Performance management is a process to ensure that the employees are contributing toward the overall goals of the organization. Performance management has around three phases like goal setting, dialogue and a method for evaluating the employees. In order to have an effective performance management the organization can implement various components of performance management like training, appraisal system and remuneration.
In short effective performance management means that the organization is achieving its goals in an efficient and effective manner. Task 1 Performance management Performance management is actually a management process for ensuring that employees are focusing their work efforts in ways that contribute to achieving the firm’s mission. In order to have an effective performance management the firm or the senior managers of the firm should divide performance management in the following phases.
Firstly, they should set their own expectations for employee performance, secondly they should maintain a dialogue between them and their subordinates so as to keep their performance on track and thirdly they should measure the actual performance of their subordinates with their performance expectations so as to have a reasonable and unbiased evaluation of their employees. The general definition of performance management and its phases can be applied to the
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From the example of an employee at Western Savings, Ms Charlene, it is quite clear that the employees are in fact are not focusing their work efforts so as to achieve the overall goal of the organization which is to provide mortgage loans to their customers and to act as a secure and reliable saving institution. In other words this shows that the senior managers or executives are in fact not successful in goal setting and goal clarification which is the most basic ingredient or phase of performance management.
The managers at western savings need to properly identify what they want from their subordinates or what their expectations are from them. Not doing so have resulted in employees like Ms Charlene committing costly mistakes which could have been prevented. Therefore, the first and foremost suggestion for the senior managers at Western savings would be to properly identify and explain to their subordinates what they expect from them, what are their responsibilities and how they can help the organization in achieving its overall goals.
Another area or phase of performance management which needs to be improved is communication. This area is mentioned at the beginning of the write up and is referred to as the ‘second phase’ of performance management. The second phase of performance management deals with maintaining a dialogue between the managers and his/her subordinates. Good, frank and candid communication between a manager and his subordinates is necessary so as to make sure that the employees or the subordinates of a particular manager are working on the ‘right’ track.
The case study seems to suggest that there is a culture of very weak communication between a manager and his subordinate. When Ms Terri tried to have an honest and frank communication with Ms Catherine in order to understand why she was not behaving responsibly, Ms Catherine didn’t open up. Therefore, in order to make sure there is effective performance management in the organization the organization needs to promote a culture where there is frank communication between a manager and his/her subordinates.
Good communication will help in effective performance management by allowing both the manager and his subordinates understand the problems, responsibilities and limitations of each other. Moreover, this will also allow the managers to take any corrective measures so as to ensure that the employees are working on the right track. The third phase of performance management deals with comparing the actual performance of the employee with the expected performance and then taking corrective measures if the actual performance is below the expected performance.
The last phase of performance management has implications for western savings as well. From the case study it is clear that even though the actual performance of Ms Catherine was measured against the expected performance which was far above her actual performance no corrective measure were taken. In fact according to the case study Ms Catherine was promoted and given other incentives simply because the employees who were responsible for evaluating her were afraid she might file a suit for discrimination against them.
In such cases where there is a fear of being sued for discrimination the managers should document all the errors committed by their subordinates and then take any corrective measures such as firing, demoting and transferring a particular employee. Unfortunately, this was not the case in this organization since there was no documentation done prior to the evaluation of an employee.
Therefore, it should be mandatory upon all the managers to document the errors or felonies committed by their subordinates then compare the actual performance with the expected performance and if the actual performance is below the expected performance then they should take some corrective measures. Moreover, the organization should also try to develop a procedure for addressing employee performance that falls below expectations. This will facilitate and help the employees to take corrective measures if their subordinate’s performance is below the expected performance.
Components of performance management In order to execute performance management in all the phases successfully it is necessary for the organization to understand the various components of performance. The components of performance management act as tools for implementing a successful performance management plan in an organization. The following are the various tools of performance management which can be utilized by Western Savings and loans bank so as to have an effective performance management system in their organization.
Training Training of the employees at various levels is very crucial for successful implementation of performance management system in any organization. Training is important for both the organization and the employees. It makes sure that the employees are performing work that is required from them and they are successfully performing their roles. If the employees are not performing their required roles they can be given instructions and advice in a training session so as to improve their current role.
Training also helps to identify those employees who cannot perform their current role and thus needs to be given another role. The case study does not suggest that there is any in house training program in the organization for the employees. This is the reason why employees like Ms Catherine are committing mistakes which is damaging the image of the organization in the eyes of its customers. Therefore, the first and foremost task that this organization has is to introduce and implement an effective training program for its employees.
The training program can take various forms and it can include various subjects. If the organization feels that it can effectively manage a training program then it should consider an in-house training program. If the in-house training program is not suitable because of lack of trained personal for imparting training or resources then it should consider outsourcing its training program. Outsourcing the training program to a reputable firm would prove to be costly but it would be effective in training the employees so that they don’t commit mistakes which are costly in terms of the image of the organization.
Moreover, a training program should include various subjects and topics specific to employees who occupy a particular level in the organization. Firstly, it should include a refresher course for employees who have spent a certain number of years with the organization. This will help the employees to remain updated with the policies and goals of the organization. Moreover, this will also help them adapt to change because of any events occurring outside the organization which may have an impact on the operations of their organization.
Secondly, the training program should also include training the employee on particular or specific tasks. This will help in improving the overall productivity of the employees and help in reducing the errors or mistakes committed by employees like Ms Catherine. Thirdly, the training program should also shed some light on the rules and regulations of the organization and general company guidance. This area is important for Western savings because the case study seems to suggest that the employees are not aware of the rules of the organization or general employment rules.
For example, employees at Western savings did not take any corrective measures against Ms Catherine even though they knew that she was not performing well simply because they ‘felt’ that they might be labeled as discriminatory or biased if they do that. Therefore, if they would have been informed in a training program that it is necessary to document employee errors in such situations this would not have been the case. Appraisal system Another way for Western savings to improve performance management is by implementing an appraisal system. Appraisal systems are used to evaluate an employee by his/her senior on different tasks or abilities.
Appraisal systems are beneficial for both the employees and the organization. Appraisal systems are used to harness the abilities and the resources of employees by letting them know where they stand. It represents a good opportunity to discuss with individual employees their strengths and weaknesses and agree new aims and objectives with them. Businesses usually make use of appraisal systems within a few months of a new employee starting or changing role within the business. Western savings will receive innumerous benefits by implementing a performance appraisal system.
Firstly, employees over there will understand what work is expected of them and how their work fits into the wider aims of the business. Secondly, appraisal systems will give the senior managers in the organization a chance to coach the employee to develop needed skills and share their own personal experiences. Furthermore, this will allow the managers to learn new ideas and method of doing work from their employees as well. This might help managers like Ms Terri who have belongs to another department but have been placed in a ‘new’ department where work is done differently.
Remuneration Remuneration is the payment of monetary and non monetary benefits to the employees. Remuneration should always be followed by a fair and unbiased appraisal system; however this is not the case in a lot of organizations. The same is the case with Western savings which has resulted in payment of higher remuneration to employees who deserve to be penalized instead of being showered with rewards. Western savings can develop a simple structure of appraisal that would be tied to the performance of the employees.
However, even the best performance appraisal system in the world will not work if it is linked to a rewards and remuneration system that employees do not trust or support. Therefore it is important for the senior executives who develop a remuneration system to win the trust and support of the employees who would be rewarded based on the remuneration system they develop. If this is not the case then the employees will not be motivated to perform their work with due diligence and hence the productivity of the employees can never reach the optimum level.
An effective remuneration is beneficial for the organization in other ways as well. Firstly, an effective remuneration system will lead to decline in employee turnover rate. A lot of competent employees because of fierce competition and lack of fair rewards leave the organization. A fair remuneration system on which the employees have trust will lead to a substantial decline in the employee turnover rate which in turn will save the cost associated with training the new employees. Moreover, employees need not be remunerated by money alone. Some employees might be motivated to increase their productivity by non monetary benefits.
Therefore, western savings should make use of non monetary benefits like recognition and other incentives. From the case study it is clear that Ms Charlene was not motivated to perform well and increase her productivity even though the organization kept on increasing her salary. Therefore, the organization should try to rely on non monetary benefits so as to motivate and inspire such employees. Task 2 Recommendation of a Performance Appraisal System There are various appraisal systems available which help in doing the appraisal of an employee like Rating scales, Essays and MBO’s or management by objectives method.
All have their advantages and disadvantages but in the view of the writer Management by objectives method is the most suitable method for this organization. Both the rating scales method, in which the evaluator has to judge the performance of an employee relative to certain traits, and the essay method, in which the evaluator is free to write anything about the person being employed, have several disadvantages for this organization. In the rating method the manager might give distorted results because of perceptual errors or difficulty in assessing the traits of an employee.
Moreover, the essay method is time consuming and the writer might write comments which may have a negative impact on the performance of the employee. Therefore MBO method seems to be the suitable method for appraising an employee at Western savings. The following are the details about MBO method. MBO-Management by Objectives Management by objectives method were first advocated by the popular and distinguished theorist Peter Drucker MBO (management by objectives) methods of performance focus on the results instead on the traits or skills of the employees.
In other words they seek to measure employee performance by examining the extent to which predetermined work objectives have been met. In Management by objective method the objectives are established jointly by the supervisor and subordinate. For example, an objective for a sales employee at Western Savings might be: Increase the gross monthly sales volume to $250,000 by 30 June. As soon as the objectives are set the employee is usually expected to do some self analysis that is, he/she needs to identify the skills needed to achieve the objectives.
Contrary to rating method they do not rely on others to locate and specify their strengths and weaknesses. They are expected to monitor their own development and progress. There are several advantages of MBO method for Western savings some of them are as follows Advantages The MBO approach will overcome the problems that may arise as a result of assuming that the employee traits needed for job success can be reliably identified and measured. From the case study it is clear that employee traits or skills are not being identified properly because of factors like being labeled as discriminatory etc.
Since the MBO method instead of assuming traits it concentrates on actual outcomes such problems can be eliminated. Furthermore, according to MBO approach if an employee meets or exceeds the set objectives then he or she is said to have shown an acceptable level of performance. Therefore, the employees would be judged on real outcomes and not on their potential or talent for success. Moreover, their rewards are not tied to someone else’s subjective opinion of their abilities. Lastly, by implementing MBO approach it would be possible for the organization to directly observe the results of the employees.
Where results are not quite good, as in the case of Ms Catherine, then corrective measures can be taken with sufficient evidence Even though MBO approach has several advantages but it has few disadvantages as well. The MBO approach can lead to unrealistic expectations from the employee about what can and cannot be reasonably accomplished. However, this disadvantage can be minimized by making sure that there is frank and honest communication between a supervisor and his subordinates. Bibliography Archer North, 2002, Performance appraisal, http://www. performance-appraisal.com (accessed 17th Dec 2008)
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