Perance ManagementFrom Model to Implementation.doc

Performance Management:From Model to ImplementationAcknowledgementsIt is completely impossible for me to acknowledge individually the help I have received in evolving my ideas presented here. My former professional colleagues in Siemens and LG, and some close friends working in various enterprises have encouraged, supported and inspired me during the past days. I have really gained a lot from them. My particular gratitude goes to SHIFT and all the professors that taught me. Without the learning environment of SHIFT and the teaching of the devoted and dedicated professors in the past two years, it would be impossible for me to complete the thesis and my education. These professors include but are not limited to Huang Yuanshen, Lu Naisheng, Luo Guoliang, Xu Yaqin, Wu Xiaoyu and Zhu Peifen, whose lectures have really given me tremendous inspiration. Finally, my sincere and the most important acknowledgement need and should go to my kind supervisor Professor Wen Jianping, and my beloved husband Bob Miao. Since the very day when I began my postgraduate study, Professor Wen has never stopped offering me her patient coaching, assistance and encouragement, which are really appreciated. I have been tremendously moved by her meticulosity and her devotion to the cause of education. My husband Bob, who is regarded as an expert on PM in the HR field, has inspired me amazingly during my writing journey, and tried to spare his precious time in polishing my thesis. Were it not for their patient support and encourage, this thesis would never have been completed. AbstractPerformance Management (PM), currently, is really a buzzword in various kinds of organizations. In order to improve the performance of the whole team, the HR Department employs different tools of PM; however, the implementation process and the results are far from satisfactory. In view of this, the author firstly proposes a model on PM that links all key factors together in PM execution. This is based on the authors knowledge of varied PM theories as well as on-the-job experience in LG and Siemens. The model clearly states the importance of Strategy Communication, Communication and Coaching, and Corporate Culture, which are often ignored by managers in daily management. It could be said that, without these elements, PM efforts would definitely end up with failure. And next, an implementation process of PM is put forward and elaborated with cases.Finally, the author points out six types of possible failures in practical implementation, and meanwhile, proposes some recommendations for improvement. Key Words: Performance Management; Performance; Strategy; Communication; Corporate Culture 摘 要业绩管理(又称绩效管理), 对当今各类企业及组织来说,是一个让管理者异常头痛的话题。表面上看,几乎所有的企业组织机构都在实施所谓的业绩管理, 但结果如何、对业绩的提升到底有何作用,恐怕十之八九的管理者都会摇头叹息。鉴于此, 本文作者在较为深入地学习研究了解管理大师们的业绩管理理论并结合在不同企业人力资源部门实践的基础上,提出了企业正确实施业绩管理的参考模型,把企业常常忽略的战略沟通、沟通教练和企业文化融入模型当中, 并置后两者于至关重要的地位。可以说,脱离了它们,业绩管理根本无从谈起。 接下来,作者从实践的角度颇具创新地提出了在企业推进业绩管理的过程和步骤,并结合实例进行了详细阐述。最后, 作者基于自己对理论的总结和在企业实地的调查,指出了当今企业实施业绩管理失败的六大因素,并针对性地提出了合理的建议及改进的办法。关键词: 业绩管理, 业绩, 战略, 沟通，企业文化ContentsIntroduction6Chapter I Theories on Performance Management71.1 Definitions of Performance Management71.2 Methodologies and Tools in PM81.2.1 360 Degree Review91.2.2 Management by Objectives91.2.3 Benchmarking111.2.4 Balanced scorecard121.2.5 Performance Appraisal131.3 Performance AppraisalPerformance Management14Chapter II Model on Performance Management172.1 Strategy Communication182.2 Key Performance Indicators and Objective Setting202.3 Action Planning222.4 Appraisal and Review222.5 Pay and Development232.6 Communication and Coaching252.7 Corporate Culture27Chapter III Process for the Implementation of PM303.1 Form a Project Team303.2 Analyze Current Problems313.3 Set objectives and KPI313.3.1 Company Objectives313.3.2 Department/Branch Goals323.3.3 Individual Performance Goals333.4 Clarify Vision and Strategy in the Organization343.5 Performance Planning383.6 Link Performance to Rewards System413.7 Performance Appraisal and Review453.8 Continuous Feedback503.9 Annual Summary Meeting52Chapter IV Conclusion56Bibliography58IntroductionSince the late 1950s, management gurus have put forward their unique views on Performance Management (PM) one after another. With the increasing expansion of modern enterprises and the fierce market competition worldwide, theories on PM seem to have been on the way to perfection. The practice in various organizations, however, has never been as satisfying as executives expected. In recent years, PM has increasingly become a buzzword in numerous companies, large or small. A survey conducted by Price Waterhouse Coopers Consulting in 2003 told us another story: 87.6% of the employees have various kinds or complaints about their internal PM system while 83.2% of the managers confessed that their performance would not be affected at all if their PM system is abandoned. The failure of PM system execution in todays companies, in the authors viewpoint, lies in vague corporate strategy, unclear corporate culture, ineffective communication and coaching of the managers, wrong Key Performance Indicators (KPI) and untimely feedback. In view of this, the author proposed her model on Performance Management, and elaborated each item theoretically. Next, the authors process for the implementation was put forward in a practical way, which aims to address some existing problems on current performance management systems in most organizations. In the end, the author pointed out the prevailing types of failure in PM implementation, and meanwhile, proposed recommendation to remedy them.The authors reading of articles, papers and books on PM and experiences and observation in LG and Siemens as well has helped make this thesis possible. Hopefully, the thesis could be of help to some organizations and managers.Chapter I Theories on Performance Management 1.1 Definitions of Performance Management Performance Management (PM) has become a hot topic since the late 1980s; however, it is not a new term either in theory or in practice. In todays business world, most organizations have become aware that performance need and should be managed. PM has already become a buzzword. However, to date, there is still no clear or fixed definition for it, though to quote the management guru Peter F. Drucker (1999:177)Performance management is the strategy, methodologies, and processes of managing the performance of the organization and its business network by leveraging assets to achieve a common set of goals and objectives.According to M. Walters from Institute of Personnel and Development (1995:89), performance management is used to describe the movement towards effectiveness, which allows organizations to become more strategic, deliberate and accountable in their actions, and improve operational effectiveness by helping communicate mission, vision and goals, set operational objectives, and continually manage performance against those objectives.And M. Armstrong (1994:102) defines PM like this: performance management is the business strategy and methodical process to manage execution of an organization to a common set of goals and stakeholder objectives. Simply speaking, performance management uses both methodology and technology to help manage the organization by aligning execution with strategy.There are also very simple definitions from Effective Performance Management (S. J. Costello, 1992:56): Performance Management = measure, monitor and manage performance against pre-defined goals and objectives; and another simple statement is, Performance Management means creating the right kind of measures and the right kind of rewards. High-Performing Organizations (S, Kerr. 1995:42) views performance management in its broadest sense: how people are managed, motivated and rewarded for superior performance, inspiring employees to manage their own performance.PM is a strategic human resources process that incorporates performance appraisal, communications of corporate strategies and objectives down through the organization, training and employee development, and compensation assessment. In western cultures, PM has been demonstrated to have a significant positive impact on such areas as job satisfaction and therefore retention and turnover rates. In recent years, PM presents managers and supervisors with a clear model that can be used to plan, monitor, analyze and maintain a satisfying process of performance improvement for their staff. It also illustrates strategies for developing the crucial skills of coaching, problem solving, and giving feedback while teaching methods for linking organizational and personal goals. PM is the process of creating a work environment or setting in which people are enabled to perform to the best of their abilities. A PM solution can help organizations align organizational units, operational processes and individuals with pre-defined goals and objectives born of a common strategy. With the continual loop of insight provided by PM solutions, organizations can easily manage their ongoing effectiveness to improve overall performance against their goals and objectives. 1.2 Methodologies and Tools in PMIn decades, PM has provided various methodologies and tools for different organizations to design and implement workable systems. Among them, 360 Degree Review, Management by Objectives (MBO), Benchmarking, and Balance Scorecard (BSC) are the most popular ones. It is evidently true that most organizations do benefit a great deal from them.1.2.1 360 Degree Review 360 Degree Review is also known as multi-rater assessment, multi-source assessment, simultaneous assessment or 360 degree feedback, which is a process of gathering evaluations from varying sources and perspectives to form a composite assessment of an individual within an organization for the purpose of performance improvement. 360 Degree Review is a method or a tool that provides each employee with an opportunity to receive performance feedback from his or her supervisor and four to eight peers, reporting staff members, co-workers and customers. Most 360 Degree Review tools are also responded to by each individual in a self assessment. 360 Degree Review allows individual to understand his own effectiveness as an employee, co-worker, or staff member. The most effective processes provide feedback based on behaviors that other employees could see. The feedback provides insight into the skills and behaviors desired in the organization to accomplish the mission, vision and goals, and live the values. The feedback is firmly planted in behaviors needed to exceed customer expectations. People who are chosen as raters, usually choices shared by the organization and employee, generally interact routinely with the person receiving feedback.The purpose of the feedback is to assist each individual to understand his or her strengths and weaknesses, and to contribute insights into aspects of his or her work in need of professional development.1.2.2 Management by Objectives Management by Objectives (MBO) was first outlined by Peter Drucker in 1954 in his book The Practice of Management. According to Drucker, managers should avoid the activity trap, getting so involved in their day-to-day activities that they forget their main purpose or objective. One of the concepts of MBO was that instead of just a few top-managers, all managers of a firm should participate in the strategic planning process, in order to improve the implementability of the plan. Another concept of MBO was that managers should implement a range of performance systems, designed to help the organization stay on the right track. Clearly, MBO can thus be seen as a predecessor of Value-Based Management.MBO is a systematic and organized approach that allows management to focus on achievable goals and to attain the best possible results from available resources. MBO managers focus on the result rather than the activity. They delegate tasks by negotiating a contract of goals with their subordinates without dictating a detailed roadmap for implementation. MBO is about setting objectives and then breaking these down into more specific goals or key target. The principle behind MBO is to make sure that everybody within the organization has a clear understanding of the aims, or objectives, of that organization, as well as awareness of their own roles and responsibilities in achieving those aims. The complete MBO system is to motivate managers and empowered employees to implement their plans. In MBO systems, objectives are written down for each level of the organization, and individuals are given specific aims and targets. There are six stages for MBO implementation:l l Define corporate objectives at board level l l Analyze management tasks and devise formal job specifications, which allocate responsibilities and decisions to individual managers l l Set performance standards l l Agree and set specific objectives l l Align individual targets with corporate objectives l l Establish a management information system to monitor achievements against objectives1.2.3 Benchmarking Dr. Mohamed Zairi in his Competitive Benchmarking: An Executive Guide (1992:34) defines Benchmarking as anything taken or used as a point of reference or comparison, something that serves as a standard by which others may be served, and all to do with anything or something that is comparatively measurable. And Cook Sarah (1995:105) says: Benchmarking is a rational, disciplined approach to continuous improvement which helps identify, compare with and emulate best practice wherever it occurs. To put it simply, Benchmarking means the following steps: find a point of reference for measurement, study key internal processes, compare with other organizations, improve continuously and then become the best. Getting the benchmarking habit is about the careful analysis of how your internal organization does what it does, how it adds value to raw materials or intellectual resources, how it matches market needs, and how it delivers the goods or service to the end customer. Generally, there are four accepted types of benchmarking, each with its own specific objectives, namely, internal, competitive, functional, and generic. To be specific, in turn they mean: benchmarking the processes that your own organization undertakes; benchmarking your direct competitor who seems to be doing better than you in the same marketplace; benchmarking the companies that are not competitors but may employ similar processes to your own in one or several parts of their organization; and benchmarking those companies that have a recognized and leading reputation for managing a process that you do. When benchmarking, all of them require a commitment of resources and expertise to varying degrees. Therefore, it is better to define the specific type at an early stage.1.2.4 Balanced scorecard Balanced Scorecard (BSC) is currently the most popular management instrument that can be used to translate an organizations mission and strategy into a comprehensive set of performance measures to provide a framework for strategic measures and management. The scorecard measures organizational performance across four perspectives: financial, customer, internal business processes as well as learning and growth. Financial perspective includes traditional financial measures such as revenue growth, returns on investment or returns on assets, market shares, and earnings per share.Customer perspective includes measures of importance to customers such as timeliness, quality, performance, cost, and service.Internal business process perspective includes measures of the critical internal activities and processes that the organization uses to meet its customers expectations.Learning and growth perspective measures the organizations ability to adapt and innovate for the future; and this could include time to market for new product development, workforce training and development, and process improvement.These perspectives provide a multi-dimensional balance between internal and external perspectives, leading versus lagging indicators, objective versus subjective measures, current versus future needs, etc. Tradeoffs become explicit business decisions based on strategy.Diagram 11.2.5 Performance Appraisal In 1993, A. M. Mohrman in his Making it Happen: Managing Performance at Work (P.92) stated that: Performance Appraisal (PA) should be the regular (usually annual) process in which managers and/or others assess an employees performance for the year as part of the performance management approach. Performance Appraisal Revisited (P. Long, 1986, P57) viewed in this way: “PA is a process of assessing progress toward achieving predetermined goals, including information on the efficiency with which resources are transformed into goods and services (outputs), the quality of those outputs (how well they are delivered to clients and the extent to which clients are satisfied) and outcomes (the results of a program activity compared to its intended purpose), and the effectiveness of the organizations operations in terms of their specific contributions to program objectives.”Virtually every major corporation uses performance appraisal systems during the past years. The systems have become an integral part of salary recommendations, succession planning, and employee development programs. Even many a company has taken it for granted that Performance Appraisal system is Performance Management. But the key question is: Do they work? Do performance appraisals improve performance, or are they a colossal wast