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Reclaiming the Right to Manage Employee
Performance (Address by Kerry Feldman to NSW Minerals Council Conference June 30 1998 – The Management Challenge, The End of Seniority) |
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Introduction Few employers would disagree that "Seniority" has severely limited productivity gains in and the competitiveness of NSW coal mining companies. It has done so by denying employers the right to manage their employees’ performance. I believe that the removal of seniority from the award presents an opportunity for employers to reclaim that right. Reclaiming it will however require application of new management skills. That begs the question: After years of experience in an environment where performance management has been effectively forbidden, are you as managers aware of the benefits of using a performance management system to help you to apply these skills? I further believe that those of you who introduce such as system will be able to use it to: 1. Retain your best employees, 2. Give these employees a reason to maintain their good
performance, 3. Remove poor performers as positions become redundant, 4. Attract superior staff away from your competitors. Over the next half-hour, I will explain what performance management is; what makes a performance management system either effective or ineffective; and how I believe that you can use such a system to capitalise on "The End of Seniority". What is Performance
Management? Performance management describes the processes by which managers improve the performance of their employees by utilising their power to reward, develop or discipline as appropriate. A performance management system documents these processes as company policy and may form a legally binding contract between the company and one or more employees. It can be negotiated through individual contracts or by collective bargaining either directly with employees or with the involvement of a union. The essential components of a performance management system are: 1. A performance plan is negotiated between a manager and
employee for a given period (usually one year). The employee agrees to
achieve a specified level of performance in exchange for a reward or to avoid
discipline. The plan also generally contains a commitment to assist the
employee improve his/her performance. 2. During the year the manager gives employees feedback on
their performance and may suggest how it can be improved. 3. Performance is appraised at year-end and decisions are
made to reward, discipline or train employees. Performance is measured in
terms of either goals or competencies. Goals are best reserved for
professional or managerial employees and competencies used for employees who
are less skilled and/or have less control over their work environment. Performance pay or promotional opportunities are typical rewards. Discipline may include dismissal, suspension, loss of privileges or counselling and are usually applied only to wilful misbehaviour. Training, (rather than discipline) is used to address incompetence. Employees who either cannot or will not successfully undertake this training are made redundant to their position and either redeployed to a position they can handle (if one is available) or given a redundancy package. 4. The cycle is completed with a new performance plan. Effective Performance
Management A performance management system will only be effective if it: 1. Is aligned with your company’s corporate direction and
business strategy 2. Objectively measures performance. 3. Is trusted to be fair by employees (and any other
stakeholders who have the power to sabotage the system). 4. Both managers and employees see that they have something
to gain from using the system. Alignment with Corporate Direction
and Business Strategy This is probably the most important criterion of effective performance management. The alignment is necessary to ensure that: ·
The system only rewards
capabilities or behaviours that will improve your company’s productivity or
competitiveness, and, ·
Incompetence or misbehaviour
that diminishes your productivity or competitiveness is addressed by either
training or discipline. It can be achieved by the development of an integrated planning and performance management cycle that spans Corporate, Business Unit and Individual Performance plans and performance measures. Objectivity The real strength of an effective Performance Management System is that, like other systems, it takes considerable time and effort to put in place, but once it is negotiated into Individual Performance Contracts or an Enterprise Agreement, it replaces day-to-day disputes over what constitutes satisfactory or superior performance. If your system is not objective it will be open to manipulation by managers or employees. This may result in legal challenges to the system itself or the way it is being implemented, and will be demotivating for "good employees" who see those who manipulate the system being rewarded unfairly. Objectivity can be achieved by setting standards for various levels of performance, explaining how it will be measured and committing to rewards or discipline for each standard during Performance Planning. Appraisal then becomes a simple and unemotional process based on objective criteria. A multi-level competency standard contains: ·
A description of a work
related task or behaviour, ·
A performance measure ·
The conditions under which
performance is achieved. A very simple example follows which also shows the commitment made to rewards, discipline or training at each level.
Trusted to be Fair Objectivity is not the only criteria by which fairness of a system is judged. Employees need to be reassured that the system will be used equitably across their organisation and that managers are using it correctly. This is achieved by firstly negotiating use of the system into an Enterprise Agreement or the company policy that administers individual performance contracts. Implementation of the system should them be made as transparent as possible; for example by publishing details of how performance pay has been distributed or by issuing a document on the "Rights and Responsibilities of Employees and Managers in using the Performance Management System". Ensuring that Managers and Employees
see Benefits of System a) Managers Implementation of a Performance Management System does require the use of new management processes. If managers see these processes as additional to their current workload and do not fully appreciate how the system can help them manage, implementation will soon be seen as a bureaucratic chore and will not be implemented successfully. The system should obviously be designed to eliminate unnecessary work and support managers as they implement it. However you may also have to convince managers that the necessary work is intended to replace, rather than add to many of the tasks they now do to manage performance (or keep their employees working). To preserve integrity across the organisation, they should also be held accountable for implementing the system through their own performance contracts. b) Employees Employees are naturally resistant to having their performance measured because they fear the consequences of it being found unsatisfactory. For most employees, this resistance evaporates very quickly if they can see it also provides real opportunities for superior performance to be rewarded. Rewards can be non-financial, but performance pay ranks among the most powerful rewards. The best way to ensure that both management and employees are aware of "what’s in it for them" is to involve them in the design of the Performance Management System. Using a Performance
Management System to Capitalise on "The End of Seniority" Now, at the risk of being glib, just a very brief outline of how I believe you could use a Performance Management System to capitalise on "The End of Seniority". All of these processes will obviously require considerable time and effort but they can be done. 1. Set up a consultative process that will facilitate the
involvement of managers, employee and union representatives as necessary in
the design of your performance management system 2. Identify up to 10, broad competencies (for each job) that
are critical to the achievement of your Corporate Objectives or Business
Strategy. Do not be constrained to technical competencies. Behavioural
competencies such as a willingness to "to cooperate as a team
member" or "provide courteous customer service" are frequently
used as competency standards. 3. Describe these in terms of competencies as I have in my
example. That is containing a description of a task, a performance measure
and the conditions under which the task is executed. 4. Commit your company to decisions to train, discipline,
make redundant or reward according to the level of competency achieved 5. Document and design a system for writing performance
plans, giving feedback and appraising performance as I have indicated. Make
sure the system provides managers with all the support they need and is easy
to implement 6. Negotiate this system into your Enterprise Agreement
and/or policy concerning Individual Performance Contracts 7. Train employees and managers in use of the system. Conclusion This has been a very brief description of what performance management is and how I believe that you could use it to capitalise on "The End of Seniority". There is obviously much more to it than I could present in half an hour. Nevertheless, I hope that I have convinced you that it is a powerful management tool that, if implemented effectively, will give you the opportunity to reclaim the right to manage your employees’ performance. I also hope that you can now see why using a performance management system will enable you to: 1. Retain your best employees, 2. Give these employees a reason to maintain their good
performance, 3. Remove poor performers as positions become redundant, 4. Attract superior staff away from your competitors. For further assistance visit the Change & Perform website or contact the principal Kerry Feldman |
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