Creating a Performance Management System

If you want to retain skilled personnel, improve morale or place qualified and deserving persons in the right position, you must have an effective performance management system. Nothing lowers morale more than a perception of unfairness in incentives and promotions. This will certainly occur if there is no objective system in place.

Setting up a performance management system is a complex and continuous process. It is a challenging project. Some of the key activities are:

• Hiring the right people. Getting qualified employees is the starting point of the process. You must have a job description that conforms to the actual functions of the position. The job description itself must be in line with the company culture and vision and mission.

• Setting performance measures and standards. This is the most critical part of the process. There must be a clear understanding of the standards and expectations. Failing to have this done will lead to confusion as to work focus, and even potential legal problems if someone is terminated for poor performance.

• Determining the right performance appraisal method. You may apply traditional or modern methods of appraisal. The traditional style relies basically on ranking, checklist or similar simple rating methods. On the other hand, the modern method utilizes more comprehensive ways of gathering and interpreting information. Among these are essay appraisals, field reviews, critical incident appraisals, work planning and reviews, and management by objectives. While these are more accurate as more data is collected, there is the disadvantage of added cost and complexity.

• Employing the balanced scorecard. This is an excellent framework that converts a company’s vision and strategies into an integrated set of performance measures. It basically provides for a valuation of both financial and non-financial aspects that are crucial to long term growth. This is why it is called a “balanced scorecard”. It provides four perspectives: financial, customer, internal business process, and learning and growth.

• Training for evaluators. A performance evaluation is just as effective as how correctly the evaluator-in-charge fills up the form. Very frequently they are just given forms with very little training on how to go about the process. Since this task is critical there must be sufficient training for evaluators in order for them to perform their function properly.

• Using performance coaching. To hasten the learning process, it is essential to do performance coaching. Coaching is more personal and usually done one-on-one on the job.

• Obtaining employee feedback. To find out how effective the process is, there needs to be a way of getting accurate feedback from the affected employees. This may be difficult if there is a conflict of interest.

• Structuring incentives for good performance. This covers a broad area. Incentives may range from promotions and pay raises, to just tokens of appreciation like a plaque. For those in sales jobs, this is easier to quantity, but for other functions, the process of selecting the metrics is much more difficult.

• Training for improvement. Your performance may be the envy of the industry, but competitors are not standing still and so you must invest in training your manpower to learn new skills and increase their value.

Setting up a performance management system is not a simple task. It is recommended that those planning to implement the system get more information on the subject.

BusinessCoach, Inc., a leading business seminar provider, conducts seminars on Performance Management Systems. You may contact them at 727-5628/727-8860/0915-205-0133, or visit their website www.businesscoachphil.com for details.

Click here to view details of the seminar: Performance Management System »

*Originally published by the Manila Bulletin. Written by Ruben Anlacan, Jr. (President, BusinessCoach, Inc.) All rights reserved. May not be reproduced or copied without express written permission of the copyright holders.