Three Types Of Performance Management Systems 4h3r19

Three Types of Performance Management Systems There are three types’ performance management systems that are critical to have in place for a company’s strategic growth. The first is the performance which is a system where both the employee and the manager are involved in creating and analyzing the data. Performance appraisal and performance evaluation are a one-way system of evaluating an employee. In order for a performance management system to be effective, it must tie in with the company’s strategic goals and objectives. It must be a part of the organization’s culture (Mello, 2015). In order for performance systems to measure the right things, they must be carefully designed in conjunction with the employee and their peers. A performance management system needs to be a broad to ensure that three areas are covered – performance deficiencies can be dealt with in a timely fashion, employee behaviors are streamlined with the company’s strategic goals and employees need to be provided with to assist them in increased career development. The following chart shows strategic choice in performance management systems: Link With Training Employee development Determine rewards and compensation Enhance motivation Facilitate legal compliance Facilitate human resource training

Link With Compensation Superior Evaluates

Flexible or Standard Evaluate traits

Peers Evaluate

Evaluate behavior

Subordinates Evaluates Customers Evaluate

Evaluate results

Individual or Team Absolute Evaluation Relative Evaluation

Time Periods Graphic rating scale Weighted checklist BARS BOS

Self-Evaluation

Critical incident Objectives-based (Mello, 2015).

Another area to discuss regarding performance management systems is who is going to evaluate the employee. Traditionally the manager performed this goal but recently, it has been found that this method has too many flaws in the system to be objective. Therefore; other, more effective people are used to evaluate including:  Subordinates can assist in employee development needs and measure employee’s leadership qualities.  Customers are used for as companies become more service-oriented.  Self-evaluations allow the employee to not only identify their flaws but come up with new ways to reduce their flaws and increase their strengths (Mello, 2015). These methods are known as the 360 system due to many individuals contributing constructive criticism however, this is very time consuming. Data from all of the sources must be condensed and shared with the employee. Without careful planning, and strategic, 360 system can be determinately to the company and the employee. Running an ineffective 360 system Page 1 of 3

Three Types of Performance Management Systems will inevitable impact the bottom-line for the company. When used incorrectly, the 360 systems have a tendency to gather too much information which leads to wasted time (Mello, 2015). What to evaluate is important for success as well. Employees are evaluated by their traits (general abilities and characteristics of each employee. They are also evaluated by their behavior such as getting along with others and being on time among other behaviors. The last evaluation that needs to be completed is a way to assess results which can be measured depending on the employees’ role. There are limitations for each measurement however. Any task that deals with the future is unable to be assessed. Secondly, budget cuts and other things out of the employees control may affect the results. Results can be skewed due to critical areas not being measured such as teamwork and motivation. To balance the system, many companies are using job performance competencies that can be tied to the strategic goals of the company. This takes a lot of time to establish and should also make use of a reward structure for each employee (Mello, 2015). How to evaluate is important as well. Performance can be relative or absolute meaning that employees are graded strictly on the job performance while relative shows the employees where they fit in regards to their peers. However, each of these methods can cause skewed results. Some companies are now using a forced ranking system to evaluate employees. Employees are put into one of three categories – the top 20% receive rewards, the top 70% are given promising futures and the bottom 10% are fired. The critics of the system use the fact that force ranking systems can be arbitrary, causing undue lawsuits therefore companies need to monitor this system very closely (Mello, 2015). There are several measures used to evaluate an employee but the best way is to use the objectivesbased performance measurement system. This system involves the employee and the employer to team up and allows employees to establish goals of their jobs with the assistance of the managers. This type of measurement has shown to increase employee morale and uses a negotiation type method between employer and employee. There are three areas that could be issues unless addressed from the beginning of the process. Issues include setting vague objectives, setting unrealistic objectives, and not using a clarification method on how employees will be evaluated (Mello, 2015). There are considerations that must be taken into including that training and development goals need to be in the performance management systems. The reward system needs to be created with the employees in mind and a way to address the newest trend in organizations – the team system trend. There are six reasons why a performance management system fails including the process being complicated, offers no impact on job performance, increases possible legal issues, no connection with rewards, lack of control over the whole process and the complexity of forms used during this type of evaluation (Mello, 2015). Finally, the ways that managers can improve the performance management system including – involving managers in the design of the system, holding managers able for the performance and development of those that the manage, set clear, specific expectations and objectives, tie the performance management systems to rewards for employees, and managers need the of upper management (Mello, 2015). Page 2 of 3

Three Types of Performance Management Systems Performance management systems can measure the right things that will lead to an overall company benefit as well for each employee if time and effort are put into the overall plan and if everyone stays of the same page. All employees must consistently know that their actions ultimately affect the bottom line and the long-term success of the company. Other ways to ensure compliance with long-term strategies includes regularly tracking the process, offering clear issues with the employees (both negative and positive), and to complete clear, regular and companywide appraisals that assist in helping corporate (or long-term success) competencies and gaps in skills that need to be addressed. Ways to tie performance to long-term success include:  Set effective goals that are not only short-term but long-term for each employee  Using SMART goals to increase the likelihood of success  Using performance planning before implementing the system  Make sure that the performance system management is an ongoing process so it can be adjusted to the long and short-term strategic goals  Gathering a plethora of information from many sources  Always document each and every measure and important piece of the system  Train the managers in how to use the performance management system in such a way that longterm success is achieved.  Train the managers in how to use the reviewing process of each employee to achieve goals that are based on long-term success and objectives  Make sure to link performance management with rewards and recognition as this will increase employee input and output thereby ultimately affecting long-term success (MacMillian, 2004). Ultimately, performance management systems can be used to increase employee morale, job satisfaction, and encourages the employee in the development of their job’s goals. They feel more empowered and most of the time they know their job description better than anyone. By using many factors listed above, managers can assure that long-term success will be included in the process as well. Regards, ~ Holley Jacobs References MacMillian, A. (2004). Importance of performance management process & best practices to optimize monitoring performance work reviews/ and goal management. Retrieved from Success Factors Web site: http://www.successfactors.com/en_us/lp/articles/optimize-performance-management.html Mello, J. (2015). Strategic Human Resource Management (4th ed.). Cengage Learning.

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