Article Summary/Powerpoint

Your workforce is the enginethat drives your company for- ward. Like any engine, however,

your workforce needs to receive

proper attention and ongoing ser-

vice to continue operating effective-

ly. In the garage, this concept is

known as preventive maintenance,

but in the business world it’s known

as performance management. In

both instances, the businesses that

do it best are the ones that see their

engines firing on all cylinders.

The Evolution of Performance Management The concept of performance man-

agement is nothing new. In fact, its

roots can be traced back as far as

the Third Century when Chinese

emperors established a perfor-

mance review system for the offi-

cial family. In the mid-16th Centu-

ry, Saint Ignatius of Loyola

established a formal rating system

for members of the Jesuit Society.

Finally, in the early part of the 20th

Century, performance appraisals

began to take hold as a common

practice in corporate America with

managers developing annual

appraisal systems for their subordi-

nates, typically blue-collar workers.

Clearly, the principles of perfor-

mance management have contin-

ued to evolve. Today, many orga-

nizations are still using that once-

a-year, top-down approach to

performance management, though

it’s in serious need of a refresh.

Instead, they need to think of per-

formance appraisal as a dynamic

assessment that flows in all direc-

tions at all times.

Unfortunately, if your organiza-

tion’s performance management

approach needs to be brought up

to date, it can be a significant chal-

lenge. To help, here are some prac-

tical suggestions you can use in

your office.

Start with Alignment: Before

implementing a performance

management approach or estab-

lishing benchmarks for success, it’s

important that you assess your

strategic organizational goals.

Work with your senior leadership

and executive teams to get a clear

understanding of your organiza-

tion’s plans, both short-term and

long-term. Only after you have

this knowledge can you begin to

tailor your performance manage-

ment approach to meet your

enterprise-wide objectives regard-

ing performance, timelines, deliv-

erables, and responsibilities.

Involve Your Employees Up

Front: Your employees should be

actively involved in the design and

ongoing maintenance of the per-

formance management program,

if possible. Consider forming a

steering committee or task force of

representatives from different

departments. Ideally, in order to

gain the most comprehensive per-

spective possible, this group would

consist of employees with different

experience levels and tenures

within your company. They can

help translate the organizational

goals into day-to-day language

that the workforce will understand

and appreciate. The group can

also provide feedback on what’s

working and what isn’t in order to

continually refine your perfor-

mance management system.

Measure What Matters: When

developing the physical perfor-

mance management tool—

whether it’s a hard-copy form or

an online evaluation—make sure

you are only including the metrics

and evaluation categories that can

help assess an employee’s contribu-

tions to the goals established in the

alignment phase. Anything extra or

unnecessary will only slow down

the process and inspire frustration

among your employees.

Measurements can be broken

down into major subcategories,

such as quality, quantity, timeli-

Does Your Performance Management Need

a Tune-Up?Here are some strategies thatwill help you keep your work- force firing on all cylinders.

1 8 S T R AT E G I C F I N A N C E I N o v e m b e r 2 0 1 1

By Laurie Chamberlain

CAREERS

2 0 S T R AT E G I C F I N A N C E I N o v e m b e r 2 0 1 1

ness, innovation, cost effective-

ness, and customer satisfaction.

It’s also important that the tool be

balanced and not emphasize one

category over another equally

important category.

Take a 360-degree View: In the

past, the performance management

process was limited to managers

reviewing their subordinates. But

today the better approach is the

360-degree review whereby all indi-

viduals, regardless of their seniority

or position, are evaluated by those

with whom they interact. The eval-

uators can be an individual’s boss,

peers, subordinates, customers, etc.

The person being evaluated also

typically does a self-assessment to

complete the circle. The goal is to

provide more feedback, more

insight, and more opportunities for

improved performance.

The effectiveness of this ap-

proach is reflected in its growing

popularity. According to human

resources consultant William M.

Mercer, 40% of American compa-

nies used 360-degree feedback in

1995; by 2000, this number had

jumped to 65%. In 2002, 90% of

Fortune 500 companies were using

a 360-degree performance review

process. (For more information,

see Diane Alexander, How Do 360

Degree Performance Reviews Affect

Employee Attitudes, Effectiveness

and Performance? University of

Rhode Island, 2006, www.uri.edu/

research.)

There are many 360-degree

feedback tools and organizations

available in the marketplace. When

deciding whether to work with a

company or develop a tool in-

house, make sure to evaluate all

options and determine how they

can help you achieve the objectives

uncovered during the alignment

phase.

Set the Stakes and Clear

Expectations: Armed with an

understanding of the organiza-

tion’s goals and the workforce’s

perspective, and with the evalua-

tion mechanism set, it’s time to

start delivering the message to

your employees.

Clearly delineate the responsi-

bilities and performance expecta-

tions of each individual. If bonus-

es, compensation, and other

rewards programs are going to be

tied directly to the new system,

spell out the guidelines clearly and

explicitly. Let employees know

why the performance manage-

ment system was refreshed, and

demonstrate how the new system

will allow for a more fair and

accurate assessment so that those

employees who deserve to be

rewarded receive their due.

Not setting clear expectations is

often the biggest misstep compa-

nies make when rolling out a new

performance management system

and approach. If your employees

don’t believe the new system

works—or if they feel you just

made a change for the sake of

change—chances are they won’t

embrace the process and won’t

benefit from the changes.

Make Manager Training

Mandatory: An effective perfor-

mance management system

requires that executives and man-

agers are educated about the pro-

gram and are able to use it proper-

ly. Unfortunately, some managers

often will go into an appraisal ses-

sion blindly, putting the employee

at a significant disadvantage vs. his

or her peers in other departments

and doing a great disservice to the

organization as a whole.

That’s why formal training pro-

grams should be compulsory and

comprehensive—in order to ensure

that everyone is on the same page.

In addition, the task force or per-

son in charge of the program must

make continuing guidance avail-

able, and these individuals must be

accessible at all times.

Evaluate Performance Every

Day: Successful organizations

monitor employees’ performance

continually and provide regular

feedback. Evaluations can be both

formal and informal, and they can

even be complemented by perfor-

mance management software that

aggregates data and makes it sim-

ple to review the information.

Likewise, discussions with

employees can take the shape of

formal annual or quarterly reviews

or can be conducted in an infor-

mal setting, such as a passing con-

versation or monthly lunches.

Anytime your managers and

employees engage in a conversa-

tion provides an opportunity for

an exchange of suggestions and

feedback while bolstering commu-

nication and improving employee

engagement.

Make Performance Manage-

ment a Social Skill: New employee

evaluation methodologies and

products continue to enter the mar-

ket every day. One of the exciting

innovations is Rypple, a Facebook-

like application where managers

can “like” tasks, reward employees

with badges, solicit feedback via a

wall post or private message, and

monitor progress through a living,

changing interface. It’s a great way

to improve manager-employee

communications and deliver feed-

CAREERS

c o n t i n u e d o n p a g e 6 1

back in real-time.

The workforce is the most

important part of any organiza-

tion. Therefore, companies must

look for ways to simultaneously

retain their highest performers and

promote productivity among all

employees. Updating and upgrad-

ing ineffective performance man-

agement policies is a practical and

often simple way to accomplish

this goal. When implemented and

developed correctly, a performance

management system can drive

engagement, morale, and, ulti-

mately, profitability. In short, it can

mean the difference between oper-

ating like a well-oiled machine and

getting stuck in gear. SF

Laurie Chamberlain is senior vice

president of Accounting Principals.

You can reach her at

Laurie.Chamberlain@accounting

principals.com.

N o v e m b e r 2 0 1 1 I S T R AT E G I C F I N A N C E 6 1

Careers c o n t i n u e d f r o m p a g e 2 0

Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.