 75 percent reduction in turnover due to lack of career opportunities, and 82 percent reduction in late appraisals (HRFocus, 2003).

It is critical for the performance plan to be communicated throughout the company in a way that all employees understand (Collins, 2001; Burt, 1982). There also must be a way to measure the progress and effectiveness of the system, and that requires clear action steps, timelines and employee and management accountability. Employee skill levels should be assessed ahead of time to ensure they have the capabilities to perform the assigned ...