Performance Management System - Essay Example

Performance Management System - Introduction Performance Management System (PMS) is the process of creating a work environment or setting in people which are enabled to perform to the best of their abilities. Performance management is a whole work system that begins when a job is defined as needed. It ends when an employee leaves your organization (Susan M. Heathfield, 2010). According to another definition about performance management, it is a process which contributes to the effective management of individuals and teams in order to achieve high levels of organisational performance. As such, it establishes shared understanding about what is to be achieved and an approach to leading and developing people which will ensure that it is achieved (Armstrong and Boron, 2004) Speaking from a broader perspective, PMS is a replacement for the conventional Performance Appraisal system which happens manually in a lot of organizations. It is more like an automated version incorporating the methods of appraisal with increased efficiency, controlled procedures and transparency in the working ways of organizations. If we focus on the objectives of PMS, we observe that it works in benefiting both the employees as well as the employer. Employees have their yearly objectives and expectations set right at the beginning of the year. Their capabilities and achievements are being measured and recorded in the system on a regular basis. Whereas for employers, it becomes simpler to assign tasks, monitor activities and judge the performance of the employees in a systemized way. In this report we will observe an organization which has implemented Performance Management System for the performance review and evaluation of their employees. Teleflex Medical is a global supplier of medical devices, surgical instruments, and disposable medical products, with an annual turnover of $2.5 billion having 14,000 employees located in more than 23 countries (Reuters, 2007). Analysis In order to carry out proper analysis of the effectiveness of the Performance Management System at Teleflex, we need to look into the best practices as suggested by some of the research groups. According to one of the researches carried out by I4CP, it s indicated that there are several well-defined steps that can make performance management an effective process in any organization (Institute for Corporate Productivity, formerly the Human Resource Institute, 2007). Another study suggested that Performance Management should be strategic by looking at broader and long term organizational issues and integrated with teams, departments and overall goals of the organization (CIPD UK, 2009). First factor to consider while analysing the PMS implemented at Teleflex Medical is the appraisal system used for performance and development reviews. The process at Teleflex focuses on building a ground for carrying out the performance appraisal of employees. Line Manager calls upon a meeting with the team members individually to discuss previous year’s achievements and milestone’s completion. Each team member performs self assessment initially which is submitted to their line manager. Once line manager reviews and approves it, it is sent to a level above. Upon receiving final reviews by all the senior stakeholders, the appraisal is once again discussed with the team member for acknowledgement. CIPD research stresses the importance of a positive relationship between individuals and line managers. Carried out sensitively, the performance appraisal is an important vehicle in developing and maintaining this relationship (Hutchinson and Purcell, 2003). Second factor to consider in the performance appraisal system is the capability of linking learning and development needs of the employees based on the appraisal. At Teleflex, learning and development is the next step after carrying out the performance appraisal process. Each line manager forms Personal Development Plan (PDP) which emphasizes on employee’s talent management, building leadership skills and forming succession plan. PDP also includes attempt to link overall business aim with key areas of responsibilities and measurable objectives (Bratton & Gold, 2001). If need be, there are external coaching guides hired for performing the same as well. According to a survey by CIPD, Taking the temperature of coaching survey reports that in 2009 line managers supported by internal coaches were responsible for about 63% of coaching delivery, whereas coaching by external practitioners was reported by only 15% of the sample. It is quite clear, therefore, that there is a trend towards using line management as the main delivery mechanism for much organisational coaching (CIPD, 2009). Third factor which is very important for Performance Management system to be effective is the management of objectives and performance standards. PMS at Teleflex allows managers to define the objectives and responsibilities of their assigned departments which drill down to employees of that department. It allows managers to discuss and assign objectives to the subordinates. These objectives act like milestones divided over a period of 12 months starting from February of each year through which on-going growth can be measured. The system is quiet flexible to allow alterations wherever necessary in the defined period of a year. Management at Teleflex made sure when they were setting up their PMS that their objective setting procedure is SMART. According to industry best practices, ‘the most well known method for setting objectives is the S.M.A.R.T. way, the SMART approach is well understood amongst managers, but is poorly practiced. S.M.A.R.T refers to the acronym that describes the key characteristics of meaningful objectives, which are Specific (concrete, detailed, well defined), Measureable (numbers, quantity, comparison), Achievable (feasible, actionable), Realistic (considering resources) and Time-Bound (a defined time line) (George Ambler, 2006). The performance management system at Teleflex allows the management to track the completion of the milestones rather than each activity. This gives an overall picture of accomplishment of key responsibilities within given time frame. The quality of each objective is determined by the results of objective achievement thus enabling the depiction of employee potential for additional responsibility and personal success. Another factor to observe is building the competences and competencies of employees. In a 2008 report published by Incomes Data Services, the authors argued that ‘competencies are typically used to define the behaviours that an employer values and believes will help it achieve its long-term goals. Competencies usually fall into two categories behavioural and technical whereas competences cover the key skills and knowledge required to achieve targets (Incomes Data Services, 2008). At Teleflex, both are monitored and mentored for improvement. The PMS system links competencies and competency of employees with the job responsibilities focusing on areas which directly affect accomplishment of objectives. PMS links the job responsibilities with required set of competencies which can impact the business objectives directly. The minimum set of skills required to achieve a target based on employee’s strengths and weaknesses is improved accordingly. Companies also need to consider the measurement criteria of the achieved objectives in comparison to the targets set. At Teleflex, objective fall under three types, they can be financial, customer dependent or business matrix based. If type of objective is Financial, it would be dependent upon the economic change of the division or business unit; if the type of objective is customer centric it means that the objective is dependent on value creation and increasing satisfaction for the customers; if it’s based on business metrics, it means it is dependent on the internal processes and measurement of critical delivery of customer’s requirements for meeting shareholders expectations. These objectives have a rating level which makes it easy for managers to perform the appraisal. There are four objective rating levels which identify employee performance relative to job requirements as per minimum expected results with four being the highest and one being the lowest. Besides the above factors there are few elements which must be linked to the performance management system. These are absenteeism management, reward management, poor performance management, and 360 degree feedback. Absenteeism is directly linked with performance management since it points out to the regularity of employees. According to the research from the CIPD, absenteeism is a significant cost contributor to the businesses. The latest employee absence survey reveals that on average sickness absence costs employers £692 per employee every year and employee absence costs employers 7.4 working days for every member of staff per year; this represents 3.3% of working time (CIPD, 2009). Teleflex currently does not have its attendance and absenteeism system linked with the performance management system. Currently managers observe and control their department’s strengths on their own which does not leave much impact on the annual appraisal. Opinions are however taken in consideration since report over attendance status can be fetched by the online attendance system present there. As far as Reward Management is concerned, recent development in the HRM literature on organizational systems and structures point towards the word “pay” being replaced by the word “reward” (Armstrong, 2001). This indicates a much broader approach to the issue of remuneration; an organization’s reward system is a powerful indicator of its approach to workforce management (Gunnigle et al., 1997). Teleflex has its reward system setup and linked with the performance appraisal’s results. They focus on both monetary and non-monetary benefits. Monetary benefits consist of annual increments, annual bonus or cash rewards, whereas non-monetary benefits include employee recognition and award distribution. Holding people accountable is another key differentiator between those companies that are successfully implementing performance management processes that make a difference and less successful companies. Holding people accountable is linked specifically to a willingness to manage and tackle underperformance (Houldsworth & Jirasinghe, 2006). Teleflex, with its performance rating system can identify which employee is performing under average on the rating scale and in which areas. After analyzing the areas of weakness, discussions are held between manager and employees about the areas that need development. Performance management system at Teleflex is able to generate reports based on required skills, knowledge and abilities of the employee, required to accomplish assigned objectives. There is a consideration of the opportunities for building on strengths and developing current or new skills. Accordingly, employees are sent to internal and external training and behaviour change solutions are looked into, whichever is relevant and can improve their skills for desired expectations. This leads to consideration for current position, future job direction and promotional opportunities. There is another aspect, 360 degree Feedback which is covered under Performance Management system. Three-hundred-sixty-degree or multisource feedback is the process in which subordinates, peers, supervisors, and customers provide anonymous feedback to recipients, has grown in popularity over the past decade (Waldman & Atwater ,1998). It gives better information about employee skills and capabilities. It creates a challenge for the individual to perform well with all stakeholders where interaction is required not just with the line manager. The process is supposed to be anonymous, filled by 8-10 people ideally answering questions relevant to them. Many organizations do not apply this method due to the demand of additional time and multi-response collection analysis. A number of times there may be biased opinion about individuals which may not link to the overall objectives assigned. As for now, Teleflex have appraisal system based on reviews of two levels of manager’s, 360 degree feedback is yet to be applied. Performance review carried out during the discussion between employee and the line manager is reviewed by one more level of management. After adding the input of that level, appraisal form is sent back to the employee for acknowledgement. Conclusion Teleflex Medical has all the major elements of performance management linked to carry out the exercise on their planned dates each year it has a number of benefits for both the employee as well as the organization. PMS at Teleflex highlights the results achieved or objectives met rather than tasks or activities completed. This avoids the misconception which managers may have that more time spent on activities means better results. The lesser the time taken by employees to finish a job or achieve objectives, results in depicting employee efficiency. This helps managers rate the employees well whereas employees learn to work in a challenging environment. Another benefit PMS at Teleflex provides is the alignment of departmental objectives with the organizational goals. Departments work on achieving results rather than portraying the efforts put into it. This benefits the organization by receiving quick results and employee by helping them in dealing with challenges. It provides meaningful measurements leading to productive action plan for employee’s training, performance development, enhancing skills and knowledge base. Through results of PMS, Teleflex can create standards and benchmark for roles to compare with. Like Cater McNamara’s research tells that it brings transparency within the system by making responsibilities and expectation clear right from the beginning of the year. Employees earn their appraisal results based on their contribution towards achieving results. Recommendations Though Teleflex is achieving a number of benefits from their system generated reports of the PMS, there are certain attributes they should consider. There needs to be a thorough training provided to managers year after year on how to conduct a performance evaluation meeting. Managers must be fully aware of all the functions and operate-ability of the system to avoid errors. Consecutive trainings saves time of the users of PMS by reminding them of the entre process flow. Even highly effective managers often feel that their specific performance appraisal skills are deficient, primarily because they use them only once a year (Grote, 1996). PMS must allow connectivity of performance appraisal results to the action items based on the results of the appraisal. For example if results show poor performance, there needs to be a performance development plan linked within PMS and monitored throughout the year. Deming’s argument has been that the cause of poor worker performance lies not within the worker but within the organization (Grote, 1996) Managers must review the assigned goals and milestones on a regular basis to provide support and mentoring to the subordinates. There needs to a module through which managers add their observations about employees all throughout the year and not just at the end of the fiscal year. This way there will be minimal chances of performance observation being missed. Performance management, unlike performance appraisal, is done on an on-going basis (Burke and Cooper, 2010) References Susan M. 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Illustrated Edition. Taylor & Francis Publication. Carter McNamara, (2009) Authenticity Consulting, LLC. Performance Management: Benefits and Concerns: Key Benefits of Performance Management [Online] Accessed from [Accessed on 10 February, 2010] Read More