Having an effective performance management process and tools is a necessary, but not suffi cient condition for effective performance management. What really matters with any performance management system is how seriously it is taken and how conscientiously it is used by managers and employees. This is why both the most challenging and the most important part of developing an effective performance management system is implementation. In Chapter 3, several best practices relevant to implementation were discussed as important for laying the groundwork for a new system. These included :
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Ensuring there is suffi cient leadership support for the system
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Gaining buy-in for the system from staff at all levels
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Realistically assessing the organization’s appetite for performance management
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Developing an effective communications strategy
Once the performance management tools and processes have been designed, several additional implementation steps are necessary. These include automating the tools and processes to the extent possible, pilot testing, training staff on using the system, evaluating the system, and improving the system based on the evaluation results. The following sections discuss best practices relevant to these implementation steps. They are derived from organizational change principles, best practices studies, and the views of experienced practitioners about how to successfully implement performance management systems.
Tips :
Cornerstones of Successful Post-Design Implementation.
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Automate as much as possible
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Implement an appeals process
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Pilot test the system prior to large-scale implementation
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Train employees and managers on all aspects of the system and process
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Evaluate and continually improve the system based on evaluation results
Practical Exercise
At the end of this chapter, practical Training Exercise 5 can be used to help to engage and empower managers and staff in the implementation process.
Automation of Performance Management Processes
Organizations have had a long history of attempting to increase work effi ciency and effectiveness. From the advent of repetitive fl ow production in the early 1900s, to the use of Total Quality Management in the 1980s, to the recent trend to outsource non mission critical functions, organizations continually strive to increase their effectiveness through increased effi ciency. This has recently resulted in widespread implementation of automated Human Resource Information Systems (HRIS), whose purpose is to more effi ciently deliver human resource-related business functions. Vendors such as SAP, PeopleSoft, and Oracle offer HRIS that allow employers to track and manage employees as they move through the employment lifecycle from pre- to post-hire. Typically, these systems automate human resource functions, such as time and attendance, leave, benefi ts, pay, recruiting, and staffing. Performance management functions have also been integrated into these large HRIS as more tools and platforms have become available that automate the appraisal process.
Functionality Provided by Automated Systems Evaluations of automated performance management systems have shown that they are viewed positively by users overall, decrease workload, ensure widespread access, and provide a standardized format for collecting, storing, and reporting performance data.
Example :
Basic Level of Functionality in Automated System
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User interfaces for displaying competencies, performance standards, and performance management process information
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Make and capture performance ratings
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Web pages that contain help, information, and instruction files
To make informed decisions about the extent of automation beyond the basic functions, time, resources, development, and maintenance costs need to be considered. For example, database development and maintenance represent signifi cant costs beyond applications development. Additionally, features such as information security, archiving, and records management represent areas that require additional consideration. There are a variety of advanced features that can be built into an automated performance management system, including :
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Capturing input from multiple rating sources.
Automated performance management systems have proven to be invaluable for the implementation of multi-source or 360-degree feedback systems, which are inherently more complex from an administrative standpoint than managerial evaluations. First, several raters must be selected from multiple rating sources (e.g., peers, customers) from which feedback is sought. With the exception of the manager, a minimum of three raters from each source are needed to provide feedback. Since not all potential raters provide feedback when they are asked, it is necessary to ask for feedback from more than the minimum needed. Usually, at least fi ve to six raters from each ratings source are asked. This means that if feedback is sought from. three sources (peers, direct reports, and customers), requests will need to be sent and rating forms made available to approximately 15–18 raters per employee. Once completed, the ratings from these different participants need to be compiled and analyzed by rating source (e.g., all peer ratings combined). A feedback report is then generated showing the results. Automated systems are almost essential for this type of multi-rater application, allowing for effi cient selection of raters, easy access to rating forms, collection and analysis of data from multiple sources, and automated development and delivery of reports.
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Capturing employee input.
This includes capturing accomplishments and any other types of employee input (e.g., comments, ratings) on line.
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Managing workfl ow.
This includes prompting managers, employees, reviewers, and human resources staff about deadlines relevant to the performance management process and providing access to forms and documents that are needed during the process.
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Providing automated feedback and training to managers.
The goal of this feedback is to help managers and other raters mitigate rating infl ation and other rating errors that commonly occur when one individual evaluates the performance of another. For example, an automated system can be programmed to track and analyze managers’ ratings over time. When suffi cient data have been collected on a large enough group of employees (e.g., 50–100), managers whose ratings seem to exhibit certain patterns (e.g., constantly rating employees at the highest rating levels) can be given feedback on their ratings and reminded to make sure their ratings refl ect both strengths and development needs. Alternatively, managers’ ratings can also be evaluated and feedback provided in real time as they are making them. This can be accomplished by fl agging ratings of an employee that meet certain predetermined thresholds and prompting managers to review their ratings for accuracy. For example, ratings might be fl agged when an employee is rated at exactly the same level on all of the competencies or when an employee receives an average rating of 4.75 or above on a 5-point scale, which may be unrealistically high, or a rating of 2.25 or below, which may be unrealistically low.
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Reporting. This capability involves generating automated reports at preprogrammed intervals to track system effectiveness. For example, reports can be produced showing the average ratings by competency, division, department, group, or other relevant entity. Similarly, ratings for protected demographic groups (e.g., employees over 40, minority groups) compared to non-protected groups can be regularly examined for adverse impact or other issues of concern. As another example, reports can be produced that show the relationships between performance ratings and outcomes such as pay and promotion. All of these types of reports are benefi cial to produce on an ongoing basis, because they provide useful information about the health of a performance management system and enable timely interventions to address any problems.
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Providing evaluation support tools.
Evaluation support tools include such things as sample behavioral statements that can be used to develop narratives, developmental activities that can be pursued to enhance performance on each competency, example performance objectives, and any other information that may facilitate completion of the appraisal. The idea is that such examples provide models and starting points for developing narratives, objectives, etc., which should increase effi ciency, effectiveness, and standardization across different managers.
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Development and training support.
Some software allows employees to create, store, and monitor their progress in achieving their individual development plans. Other related functionality includes the ability to request and get approval for formal training and to register for training programs.
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Facilitating HR decision-making.
Software tools can also be implemented to facilitate making compensation and other human resources decisions. Once managers fi nalize employees’ ratings, they can be automatically plotted on a graph that shows where each employee stands within their job level. Taking into account the employee’s performance ratings, the tool helps managers identify which employees might be under- or over-paid for their job category and level of performance. Managers can also experiment with alternative compensation amounts for different employees, while tracking the overall impact of these decisions on payroll. Other functionality allows importing performance evaluations so that they can be used with additional information to facilitate succession planning, staffing, and other human resources functions.
Buy versus
Build Decision The fi rst step in deciding what automation features should be included in a system is to collect user requirements. This involves querying relevant constituencies within an organization to identify what automated functions are needed and desirable. Since different groups typically have somewhat different needs and desires, requirements should minimally be collected from the perspective of the organization’s leadership, human resources department, IT department, performance management reviewers, managers, and employees. It is also important to examine commercial-off-the-shelf (COTS) products to learn about the different types of functionality that are available in the marketplace and to assess the costs of different software options.
A key decision that needs to be made is whether to buy a commercial product or to design and build an in-house product. Use of commercial products requires entering into licensing agreements where organizations are charged for using the products. The advantage of commercial products is that they can usually be implemented quickly (relative to an in-house development project), and they are maintained and updated by the developer over time. The biggest potential downside of commercially available software is that licensing agreements last in perpetuity and can be expensive.
Some commercial products provide a performance management shell and the organization provides the content (e.g., competencies, performance standards, and so forth). Other products provide both automated functionality and performance management content. In either case, if an organization wishes to use a commercially available product, it is important to use a reputable vendor, preferably one that is stable and will remain in business.
Use of a vendor with human resources system development expertise is especially important if the organization plans to use a process, competencies, or performance standards provided by the vendor. The concern here is whether or not a vendor’s generically developed competencies and performance standards will be job-relevant or valid for use with a given organization’s jobs. In this situation, not only is software development expertise important but expertise is needed in the development and implementation of valid and defensible performance management systems. Ideally, the vendor should. have industrial and organizational psychologists, who specialize in this area.
As an alternative to using commercial products, organizations may opt to develop their own automated performance management tools. Ownership of the automated platform eliminates the need to pay a licensing fee but the organization then has the responsibility for updating and maintaining the system. For instance, it would be necessary to maintain databases of ratings, analyze and report data for decision-making, and periodically revise the system. With a number of high quality and high functionality tools available on the market, most organizations today are opting to purchase a performance management platform but develop their own customized and validated content to be used within these.
Potential Consequences of Automation While automation of performance management processes has produced largely positive results, there are some potential negative consequences as well. On the positive side, non-automated systems tend to be paper-intensive and require passing documents through many people, from the manager, to a reviewer, to the employee, back to the manager, and eventually to human resources. Automation greatly streamlines the performance management workfl ow by enabling documents to be accessed electronically by different parties. It also substantially reduces paperwork by enabling completion and storage of information on-line rather than in paper form, thus providing an easily accessible repository of information. While this facilitates human resources data collection, decision-making, and reporting, such readily assessable data also allows for easy analysis of performance management and other human resources information, including investigation of adverse impact. Many human resources professionals anticipate increasing litigation as a result of having readily accessible data available in automated systems. In the past, it was diffi cult and time-consuming to compile records and conduct the data analyses that were necessary to evaluate system effectiveness and potential legal issues. However, data stored in automated systems is easy to retrieve and thoroughly analyze, increasing the potential for fi nding problems and reinforcing the importance of conducting performance management and other human resources activities in accordance with legal and professional standards.
Another expected advantage of automation is that the process effi ciencies it affords should free up time for managers and employees to engage in more useful performance management activities, such as performance conversations and developmental activities, rather than paperwork. A cautionary note, however, is that by making evaluations easier to complete and process, automation may tempt managers to get their performance management responsibilities done as quickly as possible, focusing their efforts on on-line activities rather than engaging with employees. Another potential downside of automation occurs when the system includes tools that are intended to be helpful to managers but can also be misused, such as example
narrative statements. If managers use these directly without taking the time to edit them so they are meaningful for staff, the performance management process may become mechanical and lose credibility. The bottom line, however, is that the advantages of automated tools and the advanced functionality they provide almost always outweigh potential concerns and disadvantages.
Case Scenario :
Do Managers Customize Narratives when Example Comments Are Available in Automated Systems?
A commercially available automated performance management system offered sample narrative comments for different levels of performance effectiveness. A large information technology company and a large retail sales organization were both considering implementation of this feature. However, both had concerns about making example comments available because they thought the managers might produce “cookie cutter” narratives for their employees, using the comments verbatim rather then customizing the narratives to refl ect what the employee actually did. If this happened, employees might be turned off by the lack of personalization in the narratives. They might also perceive a lack of interest in performance management on the part of their managers. The feature was implemented on a trial basis. Evaluations of the narratives showed that managers did, in fact, customize the generic text to make it applicable for individual employees. The managers felt that the availability of example comments was very helpful in preparing their reviews, increasing both effi ciency and consistency. Because the generic comments were customized to be meaningful to individual employees, employees also had positive reactions to their narratives.
Implement an Appeals Process
It is important to include an appeals process in any performance management system because this gives the organization an opportunity to learn about and deal with potential problems before they escalate into formal challenges. Having an appeals process in place also helps to increase employees’ perceptions of fairness regarding the system. Appeals processes take different forms in different organizations. Some have separate committees that hear, investigate, and decide on appeals. Others handle this process through the human resources department. Irrespective of the mechanisms and specific processes for handling appeals, the important point is to develop and implement a formal process where employee can safely and objectively have any concerns about their evaluations reviewed and addressed.
Pilot Test
Another important factor in ensuring a successful implementation is to pilot test a new process in a few units prior to large-scale implementation. Pilot testing helps diagnose whether or not a system is functioning properly and illuminates areas for revision prior to going live. It also provides useful information about whether managers and employees understand and support the process and if further changemanagement or communication efforts are needed. Importantly, a pilot test provides an opportunity to gauge reactions to the system and make adjustments that will facilitate acceptance.
Pilot testing should include all aspects of the system – the automated system, performance management content, written materials, training programs, and the assignment and analysis of ratings. What this means is that a full pilot test will be resource- and time-intensive, something that can be unappealing to organizational decision-makers who often want fast implementation. In fact, it is sometimes diffi cult to convince decision-makers who want to expedite implementation about the value of pilot testing. However, the negative attitudes and irrecoverable bad press that a failed system roll-out can produce – for example, the automated system crashing – are simply not worth the time gained or risk associated with forgoing a pilot test.
Train Employees and Managers
Employees and managers need to be able and motivated to conduct performance management effectively. Training helps to accomplish both of these objectives. There are different types of training that can be used for performance management – classroom training, job aides, or web-based training. The training format and strategy that make the most sense in a given situation depend on the extent of buy-in there is for the system, how much employees and managers already engage in effective performance management, and the resources – both time and fi nancial – that the organization is willing to invest in the training process
Performance management is an area where practice and feedback are particularly useful for learning. Because of the interactive nature of many performance management activities, the most effective type of training is classroom training, where trainees participate in a variety of exercises to teach and reinforce key learning objectives. For example, experienced practitioners have found that there is no comparison for classroom training when the topic is how to give and receive feedback, because this venue allows trainees to practice and grow more comfortable with the feedback, coaching, and development process. In addition, when an organization devotes the time and resources that are required for large-scale classroom training, a very strong message about the importance of performance management is sent to employees. The type of training provided and requirement or lack thereof to attend training communicate a great deal to employees about leadership’s commitment to performance management.
If an organization elects to provide classroom training, there are usually training programs for managers and employees that are offered at several points during the performance management cycle. While different training programs could be developed for these different audiences, an advantage of using the same training content for both is that everyone receives the same information, which helps to increase trust in how the system will be implemented. Although the training content for managers and employees can be identical or very similar, it is best to conduct separate training sessions for these two audiences. This is because lower-level employees can be reticent about participating in training when managers are in the same session.
To enhance transfer of training to the job, it is best to provide training on each major step of the performance management process immediately before managers and employees need to perform that step, as this helps to ensure relevant information is fresh in their minds. While this requires a larger number of training sessions overall, the sessions are shorter and more focused than if all of the content is taught in one session. Experience in several organizations has shown that employees and managers prefer and fi nd it more meaningful to attend one or two hour sessions at different points during the year rather than a full-day or more of training prior to implementation. A proposed set of classroom training sessions and timeframes for conducting these is shown in the example.
Example:
Proposed Classroom Training Sessions and Timing
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Training Session
1:
General roll out and overview of the system and setting performance objectives – one month prior to implementation
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Training Session
2:
Having effective performance conversations – within approximately the first month of the performance management cycle
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Training Session
3:
Preparing accomplishments, rating performance, and having formal review sessions – one month before accomplishments are due
An alternative to classroom training is web-based training. Simple web-based training programs can be developed to teach the mechanics of a performance management process or more advanced training can be developed that provides practice exercises and feedback. The advantage of web-based training is that participants can complete the training at their own pace and don’t have to physically attend a program outside their offi ce. These advantages are also the precise disadvantages of this type of training. Because participants are not required to physically attend a scheduled session, they can procrastinate taking the training, ignore it altogether, or race through it just to get it done. If a web-based training approach is going to work well, it usually requires policing to make sure that employees take the training and acquire the needed skills. Although web-based training is viewed as more effi cient, fl exible, and cost-effective over time, customized web-based training programs can be very expensive to develop, especially if they include interactive practice exercises. Beyond the cost, however, the more important question is whether or not a web-based approach will result in the learning and motivation that are necessary to effectively use the new system.
Shown in the example is a comprehensive list of performance management training topics. For many of these topics, exercises that provide practice or feedback to trainees can be included. Because adult learning principles focus on the importance of experiential learning, lecture content should be minimized and exercise content maximized. Throughout this book are exercises that can be used to reinforce learning in several areas.
Example :
Performance Management Training Topics
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Philosophy and purposes for which system will be used
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Plan for rolling out and educating organizational members about the system
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Roles and responsibilities of leaders, reviewers, feedback providers, managers, employees and human resources
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Major components of the performance management system and process
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Rationale for and review of performance standards
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How to discuss expectations and set performance objectives
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The importance of ongoing, constructive, and specifi c behavioral feedback
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How to seek feedback effectively from others
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How to react to and act on feedback in a constructive manner
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How to give feedback to minimize defensiveness and maintain self-esteem
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How to build trust between managers and staff
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How to gather effective feedback from other rating sources
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How to prepare summaries of your most meritorious accomplishments
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How to provide accurate evaluations that minimize rating errors and rating infl ation
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How to work with other managers to ensure uniform application of standards and consistency in ratings
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How to prepare effective rating narratives
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How to conduct effective formal review sessions
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How to provide effective coaching and mentoring • How to identify and address development needs • How to address disciplinary or serious performance problems
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How to link performance ratings to outcomes (if applicable)
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How to use the automated system and related software
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How to monitor, evaluate, and improve the performance management system over time
Performance management learning aids can be used to support more formal approaches to training. The advantage of such aids is that they can be made available on-line and used whenever an employee needs to be refreshed on some part of the system. For example, an aid might be developed that helps managers write good performance objectives or one might be developed that summarizes the key performance management activities and schedule. Performance management learning aids are useful once employees have participated in formal training and have experience with the performance management process. However, they are not suffi cient as the sole basis for training and certainly do not provide the practice and feedback that are needed to perform performance management activities well.
Tips :
Consider Providing a Performance Management Hotline
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Managers and employees can call in to ask questions about the process
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Particularly useful during the time period when major performance management activities occur (e.g., setting objectives, writing accomplishments, rating performance, etc.) but cannot be used in lieu of training
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Important to ensure that the hotline is adequately staffed so that employees’ and managers’ questions are responsively addressed
Evaluate and Continually Improve the System Performance management systems should be evaluated and continually improved over time. If data are stored in an automated system, a number of measures can be easily collected and reviewed on a regular basis. Other measures, for example, assessments of user satisfaction with the system, require separate data collections. Since different measures provide information on how different aspects of the system are working, it is best to track and collect a number of measures in order to obtain a complete picture of overall system effectiveness. The following practices are encouraged :
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Monitor Completion of Training: This involves verifying that all users of the performance management system have received training prior to implementation.
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Monitor Completion of Appraisals: This involves verifying that performance appraisal ratings have been completed and signed off on by managers, employees, and other required persons, such as human resources.
Assess Quality Using a Formal Performance Management Review This is the process where a higher level manager or human resources staff member reviews each employee’s package to ensure that :
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Narrative comments are aligned with and support the ratings
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Ratings do not appear positively or negatively biased
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Especially high or low ratings have been properly justifi ed
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Evaluation criteria appear to be applied systematically across supervisors and employees
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Proper distinctions have been made between employees, based on their performance and contributions.
Assess Alignment with Related HR Decisions If a performance management system is used as a basis for pay, promotion, or reductions in force, the consistency between the evaluations and outcomes received needs to be monitored. For example,
Good to Know :
Rating Calibration Helps Ensure an Effective Performance Management Process.
It is good practice for managers in a given unit to meet, discuss the ratings for all employees, and together decide on the fi nal rank-ordering or groupings of staff for decisionmaking purposes.
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Primary advantage.
it helps to ensure that consistent distinctions are made between employees who are exceeding, meeting, or falling below expectations. The reason is that managers end up discussing specifi c examples of performance in relation to the standards, which helps them develop consensus about how to interpret and apply them
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Primary disadvantage
while a consensus process facilitates more systematic decisionmaking, it is less practical and effective in situations where managers are geographically dispersed or lack familiarity with the performance of many employees in the group.
those who receive the highest numerical ratings should receive higher levels of pay and those who receive the lowest ratings should be the f i rst to be let go in a reduction in force. Assessing the alignment between performance ratings and outcome decisions is facilitated if data are collected and analyzed in an automated system.
Evaluate User Reactions
Surveys or focus groups should be used periodically to collect user reactions to and satisfaction with the performance management process. Modifi cations can then focus on areas that are viewed as less effective by users. One strategy that not only gathers useful information but also serves as a catalyst for increasing performance discussions is to survey organizational members on the extent to which they are seeking, giving, and receiving feedback. Experienced practitioners have found that reporting these results back to managers and employees can increase the frequency and quality feedback that is exchanged over time.
Example :
Performance Management Monitoring Procedures and Metrics
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Gather comments about concerns users have
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Provide an open web-site for comments that are regularly reviewed
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Periodically conduct focus group feedback sessions
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Dedicate a task force to review comments/feedback and make suggestions for improvement
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Monitor and categorize comments received by the help line
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Survey employees and managers about their performance management attitudes
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Are the appraisals helpful? Accurate? Useful for making decisions?
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Is feedback being given? Received? Sought?
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Are individual performance objectives being set? Are they challenging but achievable?
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Are expectations being communicated? Are they clear? Are there linkages between individual goals and higher-level goals?
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Are the rating standards useful? Are employees preparing accomplishment statements?
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Are employees and managers able to easily integrate performance management processes into their work life, or is the system too burdensome?
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Are managers taking performance management seriously or brushing it aside?
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Does performance management help achieve business results?
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Is performance management helpful for getting work done?
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Survey employees and managers about development
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Are employees being pushed to strengthen their skills ? To specialize ?
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Are development goals being, set? Monitored? Achieved ?
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Are employees counseled on career options based on their capabilities and interests ?
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Is the Development Resource being used ?
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Are employees devoting time to meeting the goals on their individual development plans ?
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Are employees meeting their development goals ?
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Evaluate system records
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Are performance objectives fi nalized and recorded on time ?
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Are performance appraisal ratings and development plans completed and submitted on time? What proportion of employees have attended performance management training ?
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How many grievances have been fi led? Is the organization or employees prevailing in grievance matters? How much are grievances and associated work costing the organization ?
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Evaluate a sample of completed rating forms Are the performance objectives meaningful, well defi ned, and measurable ?
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Are objectives tied to validated work behaviors or performance standards ?
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Are objectives similarly diffi cult and complex for employees in the same job ?
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Are forms being periodically updated as people achieve their goals or circumstances change ?
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Are accomplishment statements being completed? Do rating narratives align with the ratings ?
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Are they behavioral ? Useful? Provide good documentation for especially high or low ratings ? Clear to outside readers ?
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Do accomplishment statements meet all of the criteria for good accomplishments ?
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Are all development activities oriented around taking training classes only, or do they refl ect on-the job experiences and other learning activities ?
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Do development plans refl ect experiences from the Development Resource ?
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Analyze rating data
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Examine rating averages and distributions most ratings should be around the center of the scale (“Meets Expectations”) and with reasonable differentiation between employees
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Look at average rating scores and distributions across work groups
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Look at average rating scores and distributions of ratings by race/gender group to evaluate equivalency of ratings across groups
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Look at average rating scores and distributions of ratings by competency – lower averages on some competencies might mean training is needed organization wide Look at whether or not the rewards received align with the ratings given
Practical Exercise
Example Exercise 5 :
Implementation Discussion Exercise
Trainer Note : The purpose of this exercise to get organizational members thinking about ways they can contribute to effective performance management implementation and solve implementation problems. Divide the class into three groups. Each will discuss a separate issue that may impact the performance management implementation success. The groups should be no more than 10–12 participants. If the training class is bigger than 30, you may divide into a larger number of groups, and some will discuss the same issue.
Assign an issue to each group. The discussions should last about 20 minutes. Trainees should not only discuss the issues but they should also brainstorm strategies and practical solutions to address them. Each group should appoint someone to record the group’s conclusions on a fl ip chart. One group member will also need to report out for the group.
Issue 1
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What are the biggest concerns among employees about the new direction for performance management and what can be done to address these ?
Issue 2
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What are the biggest concerns among managers about the new direction for performance management and what can be done to address these ?
Issue 3
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What organizational barriers exist to implementing the new performance management system and what can be done to address these ?
