Essay: Performance Management (PM)

Introduction
Performance Management (PM) is defined as a strategic and systematic approach to achieve sustainable success to organisations by improving the performance of the employees and developing the abilities of team players and individual (Armstrong and Barron, 1998).
In this paper, the author would propose a PM system that is applicable to the Dolphin Logistics Company as pertaining to the case study of this assignment.
Benefits of PM system
Organizational benefits

• Boost organisation’s overall performance.
• Clear understanding of individual goals, training and developmental needs for each employee.
• Enhance teamwork within department or even with other department.
• Retaining top performers and providing incentives to maintain performance
• Effective communication, feedback or working relationship between managers and employees
• Managers could have a better identification of improvement and development required for each employee.Employees’ benefits
• Motivate staff to excel in work performance.
• Process differentiates high/low performers.
• Employee would receive constructive feedback on work performance.Proposed framework of PM for Dolphins Logistics Company (DLC)
  Strategic planning of a PM system should systematically address an organisation’s objectives and intents that are value to stakeholders and performance-driven. The author proposes using the “Performance development cycle” as a framework to guide the process of developing a PM system. As depicted in the diagram below, the cycle comprises 3 major stages namely, performance development planning, ongoing discussion, performance development review and reward and recognition. This process occurs on a continuum.
  Diagram adapted from http://meilleradvisoryservices.com/yahoo_site_admin1/assets/docs/MEILLER_-_Performance_Development_Cycle.263120004.jpg
  Prior to developing a proposal for the DLC, the author takes into consideration of the factors stated in the table below (Anthony, 2003):
  Current formal PM system in place
  Desired and actual outcomes of the current PM
  Mode of communication about PM system and expectations of all employees
  Written performance goal plans for all employees
  Accountability of managers for employees’ performance
  Mode and frequency of communication with employees on their performance
  Current feedback system on performance
  Proposed PM Competency System for the DLC
  A competency-based measurement system is recommended for the DLC to assess the staff’s demonstrable ability. A competency is the set of an employee’s skills, knowledge and attitudes in his/her scope of practice that when taken in totality enables the employee to demonstrate expected working standards or produce a desired outcome (Sumlin, 1997). In another words, a competency is behaviourally anchored and is clearly observable in the organisation (Sumlin, 1997).
  Under the recommended PM system, each staff’s performance would have 3 sets of measurable competencies:
  Core competencies Leadership competencies Job scope related competencies
  Put clients as first priority Embrace change Specific to job descriptors
  Completes task on hand Influence and lead
  Team player Think strategically
  Develop self and others
  Apply and share knowledge
  (Krausert, 2008)
  Proposed Performance Levels for the DLC
  The performance levels are clearly defined and disseminated to all staff:
  Levels of performance Definition
  Role Model (RM) Demonstrates/exceeds expectations for a particular competency in his/her current position
  Proficient (P) Consistently demonstrates all behaviours for that particular competency in his/her current position
  Needs development (ND) Yet to fully demonstrated all behaviours for that particular competency in his/her current band & below and needs further development in this competency.
  (Anthony, 2003)
  Proposed Overall Performance Rating for the DLC
  A 6-rating system is used for the Overall Performance Rating of an employee, as shown below:
  Summary of Overall Performance
  Outstanding (O) Exceeds job requirements, achieved outstanding results deserving special commendation
  Exceeds Expectations (EE) Exceeds job requirements, achieved very good results and made major contributions
  Very Good (VG) Has done very well and made considerable contributions
  Good (GD) Has done well
  Fair (FR) Has areas for improvement
  Unsatisfactory (U) Significant improvements required for continued employment in current position
  (Anthony, 2003).
  Performance Development Planning
  Setting of organisational goals
  The first step establishes the goals of the DLC in order to achieve organization success and translates them into employee goals. The employees could align their individual performance with desired results when they have a clear understanding of the DLC’s organizational goals (Belford and Malmi, 2009). Planning also enables the DLC to evaluate performance in relation to its goals and to drive future directions of the company (Bevan, 2014). While doing so, setting the employees at the right perspectives is vital.
  The table below shows the major differences between the traditional and contemporary views of the PM system, which ought to be communicated with all grades of employees of the DLC.
  Elements Traditional view Contemporary view
  Purpose Organizational, legal and fragmented Integrated, continuous,
  Concentrates on performance
  Appraiser Manager Managers, peers, internal customers
  Role of appraisee Passive, receive information Engaged and participates actively through self- assessment/ rating.
  Measurement Subjective, may be biased Objective and subjective
  Timing On a fixed, periodical, for administrative purposes. Occurs on a regular and timely basis.
  (Yee, 2016)
  Setting individual’s objectives and indicators
  In the DLC, employees should be well informed about the minimum effective standard for performance goal setting based on specific job descriptions, work assignment and professional work etiquette (Armstrong and Baron, 1998). Essentially, the goals that are aligned to individual and team performances should be measurable, realistic and achievable within an expected timeframe (Bevan, 2014). Both the managers and their employees should be involved in the goal-setting process to ensure commitment. Alongside, the goals would be considered as effective if flexibility could be exercised to account for dynamic working conditions (Armstrong and Baron, 1998). Goals should not be duplicating or rather should be comprehensive by covering the major aspects of staff’s job duties (Belford and Malmi, 2009). Lastly, the whole process should be documented and reviewed regularly by the managers and employees.
  The table below illustrates the types of goals that is set during the planning phase:
  1. Job description goals – Goals may be based on achievement of a pre-established set of job duties.
  – These goals should be achieved continuously until the job description changes. It could be related to customer, process or system-oriented goals.
  2. Project Goals – These goals may be based on the objectives of certain assignment or projects till they are completed.
  3. Behavioural goals – Goals may be set upon desired behaviors and should be maintained continuously.
  4. Stretch goals – This type of goals is usually set to enhance the knowledge, skills and abilities of employees who may show high potential.
  (Horwitz, 2015).
  On going discussion
  During this process, the managers and employees of the DLC are expected to collaborate to identify and develop employees’ strengths (Anthony, 2003). It is recommended for managers to decouple performance discussions and compensation discussions. Managers should provide immediate feedback that may be informal (Horwitz, 2015).
  Feedback is a vital feature of all phases of the PM process. Key performance indicators should be discussed and feedback should be provided on a continual basis throughout the performance appraisal and rating processes (Belford and Malmi, 2009). Besides that providing periodical feedback about daily course of work and contributions is recommended.  There should be a two-way communication process between both managers and employees (Bevan, 2014).  This process requires training both managers and employees about their responsibilities in the performance feedback process. Effective feedback should be timely, constructive, specific and balanced, and should include both positive and development information based on what the employee did well or areas for improvement (Horwitz, 2015). It is critical that feedbacks are elicited based on working behaviours rather than on personal attributes (Sumlin, 1997).
  Proposed Managerial Roles in the DLC
• Seek consensus on the objectives, competencies and development needs with employees so that they could accomplish the key achievement areas.
• Review and feedback individual performance against objectives and competencies on a timely basis, throughout the year.
• Provide feedback and discuss on the amendments to individual objectives as working climate change.
• Assist employees to attain core skills necessary to function well or advance their skills set by developing an individual development plan (Refer to appendix A for sample of Individual Development Plan) (Krauser, 2008).
• Concentrate on individuals’ strengths and manage around their weaknesses.
• Render support to employees to achieve objectives through proper coaching and provide relevant training opportunities.
• Constantly develop each employee’s unique talents, working behaviour and area of interest.
• Manage and guide under-performance or under-achievers
• Conduct a appraisal review with the employees to update them on their job skills/ abilities/ attitudinal/ behavioural as supplemented by interim reviews held quarterly or half yearly basis (Refer to Appendix B the PM interim review) (Cardy and Leonard, 2014).Great managers should be equipped with the following skill set to maximize the potential and achieve excellent performance from their staff:
• Goal setting, eliciting and providing feedback, conflict resolution and grievance management.
• Active listening and effective communication skills are imperative to engage and motivate staff to excel at work.Proposed Roles of Employees during the PM process
• Contributes and participates actively during the goal-setting process.
• Be aware and respect his/her manager’s role and responsibilities during the performance interview.
• Be responsible to complete self- rating or evaluation as it provides an opportunity for the manager and the employee to communicate their views or address any gaps/issues.
• Display active listening and feedback constructively on the goals outlined and incorporate them into his or her future work performance.
• Ask relevant questions and raise concerns with the manager when he/she feels his or her performance has not been measured or documented fairly.Proposed Performance Review Process for the DLC
  The performance review process varies in accordance with each organisational’s strategic intents, objectives and culture and focuses on how the performance review process is implemented. The author proposes for the DLC to set the components of an effective performance review process as shown in Appendix C (Luecke, 2006).
  Proposed Performance Review Method for the DLC
  – A feedback loop that is measured against specific goals prior to each performance management cycle:
  360 degree appraisals are powerful developmental method that is quite different to traditional manager-subordinate appraisals. However, the 360 degree process does not replace the traditional one-to-one process, or rather it augments and could be used a stand-alone development method (Cardy and Leonard, 2014). This process involves the appraisee receiving feedback from peer colleagues (named or anonymous) whose views are considered helpful and relevant. The feedback is typically provided on a form showing job skills/ abilities/ attitudinal/ behavioural criteria and some sort of scoring or value judgment system (Cardy and Leonard, 2014). The appraisee should also assess himself or herself using the same feedback instrument or form (Refer to Appendix D) (Cardy and Leonard, 2014).
  Other sources of feedback includes the following (Anthony, 2003).:
• direct observation of RO
• staff’ s self assessment and documentation
• staff’s performance relative to his/her peers in the same position/grade
• input of other feedback sources (for example project team leader, internal customers/patients)
• input and moderation of Moderation Panel, benchmarking with other departmentsProposed Employees Survey for the DLC
  Employee satisfaction surveys are another great method to measure the extent to which managers are able to conduct great performance conversations with employees (Bevan, 2014).
  The survey may comprise the following questions:
• My immediate supervisor motivates staff with a positive impact
• My immediate supervisor clearly communicates goals or assignments to me.
• I am recognized for the contributions to my work.
• My immediate supervisor provides me with constructive feedback on my    performance on a regular basis.
• I am given encouragement and guidance on how to further develop my strengths and potential
• My immediate supervisor has effectively reviewed my overall performance during appraisal process.- A process for acknowledging the performance review outcomes is essential to ensure that it is clearly communicated between the manager and the employee (Horwitz, 2015). All staff should be given the opportunity to express their response to their Overall Rating, as well as the manager’s assessment of his/her performance and the ratings for each competency. When a staff disagrees with the Overall Rating, the staff may wish to invoke the Staff Grievance/Appeal Procedure within a given timeframe (Refer to Appendix E) (Cardy and Leonard, 2014).
  Timeline for PM and Moderation Process
  The author proposes that the Human Resource Heads must ensure that the following timeline is adhered to for the performance management and moderation process, so as not to disrupt the annual increment and bonus exercise due. Refer to diagram below for stages.
  Stage/ status Timeline
  Stage 1- In preparation
  Stage 2- In planning 1-2 months
• A- Planning by employee
•  B- Approval of plan by manager 1-2 monthsStage 3- In review
•  A- Interim review by staff
•  B- Interim review by manager
•  C- Interim review completed 2-3 monthsStage 4- In process
•  A- Part appraisal
•  B- Year end assessment by manager
•  C- Processing by HR
•  D- Final assessment by manager
•  E- Acknowledgement by employee
•  F- Acknowledgement by manager 2-3 monthsStage 5- completed
  (Cardy and Leonard, 2014).
  Resolving poor performance
  The best method in resolving poor performance is ensuring that managers provide regular and constructive feedback, and hold conversations about goals and careers.
  The PM exercise may be conducted once per annum. However, if at any time during the course of the year, a staff is found to be grossly lacking in work performance, the manager should not delay until the PM exercise to give feedback to the staff. The manager should be steadfast by activating the Performance Improvement Plan (PIP) for the staff immediately. The PIP should be activated when the manager is of opinion that the staff needs improvement in performance, which if remained unchanged, would affect the staff’s suitability to be confirmed (in the case of new recruits under probation) or to remain in continued employment (in the case of existing staff).
  Additionally, the PIP provides a communication means for open dialogue and consistent feedback, which could allow an employee who is not meeting expectations, the opportunity to succeed or the manager to prepare for progressive disciplinary actions (Bevan, 2014). A performance improvement plan should include both the feedback conversation and documentation. The PIP process may lead to a number of possible outcomes, such as a return to satisfactory performance, extension of the timeline for correcting the performance discrepancy, job rotation or termination (Leucke, 2006). This documentation may serve the purpose of protecting the employer should performance fail to meet expectations and further disciplinary action needs to be undertaken (Belford and Malmi, 2009).
  The format of the performance improvement plan may include the following components:
• Employee information.
• Relevant dates.
• Description of performance discrepancy/gap.
• Description of expected performance.
• Description of actual performance.
• Description of consequences.
• Plan of action.
• Endorsement by the manager and the employee.
• Evaluation of plan of action and overall performance improvement plan.
• Date of commencement and duration of the PIP should be stated.
• The plan should record the dates or frequency of progress reviews during the duration of the plan.
• The PIP should identify the specific facts about performance results and/or behavioral issues that describe and demonstrate the performance discrepancy.
• All recorded information should be specific and factual
• A statement regarding expectations for sustained and/or consistent performance should be included to ensure that true performance improvement has been attained.(Refer to Appendix F for a PIP sample) (Cardy and Leonard, 2014).
  Reward and Recognition for the DLC
  The author proposes that the DLC should communicate with its employees that the promotion for employees is not “automatic”. While the length of service of the staff is often a useful indicator of the experience and expertise level attained, it is not the sole criterion for promotion. Promotion must be subject to a staff’s good performance andhe/she must meet all the competency requirements for the higher job position.
  In addition, promotions of staff may be subjected to availability of higher job positions.
  (Refer Appendix G for flowchart of promotion process) (Howitz, 2015).
  Criteria for Promotion
  The staff must satisfy these criteria in order to be shortlisted for consideration for promotion (Belford and Malmi, 2009).
• Performance track record
• Professional qualifications
• Minimum length of relevant experience
• Competency requirements of the higher job position
• Potential to succeed in the higher job positionSuccession planning for the DLC
  It is vital for the DLC to ensure that key management is equipped with the best talent at all times to ensure continuity in leadership and succession (Bevan, 2014). For this purpose, the author proposes to have a talent management and succession planning framework with the objective of identifying, developing and grooming high potential staff to assume key management positions within the company (Refer to table below for sample of framework for succession planning). Further description on “HiPo” is stated on next page of this paper).
  Steps Process owners
  Step 1: HiPo Identification
  – Do potential assessment with moderation panel
  -Identify HiPo talent pool – CEO, Directors, Deputy directors and assistant directors
  – Departmental heads and managers
  – Human resource head
  Step 2: Succession planning
  – Identify/ review key management positions
  -Identify/ succession candidates for key management position -Cluster CEO, Directors
  – Director, Human resource head
  Step 3: Gap analysis
  -Define competency requirements for key management position
  – Identify gaps in competencies of HiPo staff (current competencies of HiPo staff versus competency requirements of key management position matched to the staff -Deputy Directors,
  – Assistant Directors
  – Departmental heads
  – HR secretary
  Step 4: Talent Development
  – Training, transfer, job rotations
  -Stretch goals and assignment Deputy Directors,
  – Departmental heads
  – HR secretary
  (Luecke, 2006).
  Potential Assessment and Performance Assessment are separate exercises with different and distinct objectives. The “HiPo” (high potential) employee would be developed for succession planning. The employee is assessed on his/her current estimated potential that is an indication of a person’s potential to reach the next position. These HiPo employees may be developed and groomed accordingly, so that they could hone their skills to assume key management positions in due course. The table below depicts a table for projection of HiPo candidates in an organisation.
  High Potential (HiPo) Candidates
  Current Incumbent
  Acting Incumbent (2nd in line)
  Hipo Candidates ready within year
  HiPo Candidates likely to be ready within 2-4years
  HiPo Candidates for considerations only after 5 years or more
  HiPo Candidates with HOD potential
  HiPo Candidates likely to be ready within 2-4years
  HiPo Candidates for considerations only after 5 years or more
  HiPo Candidates with Managerial Potential
  Current Incumbent
  Acting Incumbent (2nd in line)
  Hipo Candidates ready within year
  HiPo Candidates likely to be ready within 2-4years
  HiPo Candidates for considerations only after 5 years or more
  (Luecke, 2006).
  On the other hand, performance assessment identifies the “HiPe” (high performance) employee for the year, so that they could be rewarded commensurately. An employee is assessed on his/her performance, based on contribution made to the company in financial year. Employees are then ranked in order of their performance, according to their respective job band, by a process known as Performance Ranking as shown on the table below (Luecke, 2006).
  Prosposed DLC Performance Ranking system
  Band 1 Contribute by following procedures and standards
  -A learner of follower
  Band 2 Contribute independently
  -A specialist or Doer
  Band 3 Contribute through expertise
  – A technical expert of professional
  Band 4 Contribute through leading
  – A Guru or leader
  Band 5 Contribute through vision
  – A Navigator or Boundary shaper
  Through the ranking process, the “HiPe” (high performance) employees are thus identified.
  Conclusion
  Effective performance management provides meaningful and timely feedback. It ensures employees have clear expectations and encourage employees to achieve higher performance standards. Formal performance management approaches often undermine the specific behaviours that lead to maximised performance. Employees and managers require adequate training and support to achieve the desired behavioural change. Adopting a flexible approach that reinforces critical work behaviours and aligns individual work to organizational objectives is essential. Ultimately, there is no single best performance management approach for every organization. Hence, it would be beneficial to focus on the performance management practices using an objective stance and core competencies, leadership competencies and job-related competencies that is anchored to desired behaviours in driving improved performance, thus gaining measurable value from performance management.

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