Performance Planning & Review: Making Employee Appraisals Work

224 Pages·2004·0.74 MB·English

by  Richard Rudman

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performance
planning and
review
making employee
appraisals work
nd edition
2
Performance Plan/Review TEXT 29/7/03 2:48 PM Page ii
Performance Plan/Review TEXT 29/7/03 2:48 PM Page iii
performance
planning and
review
making employee
appraisals work
nd edition
2
Richard Rudman
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First published in 1995
Copyright © Richard Rudman
This edition first published 2003
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Cataloguing-in-Publication entry:
Rudman, R.S. (Richard Stanley), 1948– .
Performance planning and review : making employee
appraisals work.
2nd ed.
Bibliography.
Includes index.
ISBN 1 74114 103 6.
1. Employees - Rating of. 2. Personnel management.
I. Title
658.3125
Set in 10.5/13 pt Sabon by Midland Typesetters
Printed by CMO Image Printing, Singapore
10 9 8 7 6 5 4 3 2 1
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Contents
1 the challenge of performance management 1
• Grasping the challenge 2
• Adapting to change 5
2 performance and performance management 7
• Performance management and the organisation 8
• Performance management and the manager 10
• Performance management and the job 13
• Performance management and the work team 15
• Performance management and the ‘new’ employee 16
• Panacea or disease? 20
3 developing a performance management system 22
• Deciding on objectives 24
• Conflicts 26
• Effective performance management systems 31
• Overcoming objections 40
4 planning performance 45
• Performance planning and the job description 45
• Writing job descriptions 47
• Job descriptions as performance contracts 49
• Standards, targets, objectives and measures 51
• Principles and benefits of performance measurement 54
• Setting targets 55
• Targets for managers 60
5 reviewing performance 66
• What performance do we review? 67
• How do we review performance? 68
• Performance review methods 69
• Comparison or ranking methods 70
• Standards-based reviews 73
v
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vi performance planning and review
• Results-oriented reviews 88
• Competency-based methods 93
• Problems of error in performance reviews 98
• Who should do the performance review? 101
• Training for reviewers 113
6 discussing performance 115
• Preparing for the discussion 119
• Arrangements for the performance discussion 120
• The structure of the discussion 122
• Communication skills 126
• A model format 133
7 developing performance 144
• The manager’s role 145
• Training and learning 147
• The manager as coach 153
• Coaching for performance improvement 158
• The performance development discussion 159
• Handling performance problems 166
• Career development 169
8 rewarding performance 173
• Performance and rewards 175
• Equity and expectancy 177
• Linking pay to performance review 178
• Effective performance pay schemes 181
• Types of performance pay 182
• Paying for performance 184
9 performance planning and review for teams 193
• Different kinds of teams 196
• Whose performance? 197
• Teams and individuals 198
• What performance? 200
• Who reviews team performance? 204
• Rewarding team performance 207
References 211
Index 216
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chapter 1
the challenge of
performance management
Few people look forward to the annual performance appraisal inter-
view.Managers don’t like being put in the role of judge. Employees don’t
like being evaluated. So performance appraisals get done because the
system requires it. We often hear complaints like this—especially where
employees’ performance is being assessed in isolation from the organisa-
tion’s business and operating objectives. Or where performance appraisal
is a once-a-year event which neither managers nor employees see as a
positive contributor to working relationships or work performance.
Complaints like this lead to calls for performance appraisal to be
abandoned or abolished. For example, the grand old man of quality
management, W. Edwards Deming, once described performance appraisal
as a ‘deadly disease’ (Deming 1986) and Professor Clive Fletcher
suggested in the early 1990s that appraisal might be ‘an idea whose time
had gone’ (Fletcher 1993a).
The critics have some things in common. First, they assert that
performance appraisals fail to achieve their stated objectives and thus
serve no useful purpose. But they don’t examine why this is so. Second,
they condemn the performance appraisal practices of some organisations
as succeeding only in demoralising and demotivating their employees,
and then generalise from these examples. Next, they cite examples of
organisations which have done away with appraisals—but then gone on
to replace them with performance planning or employee development
planning or other processes that mirror the practices of many organisa-
tions that are firmly committeed to their performance management
systems. Fourth, the critics find it difficult to suggest how organisations
might direct and assess what their employees do without using some form
of performance management. It’s easy to take the negative case if you
don’t have to suggest an alternative.
On the other side of the argument are people like Tom Peters—one
of the authors of the ground-breaking In Search of Excellence—who
argues that ‘dynamic employee evaluation is more critical than ever’ in
1
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2 performance planning and review
a world where both organisations and work are changing rapidly (Peters
1994). It seems that most organisations, and many of their employees,
agree. Surveys all over the world show that most organisations use some
form of performance appraisal. It might be true that appraisals work
best in cultures—whether societal or organisational—where people are
comfortable with open discussion and where it is acceptable for managers
and their employees to give and receive feedback. But cultural differences
are a poor excuse for avoiding the review and discussion of perform-
ance: organisations and managers should ensure that all their practices
and behaviours are appropriate and sensitive to the needs and aspira-
tions of their people.
Performance appraisals might add to the pressures on managers’
time, and they might be a source of disappointment or discontent for
employees who feel they are treated unreasonably. Yet a British study
reveals that, for a majority of more than 35000 people it surveyed, the
annual appraisal encourages employees to feel valued, engenders a sense
of personal and career development and increases organisational commit-
ment (Strebler et al. 2001). In many aspects of their working lives,
employees who receive appraisals are significantly more satisfied and feel
significantly more positive than those who do not.
Other UK research suggests that performance reviews have an even
more important role: it seems that employees who receive appraisals
arenot only more positive about their jobs but more competent at them
as well (Borrill et al. 2001). A study of 61 hospitals led by Professor
Michael West of the Aston Business School showed that the extent and
sophistication of appraisal systems was closely related to lower patient
mortality rates. Of the various human resources practices tested by the
researchers, appraisal was found to have the strongest relationship with
patient mortality. Most organisations might not be in the business of
saving lives, but they should appreciate the significance of this research-
based linkage between being appraised and performing well.
grasping the challenge
Managing people and performance has always been a challenge for
organisations and managers. Inevitably, the first performance appraisal
was made soon after the first employer hired the first employee. Ever
since, employers have been making judgments about their employees:
Are they doing what we want them to? How does this person’s perform-
ance compare with others? What are this employee’s strengths? What
training does that employee need? Shall we give this employee a salary
increase? Or promote that employee?
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the challenge of performance management 3
Managers have always found performance appraisal challenging.
Most of us—mistakenly, as it happens—think we are reasonably good
judges of other people. Yet we seem to find it difficult to assess our
employees’ work, to communicate those assessments to the people
concerned, and so achieve the changes in attitudes and behaviour that
will lead to improved performance. Perhaps the problem is the frequent
use of the term performance appraisalwhich—for me, anyway—implies
being judgmental. Perhaps managers are unsure about the information
and skills they use to make and communicate their assessments; perhaps
employees are reluctant to accept these assessments if they could adversely
affect their salaries or careers.
Perhaps neither managers nor employees see performance appraisal
as worthwhile. For managers, it might be just another time-consuming,
bureaucratic requirement; for employees, it might be seen as another
example of top-down management decision-making. Perhaps neither
managers nor employees see the performance appraisal system as a tool
for managing and improving performance. Indeed, it might be worth
asking whether the information collected on appraisal forms is ever
actually used for management decision-making—or simply filed away in
the human resources department.
Internationally, according to one survey, more than 80 per cent of all
workplaces subject their employees to some form of regular performance
appraisal—yet only about 5 per cent are satisfied with the results. Here
are some changes that might help the others to improve this situation.
Try a new name
Performance appraisal should emphasise planningas much as review. So
why not use those words? The new name would be a constant reminder
of this dual function. Accordingly, this book uses performanceplanning
and review in preference to ‘performance appraisal’ to describe the
process of setting employees’ work plans and targets and reviewing their
performance. A change in name might also help to shift the emphasis
away from ‘judgment’ and ‘appraisal’ towards a recognition that sensible
assessments of another person’s performance are not really possible if
you don’t know what that person set out to achieve. Nor can an employee
be expected to achieve performance standards or targets without knowing
what they are from the outset.
Focus on performance
Performance planning and review should focus on performance. Per-
formance appraisal systems that gather data for decisions about
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4 performance planning and review
remuneration, training, promotion and career development are probably
trying to do too much: they might end up doing none of these things very
well. The focus on performance should be just that, and not extend to
consideration of the employee’s personality or other characteristics. In
addition, the key question to ask is ‘How well is this employee perform-
ing in terms of the plans and targets we agreed on?’—not ‘How well is
the employee performing in comparison with others in the work group?’
Make it fit
The performance planning and review process must suit the environment
and culture of the organisation. This requires more than lip service to
the latest business buzz words and management fads: it means the organ-
isation has to be sure that what it does in practice is consistent with the
promise it makes. Does an organisation risk its credibility if it preaches
employee empowerment but makes appraisals compulsory? Is a ‘one-
size-fits-all’ appraisal system consistent with a policy of encouraging
diversity? How do you reconcile a team-based approach to working with
a system of individual performance reviews?
In addition, the people who have to make performance planning
and review work effectively—that is, all the managers and all their
employees—must be given the skills and confidence to use its processes
as part of their normal management and working roles.
Take a total approach
Simply changing the name and emphasis will not be enough unless
performance planning and review is central to the organisation’s total
approach to performance management. It might have been appropriate
once to describe performance appraisal as ‘simply an attempt to think
clearly about each person’s current performance and future prospects
against the background of the total work situation’ (Mayfield 1960).
Back then, of course, the world was a much more straightforward
place. Today, organisations must pay close attention to the manage-
ment of performance as they struggle to be competitive in constantly
changing markets and circumstances. The structure of organisations, the
nature of the work they do and the people they employ have all changed
dramatically over the past few decades—and so has the nature of the
performance that must be managed.
Performance planning and review should be part of a total approach
to performance management. Employees must be able to see how their
work contributes to the achievement of the organisation’s overall goals;