Performance Management Systems - Assignment Example

Performance Management Systems What are the advantages in systematizing performance management in the ways described above Performance management systems (PMS) one of the most important human resource management processes. PMS lays the foundation for other human resources functions. It has been utilized by organizations for quite sometime. In practice however it doesn't really work very well. (Sydanmaanlakka, 55) For the longest time, it has been conducted manually and as technology evolves, so does performance management. Performance reviews and other classical forms of performance management have been part of organizations for several decades and perhaps longer. The tools to help manage and track performance management across organizations have been in place for considerably less time. In fact, most of the oldest of those in use today have only been on the market a little longer than five years. Systematizing the performance management systems has its benefits. Taking into account the case of Saba's Enterprise Performance solutions, it offers the following advantages: First, it focuses people on strategic initiatives, such as responding to new competitors, launching a product, or investing in a new line of business. The identification of strategic initiatives and making it visible across the organization shapes the goals and the competencies required for each individual in the organization. Beneath these are operational objectives that focus on what you need to do to achieve strategic aims. Prioritizing these will identify key areas of activity and areas where additional effort or resource will be directed to deliver improvement. Operational priorities will influence the decisions that managers make on a yearly, monthly and even daily basis. Second, it helps organizations execute on their business strategy by focusing people on strategic initiatives resulting to goal alignment of individual activities and organizational goals. One of the biggest challenges that organizations face in developing their personnel for maximum business gains is aligning development efforts with the organization's goals. In a recent survey by Bersin & Associates, 60% of training managers indicated that their biggest challenge was to be sure their efforts were aligned with the company's business strategy. In fact, the idea of performance management is to combine the viewpoints of the organization, the individual, and the environment. Third, it offers performance assessment capabilities designed to increase the productivity of individuals and the overall organization. Top performing organizations combine performance and improvement in a single agenda, often establishing a senior management group with responsibility for both. These groups, sometimes including executive portfolio holders, take responsibility for: regularly monitoring and acting on key performance indicators that reflect corporate priorities, setting standards for performance and expectations of when action needs to be taken identifying tolerances for performance , asking challenging questions about performance , ensuring that there are robust action plans to address under-performance, redirecting resources where necessary , following up planned actions, ensuring they have led to improvement , and sending out a clear signal that performance and improvement are being taken seriously at the highest level. Lastly, it focuses learning resources on organizational and competitive goals. To be successful today, organizations must focus on understanding who they are and where they want to go (the vision and mission), setting clear expectations of the outcomes to be achieved by the organization (goals and objectives) and describing how people should perform their roles to deliver the vision, mission and goals (the competency system). Having a clear direction and defined outcomes doesn't seem to be sufficient to drive sustainable growth, particularly as competition emerges on multiple fronts in the marketplace. To achieve sustainability in performance, greater focus needs to be placed not only on the results to be achieved and the activities associated with success, but how the work of the organization is to be accomplished. 2.) What are the dangers and pitfalls Like any other systems, the systematization of performance management systems has also its downsides. 1. Measures are not headed towards strategy. In the implementation of systematizing PMS, it is important that at the onset of determining goals and objectives,initiatives or measures are directed toward the individual or organizational strategy. Should the organizational strategy or structure changes, the measures need to be updated in the system. 2. Failure to disseminate measures at all levels. In strategic management, one of the essential tenet is to communicate the strategies at all levels in the organization. Even with a good system at hand, failure to do so would put PMS in vain.(Labarge, 5) 3. Conflicting, Over, and Under Measures - In the formulation of goals and objectives, establishing too many measures may lead to lack of focus or it may be the other way around resulting to not enough measures. The phrase "less is more" may be true on this situation. With too many measure, the process might be become complex. Competency in applying analytics will increasingly be a competitive edge even with the system at hand. Also, measuring [progress too often - may result to wasteful efforts and high costs, resulting in little or no added value. Key performance indicators (KPIs) should be reserved for balanced scorecard measures derived from a strategy map. KPIs should monitor progress toward achieving each of the strategic objectives in the strategy map. In contrast, performance indicators (PIs without the "key" adjective) measure process outputs or project milestones and are displayed in dashboards. 4. Progress measurement. Failure to monitor strategic initiatives may mean failure to know potential problems in the system. A prevailing misconception is that performance management is simply better financial budgeting and control with some measures displayed on dashboards. It is much broader and integrates methodologies such as customer relationship management, lean/quality management, and rolling forecasts. 5.Collection of data. Too much data could result in a mountain of data that are irrelevant or at least the same with other data. Critical to understand what the data will look like, when it will be collected, at what frequency, by whom and what it means, up front. (LaBarge, 8) 6. Flexibility of the system. Systematization of performance management may encounter problems especially when the system is not flexible enough to bend with the organizational structure and the framework to which the OMS data are confined. 7. Failure to base business decisions on data - Developing performance measures or collecting data only to comply with a requirement does nothing to improve the position of the company. 8. Insufficient leadership - Even with good systems at hand, leadership issues still affects the implementation of the system and and in practice. Leadership copes with change that is accelerating, and relies on vision and inspiration to drive behavior. When executives are weak at setting direction, arguably their primary purpose, then good organizational effectiveness will never overcome the resulting poor strategy. ( LaBarge, 10) 9. Users capabilities. Like most other systems, user capabilities are also factors to consider since most of the time it accounts to the large problems encountered with systems. 3. ) Give examples of organizations where you think system like Saba's would be either particularly appropriate or particularly inappropriate. Give your reasons. In my research, the performance management systems of the Internal Revenue Service(IRS) and the National Weather Station can benefit from Sagas Performance Solutions. In a 2001 report to the Congress, the General Accountings Office emphasizes the need for IRS to improve its performance systems for the following reasons:(1) clarity of one strategic goal, (2) clarity of one strategic objective, and (3) linkage between certain strategic measures and strategic objectives. With respect to the first issue, two of IRS' three strategic goals-"service to each taxpayer" and "productivity through a quality work environment"-give a relatively clear indication of IRS' priorities,direction, and the potential impact its policies can be expected to have on individual taxpayers and agency employees. However, IRS' goal of "service to all taxpayers" did not clearly define its intent, which is the application of the tax law with integrity and fairness so that taxpayers that do not comply with the tax laws are not allowed to place a burden on those that do. During the course of the review, the matter is brought to the attention of top IRS executives, including the Commissioner of Internal Revenue. IRS agreed that the goal did not clearly convey its intent. In February 2001, just before the report is issued, IRS released its strategic plan for fiscal years 2000- 05, which showed the goal statement was modified to read "service to all taxpayers through fair and uniform application of the law." This modification of the goal statement makes clearer that this goal covers how IRS applies the tax laws to all taxpayers. With respect to the second issue, IRS' strategic objectives are consistent with its mission and with one exception-the objective of "increasing fairness of compliance"-are clearly stated, specific, measurable, and outcome or output oriented. As IRS recognizes, this fairness objective could be subject to various interpretations and difficult to measure. For example, fairness could mean each individual taxpayer is equally likely to be audited regardless of such characteristics as occupation or income. Fairness could also mean that IRS would target enforcement activities toward pockets of noncompliance so that compliant taxpayers are less likely to be burdened by audit activities. Rewording this objective to more clearly express the desired result could help managers better focus their efforts to achieve this objective. With respect to the third issue, for six of its seven strategic objectives, IRS has developed performance measures that are directly related to the objectives, focus on expected outcomes or outputs, and capture relevant information. However, for two of these six objectives, IRS' performance measures do not capture all the information that is relevant to measuring progress toward achieving the objectives. IRS has relied strictly on taxpayer perceptions as measured by customer satisfaction surveys or complaints to measure how well it is meeting its two strategic objectives of "providing quality service to taxpayers who need help with their returns or accounts" and "providing quality service to those who may owe additional taxes." Although customer satisfaction surveys and complaints provide relevant information, they do not address an important component of IRS' service-whether the taxpayer's problem was properly handled within the context of the tax law. Elements of IRS' existing quality management systems might provide the basis for developing such a measure. The quality management systems currently include assessments such as whether IRS employees properly computed tax liabilities or selected the most appropriate payment method for collecting past-due taxes. In addition, IRS did not have a performance measure for its strategy. (IRS Modernization, 14) On the other hand, the NWS Draft plan of the PMS in the year 2006 shows that there is a need for a comprehensive performance management system for products and services. The system requires for the Development, reporting, and interpretation of key measures and indicators related to the quality, timeliness, accuracy, and usefulness of products and services. Identification of significant performance trends to find successes and address deficiencies. Useful and meaningful information and feedback for forecasters, managers, partners, and customers. Given the following facts, it would be appropriate for IRS and the NWS to make use of Sabas' Performance Suite Solutions. Saba Performance helps organizations continuously align an individual's activities with key organizational goals by establishing a relevant performance review process. This clarifies expectations, increases accountability, and identifies actionable improvements on the case of IRS while for NWS, it may lead to an improved performance management systems and come up with a better framework for better management decisions. Works Cited: 1. Sydanmaanlakka, P. " An Intelligent Organization" 2002 Capstone Publishing p. 55. 1. McPhail, B. Actual and Ideal: Practices and Pitfalls of Performance Management and Electronic Performance In Call Centres. 2. "NWS Management Performance System" 2006. 3. Montebello, A. "Major Pitfalls of Performance Management Systems" 1999 4. "Saba.The People Management Solutions" 5. Cokins, G. "How to Avoid Performance Management Pitfalls " 14 January 2008 6. "The Performance Management" 7. "Value of Performance Systems Management". < http://humancapitalinstitute.org/hci/track_community_talent_management.guide> 8. LaBarge, R. "Major Pitfalls of Performance Measurements Systems". 17 November 1999 9. "IRS Modernization" July 2001 Read More