human resource

© Strayer University. All Rights Reserved. This document contains Strayer University confidential and proprietary information and may not be copied, further distributed, or otherwise disclosed, in whole or in part, without the expressed written permission of Strayer University. JWI 521 – Week 3 Lecture Notes (1192) Page 1 of 5

JWI 521 Recruit, Develop, Assess, Reward, Retain

Week Five Lecture Notes

© Strayer University. All Rights Reserved. This document contains Strayer University confidential and proprietary information and may not be copied, further distributed, or otherwise disclosed, in whole or in part, without the expressed written permission of Strayer University. JWI 521 – Week 3 Lecture Notes (1192) Page 2 of 5

PERFORMANCE MANAGEMENT What it Means Performance management must be based on a detailed assessment of current and past performance. In most companies, this assessment is done in the form of an annual performance review. Most people would agree that candid, timely, accurate performance evaluation and feedback are important responsibilities of a good manager. Yet, in most companies, the annual performance review process is chock full of problems, the managers doing the assessing generally dislike it, and the employees being assessed like it even less. Why is it so difficult to do performance management well? And what is the impact when an organization’s performance management systems are ineffective? Why it Matters

• Accurate assessment leads to performance feedback that enables employees to improve

• Effective evaluation allows managers to fill positions with the most qualified people • Competent assessments form the basis for good reward systems for your top talent

“Performance management has become a rule-based, bureaucratic process, existing as an end in itself rather than actually shaping performance.”

Laszlo Bock

© Strayer University. All Rights Reserved. This document contains Strayer University confidential and proprietary information and may not be copied, further distributed, or otherwise disclosed, in whole or in part, without the expressed written permission of Strayer University. JWI 521 – Week 3 Lecture Notes (1192) Page 3 of 5

GETTING PERFORMANCE EVALUATIONS RIGHT

Every company, of course, will have its own practices and processes for performance review and management, but the most effective companies generally follow these four best practices. 1: Give timely performance reviews Most organizations direct their managers to formally review employee performance once a year. Too often, the review is treated as a check the box process, with no follow-up in terms of future planning or rewards. The problems with an annual performance review are numerous. For the manager: if you only do something once a year, you never get good at it; nearly half the feedback you give will be more than six months old, by which time dysfunctional behaviors have grown into habits; and it feels hard to give candid feedback when pay increases depend upon it. For the employee: the review feels overwhelming since it covers a whole year’s work; compensation and career prospects for the next year are on the line; self esteem and confidence may plummet or soar, depending on what is said in a single meeting. Performance should be assessed and formal reviews conducted at least twice a year. Regular informal appraisals should happen much more often. Good managers have regular meetings with each of their direct reports – ideally once or twice a month – to discuss projects, tackle challenges, adjust goals, and set clear expectations. This approach addresses many of the problems inherent in the traditional annual performance review by reducing the high stakes associated with a single annual performance evaluation. 2: Include a performance-development component Regular informal appraisal meetings allow managers to focus on different objectives throughout the performance period and to adjust expectations. It enables them to include a developmental and coaching element in the review process. The level of candor rises sharply. Managers are less likely to avoid criticism when talking to their direct reports, because no one will be fired as a result of the conversation. The mid-year performance review is a time for looking back at past performance and forward to the upcoming second half of the year. The employee will be much more receptive to criticism at this time because his or her whole future does not depend on this meeting. There is time to improve on any areas of weakness before the annual performance review. The employee is given a fair chance to respond to feedback and expectations before they face an evaluation with significant consequences for their career. This formal end-of-year review should focus mainly on the past year. It will include discussion of the following topics: the employee's strengths, based on observed behaviors and accomplishments during the year; development needs, based on observed behaviors and accomplishments; implications of his or her performance on compensation and career progress, and establishment of some initial plans and goals for the upcoming year.

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3: Base evaluations on both quantitative and qualitative measures There is, in fact, no such thing as an objective measure of performance. When asked to name a business activity that can be assessed objectively, most people confidently reply, “Sales.” But even salespeople cannot be evaluated objectively. For example, salespeople are always measured on how much they sell and how profitable those sales are to the company. These metrics are very useful for keeping track of how well the company is doing, and for comparing employee performance. But such quantitative metrics cannot tell you whether customer goodwill was enhanced or systematically degraded because of a salesperson’s interactions. Nor will they let you know whether your senior people are mentoring and sharing best practices with the newer salespeople, or whether they are representing your company well in the community. When comparing the performance of one salesperson with another, quantitative evaluation measures do not usually reflect the level of difficulty of the jobs being compared. For example, which do you think is the more important determinant of sales success – the skill of the salesperson, or the prosperity of the territory? In a national chain of real-estate sales offices, salespeople who are canvassing the most affluent neighborhoods will inevitably bring in more money. But that does not necessarily prove that their sales techniques are better, since they start with a built-in advantage due to their wealthier customer prospects. Quantitative measures are valuable, but they rarely tell the whole story. For example, to improve customer service, many call centers keep track of how many times an employee's telephone rings before it is answered. Of course, this metric tells the company nothing about how courteously the customers are treated or whether their problems are resolved, which are more important to customers than whether the phone is picked up on the second or third ring. These dimensions of performance cannot be measured with quantitative metrics, but can be assessed through qualitative measures. They may be overlooked, since courtesy and problem resolution are harder to measure than the time taken to answer the phone. 4: Take into account the importance of the work performed Organizations often fail to consider not only the value of the work an individual actually does, but also the value of the work assigned to a particular position. As you have learned, positions that are strategically important today may not be tomorrow. Consequently, every company needs to continually assess whether or not the tasks their employees are performing are still adding value. The best-run organizations do this form of performance evaluation, but many companies do not. Leaders and senior managers have a responsibility to step back on a consistent basis, so as to assess teams and individual employees in terms of the value added by their work. Without periodic reevaluation of performance across teams, departments, and the company, situations invariably develop in which hardworking, loyal employees continue their unbroken record of high performance, while the tasks they are performing have ever-lower strategic value.

© Strayer University. All Rights Reserved. This document contains Strayer University confidential and proprietary information and may not be copied, further distributed, or otherwise disclosed, in whole or in part, without the expressed written permission of Strayer University. JWI 521 – Week 3 Lecture Notes (1192) Page 5 of 5

GETTING THE MOST OUT OF THIS WEEK’S CLASS

As you read the materials and participate in class activities, stay focused on the key learning outcomes for the week:

• Compare different approaches to performance review and assessment Think about your own experience with performance review. As an employee, do you dread the annual performance review? As a manager, do you find the process valuable, or does it frustrate you? Would more frequent, informal reviews help to reduce the stress level for all concerned? As you increase your understanding of what an effective performance review system looks like, think about what is needed to build a culture of regular informal performance review and, thus, take the pressure off the annual review meeting.

• Explore HR’s role in coordinating people management and review HR is generally the department in charge of managing performance review across the company. How can performance review systems be structured to obtain the most value from the process? Does your company’s performance review include both quantitative and qualitative measures? Do managers hold regular informal meetings with employees to monitor progress and adjust goals? If not, how can HR introduce changes to performance management in a way that will gain buy-in from both employees and managers? What will it take to introduce more frequent, informal meetings with direct reports in an organization where this practice has never been the norm?

• Discuss the value of stretch assignments to challenge top employees What are the advantages of using job content as a training mechanism, rather than formal training? Are there some skills that cannot be easily taught through formal training? What about project management? While it may be useful to take a short training session to learn how to navigate a new project management system, nothing beats a workplace project for testing the employee’s ability to implement the system in the real world. How about leadership and decision-making? Can these be taught in the classroom, perhaps using a simulation? Or does it make more sense to use the hands- on approach to develop the leadership skills that top employees will need in the future?