1. Explain at least two purposes of performance management and its relationship to business objectives
The purpose of performance management is to maximise and improve the performance of all staff by achieving continuous improvement within the organisation in line with its mission statement, business plan’s aim and objectives.
Its purpose is to develop staff to meet and at times exceed expectation to achieve their full potential which will benefit them and the organisation. Performance management also provides a foundation for self—development and its helps to ensure that support and direction that staff may require to improve is readily available.
Performance Management is also a major factor of the business approach in its management of staff are aware of what is expected of them to enable the organisation to manage its business and have staff that are skilled and talented to deliver what is expected of them, supported to meet these expectation and be given regular feedback on their performance and in turn have the opportunity to discuss and contribute individually and as part of a team to the targets set, again establishing a culture where staff feel motivated.
2. Identify three components of performance management systems
The performance management of any business is a key factor of its approach to its management of staff, and an effective system should include the following components:-
i) Recruitment and promotion of staff into roles that fits their skills and ability, by setting clear targets, objectives and understanding of performance expected. Continuous audit of its staff skills will also enable the organisation to plan its staff succession.
ii) Creating a supportive work environment and provide on the job training and rewards for good, continuous performance, whilst providing opportunities for staff to identify their own goals and develop skills and competencies. Also develop an open and constructive (transparency) working relationship between all staff i.e. managers and staff members,
iii) Allowing departmental managers/team leaders to develop their own targets and goals in line with the organisation’s business objectives, which will create a sense of equality that would send out a clear message that anyone can achieve performance rewards by attaining expectation and goals set by the organisation
3. Explain the relationship between motivation and performance management, referring to at least two motivations theories
There are two types of motivation: intrinsic motivation and extrinsic motivation.
Intrinsic motivation is defined as the doing of an activity for its inherent satisfactions rather than for some separable consequences.
Extrinsic motivation occurs when things are done to or for people to motivate them. These include rewards, such as incentives, increased pay, praise or promotion and punishments such has disciplinary action, withholding pay or criticism.
Vroom 1964/Porter and Lawler 1968 – the concept of expectancy was originally contained in the valency-instrumentality-expectancy (VIE) theory formulated by Vroom (1964). Valence stands for value, instrumentality is the belief that if we do one thing it will lead to another and expectancy is the probability that action or effort will lead to an outcome and an increase in performance. Effort depends on the likelihood that rewards will follow effort and that the reward is worthwhile i.e. they must be a link between effort and rewards and that the reward should be achievable and again worthwhile.
Latham and Locke 1979 – Goal theory is that motivation and performance are higher when individuals are set specific goals, when goals are difficult but accepted and when there is feedback on performance. Motivation will improve if people have demanding but agreed goals and received constructive feedback, which will improve performance and provide the rationale for performance management and goal setting.
Motivation is about the factors, which links into how organisation’s uses performance management to get better results from their staff by strategically encouraging the performance within its business. If employees are highly motivated they will perform better, and will co-operate collectively to improve the standards which would lead to a sense of achievement creating greater motivation.
4. Identify two purposes of reward within a performance management system are as follows:
i) to attract, retain and motivate skilled and quality employees the organisation needs, develop a performance culture and reduce staff turnover.
ii) to operate with transparency which will help employees to understand how the rewards functions operate and how they are affected by them.
5. Describe at least three components of a total reward system, one of which should be non-financial
1. Benefits (Extrinsic) is a financial reward that an employer uses to supplement the cash compensation given to an employee, which provides them with a level of security and financial protection in regards to the following:
a. Annual leave
b. Sickness pay
c. Bereavement pay
d. Retirement pay
e. Pension contribution
2. Compensation (Extrinsic) is another financial reward in regards to the following:
a. Fixed pay – a salary/wage for a job employed to carry out.
b. Short-term incentive pay – could be described as performance related bonus pay, given to the employees who depending on the continuous improve work performance i.e. achieving appraisal targets set.
c. Long-term incentive pay – reward could be listed as stock percentage options of the business; performance shares/units to reward excellent performance over a longer period i.e. 3-5 year financial plan.
3. ‘Total Reward’ (Intrinsic) which an employer can used to attract, motivate and retain talented employees, by acknowledging employees efforts or positive performance, reward can be non-financial as follows:
a. Verbal recognition of achievement by the Board of Directors;
d. Theatre tickets/dinner
e. Support in external training and development, which will aid to create a happy and motivated workforce.
6. Explain the factors that should be considered when managing good and poor performance
a. Develop a clear system that is good for the business and staff.
b. A consistent approach to performance management of all staff, which will provide opportunities to address problems and generate effective solutions and promotion and further development for staff that have achieved all targets set.
c. Provide training for all managers/team leaders who line-manage – assisting them to deal effectively with performance issues, as managers needs clear procedures and the courage and willingness to address issues/concerns.
d. Discuss other options for improving poor performance or maintain good performance i.e. continuous monitoring and provide feedback.
For the management of both good or poor performance to be effective, the culture of the organisation should be that its encourages on-going feedback and discussion in an open and supportive environment, and when staff are performing well ensuring that there is a clear procedure in promoting and retaining valuable staff. Also, that managers and employee both have the skills to use and understand the process effectively for mutual benefit.
Lastly, a well informed employee will be easier to appraise, this resulting in less time consuming and good results.
7. Describe at least two items of data, including one external to the organisation
Personnel file – has all the information of the employee from the commencement of employment, all recruitment letters, references, supervision notes, appraisal information, and any other personal information which is legally required. It will contain all confidential health/sickness details, absences and training records. In case of any ET claims, the personnel file will be required as an audit trail of the employee life with the organisation, so it should always be in date order and accurate and secured.
In order to gather feedback from other employees, organizations will often use a360° feedback process. Along with the completion of a self-assessment, selected peers, subordinates, and managers are asked to contribute feedback around pre-identified areas. The feedback is based upon specifically identified skills or competencies and the final results are compared against the employee’s self-assessment. This type of feedback increases self-awareness and in some cases is used to support the performance evaluation process.
360 Degree Feedback is a system or process in which employees receive confidential, anonymous feedback from the people who work around them. This typically includes the employee’s manager, peers, and direct reports. A mixture of about eight to twelve people fill out an anonymous online feedback form that asks questions covering a broad range of workplace competencies. The feedback forms include questions that are measured on a rating scale and also ask raters to provide written comments. The person receiving feedback also fills out a self-rating survey that includes the same survey questions that others receive in their forms.
Managers and leaders within organizations use 360 feedback surveys to get a better understanding of their strengths and weaknesses. The 360 feedback system automatically tabulates the results and presents them in a format that helps the feedback recipient create a development plan. Individual responses are always combined with responses from other people in the same rater category (e.g. peer, direct report) in order to preserve anonymity and to give the employee a clear picture of his/her greatest overall strengths and weaknesses.
360 Feedback can also be a useful development tool for people who are not in a management role. Strictly speaking, a “non-manager” 360 assessment is not measuring feedback from 360 degrees since there are no direct reports, but the same principles still apply. 360 Feedback for non-managers is useful to help people be more effective in their current roles, and also to help them understand what areas they should focus on if they want to move into a management role.
What a 360 Feedback Survey Measures:
• 360 feedback measures behaviors and competencies
• 360 assessments provide feedback on how others perceive an employee • 360 feedback addresses skills such as listening, planning, and goal-setting • A 360 evaluation focuses on subjective areas such as teamwork, character, and leadership effectiveness
What 360 Feedback Surveys do not assess:
• 360 feedback is not a way to determine whether an employee is meeting basic job requirements
• 360 feedback is not a way to measure employee performance objectives (MBOs)
External data to the organisation – Surveys
Survey could be defined as a valuable piece of information providing feedback to the organisation about services or products they provide. Organisation would use surveys top assess customer or employee satisfactory or to identify issues that is needed to be addressed.
Common types of surveys are:
a. Written questionnaires
b. Face-to-face or telephone interviews
c. Email /website surveys
d. Focus groups
8. Explain the frequency, purpose and process of performance review
Brooks Consultancy Limited – The performance management review process works on an annual basis system which works through a three stage annual process starting in April and ending in March, to coincides with the business financial and reporting year, and presented to the Finance & Audit Sub-Committee annually at the end of March.
April – June – Stage 1 – Staff are given a copy of the Annual training plan, which has been agreed and approved by the Board of Directors, and agreed their individual targets/goals in line with their personal development plan which is discussed with their line manager during the performance review meeting.
July – December – Stage 2 – During this period, targets / goals are monitored to ensure that individual are still on track and if there are any concerns as there may be a need to review.
January – March – Stage 3 – A review of all staff performance takes place, which is justified against the business objectives and decision are made in regards to performance rewards, personal development and promotion.
Board of Directors are presented with any financial implications at the end of March, and requested to agree and ratify, if any increased spend to the annual budget.
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Discussion Paper onPerformance Management
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