An understanding of what performance management is supposed to do is critical. When performance appraisal is used to develop employees as resources, it usually works. When management uses performance appraisal as a punishment or when fail to understand its limitations, it fails. The key is not which form or which method is used, but whether managers and employees understand its purposes. In its simplest form, a performance appraisal is a manager’s observation: “Here are your strengths and weaknesses, and here is a way to shore up the weak areas.” It can lead to higher employee motivation and satisfaction if done right.
But in an era of continuous improvement, an ineffective performance management system can be a huge liability.
An effective performance management system will be:
• Consistent with the strategic mission of the organization
• Beneficial as a development tool
• Useful as an administrative tool
• Legal and job-related
• Viewed as generally fair by employees
• Useful in documenting employee performance
Most systems can be improved by training supervisors, because conducting performance appraisal is a big part of a performance management system. Training should focus on minimizing rater errors and providing a common frame of reference on how raters observe and recall information.
Organizationally, there is a tendency to distill performance into a single number that can be used to support pay raises. Systems based on this concept reduce the complexity of each person’s contribution in order to satisfy compensation system requirements. Such systems are too simplistic to give employees useful feedback or help managers pinpoint training and development needs. In fact, use of a single numerical rating often is a barrier to performance discussions, because what is emphasized is attaching a label to a person’s performance and defending or attacking that label. Effective performance management systems evolve from the recognition that human behaviors and capabilities collapsed into a single score have limited use in shaping the necessary range of performance.
By Nilesh Shah
But in an era of continuous improvement, an ineffective performance management system can be a huge liability.
An effective performance management system will be:
• Consistent with the strategic mission of the organization
• Beneficial as a development tool
• Useful as an administrative tool
• Legal and job-related
• Viewed as generally fair by employees
• Useful in documenting employee performance
Most systems can be improved by training supervisors, because conducting performance appraisal is a big part of a performance management system. Training should focus on minimizing rater errors and providing a common frame of reference on how raters observe and recall information.
Organizationally, there is a tendency to distill performance into a single number that can be used to support pay raises. Systems based on this concept reduce the complexity of each person’s contribution in order to satisfy compensation system requirements. Such systems are too simplistic to give employees useful feedback or help managers pinpoint training and development needs. In fact, use of a single numerical rating often is a barrier to performance discussions, because what is emphasized is attaching a label to a person’s performance and defending or attacking that label. Effective performance management systems evolve from the recognition that human behaviors and capabilities collapsed into a single score have limited use in shaping the necessary range of performance.
By Nilesh Shah