Introducing a Performance Management System during Organisational Change

Performance Management Systems have traditionally been viewed as instruments for 're-freezing' the organisation or consolidating gains resulting from a change program.  Unfortunately, the rate and extent of change currently expected of organisations in Australia, North America and the UK allows no time for re-freezing.  Can a Performance Management System be introduced in this climate?  This paper purports not only that it can, but that when it is, it fortifies the change program by co-ordinating all the other initiatives within it.

Successful introduction is however subject to two important conditions: that it is seen as an integral part of the change program and that it is tailored to address specific employee and organisational needs.

Integrating the System into the Change Program

Line managers understand the importance of the myriad of activities that make up the change program.  They must see the Performance Management System as having similar importance and urgency as other activities in the change program.  Unless they do, the system will never be implemented and its power to fortify the change effort will be undermined.

Implementation requires that the system compete effectively with other deadlines associated with the change program.  Line managers understand the importance of the deadlines and give them priority.  Unless the system is given similar priority it will suffer.

Performance management fortifies change by identifying duplication of effort and initiatives that are pulling the organisation in opposing directions.  Inefficiency results from duplication.  The presence of initiatives working in opposition can lead to disintegration, confusion, mistakes, low morale and cynicism.  These are all enemies of a successful change program.  For example; duplication occurs when two positions in the structure are designed to provide the same customer with a near identical service; opposition results from a pay structure that rewards quantitative targets, which can only be achieved by compromising Corporate or Business Objectives.

The Performance Management System can be integrated into the Change program by using it to develop a 'Performance Oriented Culture', enhancing the capacity of line managers to lead change and supporting them as they do so.

Using the Performance Management System to build a Performance Oriented Culture

Within a Performance Oriented Culture, employees willingly work toward achievement of organisational goals.  They also work willingly to satisfy their clients.  They do both with minimal control needed by management.  Such a culture requires that employees be committed to Corporate Objectives, empowered to achieve them and trust their organisation to treat them fairly.  An effective Performance Management System delivers all these requirements by establishing links between Corporate and individual performance and by building trust in the organisation’s reward systems.

Use the System to Enhance Change Leadership

Change Management must be led from the top of an organisation and this leadership cascaded down through every level of management.  Individual line managers will have varying capabilities and inclinations to accept this role as leader.  An effective Performance Management System both encourages and supports them as they do so.  Both making them accountable for implementing the system and raising their expectations of what it can do encourages them.  Accountability is achieved by a stipulation in their own Performance Agreement that they appraise their immediate subordinates before their own contract can be reviewed.  Unfortunately, past experience has caused many managers to have low expectations of a Performance Management System.  Unless they are made to value it as a useful management tool, they will not commit sufficient time and energy to it and it will quickly degenerate into an administrative encumbrance.  To value it, they need to be reassured that this system, unlike those they have used in the past will actually work.

Support Line Managers as they implement the System

Line managers need support to implement Performance Management in any environment but particularly in one that is changing rapidly.  Training, documentation and decision-making support from senior management can provide that support.  The last of these is particularly important if effective implementation requires the manager to make unpopular decisions.

Tailoring the System to Employee and Organisational Needs

Too often Performance Management is introduced because it is considered a ‘good thing' for any organisation without identifying the specific outcomes it can achieve for a particular company.  Attempting to do so during a busy change program can cause more problems than it corrects.  One result of this is that managers become cynical, seeing the system as simply another useless bureaucratic encumbrance.  A more common problem occurs when protagonists believe that any single system can deliver all the collective outcomes of Performance Management:  feedback, developmental advice, pay equity and alignment of Corporate and individual performance.  They forget that no one system will do all of these well, with the result that the system falters in the very areas where it may have been most useful.

Recognise Organisation Specific Conditions

A successful system avoids this failure by recognising organisation specific contingencies relevant to its introduction: issues that it needs to address, characteristics that may impact on its success and complementary strategies with which it should be aligned.

These contingencies will drive critical design decisions:  Who’s performance is to be appraised?  Who is to do the appraising?  What will be measured to judge performance?  And what use will be made of performance information?

There are no universally right answers to these questions.  For example, the use of "bottom up" or 360-degree appraisal may provide useful feedback to managers in an organisation that has established 'shared values' but generate spiteful rubbish in one that has high levels of industrial unrest.  Similarly, employees will be more tolerant of 'being measured' if they believe that the system will bring equity to pay structures that they currently perceive as unfair.

Conclusion

This paper finds that Performance Management can, under the right conditions, be introduced during change.  It is conditional on due consideration being given to both the role it is to play in the overall change program and the peculiarities of the organisation it serves.  This will not necessarily be easy.  However, once in place, a system that meets these requirements will both fortify the change effort and, most importantly, begin to rebuild a vibrant performance oriented culture in which employees willingly strive toward organisational goals.