3PRM 12 February 2012

Supporting Good Practice in Performance and Reward Management ASSIGNMENT Activity1

1. Two Purposes of Performance Management and its relationships to business objectives. Performance management is a repetitive process, established by organisations to help them in accomplishing their objectives (goals, as listed in the organisations vision) by maximizing the performance of an individual, team or whole organisation and ensure that the objectives are achieved. 1 The Performance Management Process is a key component of organisations overall approach to the management of its people. As part of the performance management system, Performance Management Process aims to achieve the following: To enable an individual employee to know exactly what is expected both in terms of outputs (the delivery of agreed objectives) and the relevant, appropriate behavioural style (role-related competency models), which will underpin the delivery of the agreed objectives. To enable individual and team effort to be focused on the delivery of the departmental business plan. To enable an individual to identify and meet personal development needs which will facilitate the delivery of agreed objectives. To enable individual employees to feel motivated and valued for their contribution to the on-going success of organisation. To enable individuals to identify and achieve realistic career goals over time. To enable the organisation to reward individuals fairly based on an objective assessment of their contribution. To enable the organisation to audit the capability of its staff. To enable the organisation to plan for its own staff succession. An honest and constructive working relationship between a manager and member of staff.2 The purpose of performance management is to ensure accomplishment of business objectives and to increase the strength of the employees.
1

Daniels, Aubrey (4th edition, July 2004). Performance Management: Changing Behavior that Drives Organizational Effectiveness.

Chartered Institute for Personnel and Development 2009 - Discussion Paper on Performance Management, Issued on 2009; Reference: 4741

3PRM 12 February 2012 Accomplishment of business objectives is an essential survival goal for an organisation. In order to accomplish the business objectives these has to be established by the upper management and than communicated to its own employees. After the objectives have been communicated to the employees it has to be measured, appraised, action planned and monitored. However, the performance management process incorporates the entire business objectives evolution since its inception until its end. In order to increase the strength of the employees you have to measure it. The performance management process sets specific goals to be accomplished in certain time. The strength of the employees is increased by motivation and reward. To motivate and retain high performance by providing career development programs including motivational and reward strategies, challenging work assignments and other on-the job learning initiatives that will lad to career development and ongoing job satisfaction. The performance management process is usually designed to help employees understand what they need to learn and how they need to learn it. Employees are expected to be in a constant growth and learning mode, demonstrating organization and/or role-specific competencies; the bundles of skills, behaviours and knowledge that are critical to the organisations ability to execute its business strategy. Coaching and mentoring programs are used on a formal basis to provide employees with ongoing support as they develop and apply new competencies. 2. What are the 4 components of performance management system? An effective performance management system should include the following components: Setting up objectives: a clear understanding of job expectations Discuss results; determine performance: regular feedback about performance Identify strengths; identify areas for improvement; seek joint agreement on action plan: advice and steps for improving performance On the job training; formal training; coaching and other development activities: rewards for good performance.3

3. Explain the relationship between motivation and performance management, referring to at least 2 motivational theories. Motivation is about what makes people think, act or behave in particular way. The link between motivation and performance management its very obvious. If the employees are highly motivated they will perform better, so better performance can lead to a sense of achievement and result in greater motivation.
3

Martin, M., Whiting, F. and Jackson, T. (5th edition). Human Resource Practice: page 168, Fig 6.3

3PRM 12 February 2012 The following theories each offer advice and insight on how people actually make choices to work hard or not work hard based on their individual preferences, the available rewards, and the possible work outcomes. Reinforcement Theory The reinforcement theory is based on E.L. Thorndikes law of effect and describes relationship between behaviour and consequences. This theory focuses on modifying an employee's on-thejob behaviour through the appropriate use of one of the following four techniques:

Positive reinforcement rewards desirable behaviour. Positive reinforcement, such as a pay raise or promotion, is provided as a reward for positive behaviour with the intention of increasing the probability that the desired behaviour will be repeated.

Avoidance is an attempt to show an employee what the consequences of improper behaviour will be. If an employee does not engage in improper behaviour, he or she will not experience the consequence.

Extinction is basically ignoring the behaviour of a subordinate and not providing either positive or negative reinforcement. Classroom teachers often use this technique when they ignore students who are acting out to get attention. This technique should only be used when the supervisor perceives the behaviour as temporary, not typical, and not serious.

Punishment (ex: threats) is an attempt to decrease the likelihood of a behaviour recurring by applying negative consequences. The reinforcement theory has the following implications for management:

Learning what is acceptable to the organization influences motivated behaviour.

Managers who are trying to motivate their employees should be sure to tell individuals what they are doing wrong and be careful not to reward all individuals at the same time.

Managers must tell individuals what they can do to receive positive reinforcement.

Managers must be sure to administer the reinforcement as closely as possible to the occurrence of the behaviour.

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Managers must recognize that failure to reward can also modify behaviour. Employees who believe that they deserve a reward and do not receive it will often become disenchanted with both their manager and company.4

The Goal Setting Theory The goal-setting theory, introduced in the late 1960s by Edwin Locke, proposed that intentions to work toward a goal are a major source of work motivation. Goals, in essence, tell employees what needs to be done and how much effort should be expanded. In general, the more difficult the goal, the higher the level of performance expected. Managers can set the goals for their employees, or employees and managers can develop goals together. One advantage of employees participating in goal setting is that they may be more likely to work toward a goal they helped develop. No matter who sets the goal, however, employees do better when they get feedback on their progress. In addition to feedback, four other factors influence the goals-performance relationship:

The employee must be committed to the goal. The employee must believe that he is capable of performing the task. Tasks involved in achieving the goal should be simple, familiar, and independent.

If the goal-setting theory is followed, managers need to work with their employees in determining goal objectives in order to provide targets for motivation. In addition, the goals that are established should be specific rather than general in nature, and managers must provide feedback on performance.5 4. What are 2 purposes of reward within a performance management system and give an example of this within your organisation. The main purposes of reward within a performance management system are to retain, motivate key employees and to reduce turnover. Its a known fact that people are the most important asset in the organisation and the company where Im working for can give a good example. The CEO Awards is an additional short term reward that is meant to reward outstanding employees that performed extraordinary in a period of one year.
4

Richard L. Daft, Patricia G. Lane(2007), The leadership experience, 234-235

GARY,P. LATHAM(2007),Work motivation: history, theory, research and practice, page 60-70

3PRM 12 February 2012 However, The CEO Awards are open to all employees. The awards for last year were a trip on one of the Jubilee Sailing Trust vessels. Mainly the award scheme has been introduce to recognize, reward and encourage contribution to ongoing success of the organization, and nominations were invited to evidence the following criteria: Contribution to the success of the business this year Leadership qualities displayed Contribution to the personal development of colleagues Contribution to management of health and safety in the business

5. Describe at least 3 components of a total reward system, one of which should be non financial. The total reward system is a multitude of tools that the employer has in its hand and may be used to attract, motivate and retain employees. From the employee point of view the total rewards represent everything that he/she perceives to be of value resulting from the employment relationship. The reward concept covers both financial and non financial pay. The components of a total reward system are: Compensation is a critical component of the reward system that includes: basic pay system (annual or monthly salary rate) and variable or incentive pay systems (sales commissions, appraisal/performance-related pay, skills-base pay, etc.) Benefits are used to supplement the cash compensation that the employees receive and are designed to protect the employees and the family from financial risks. Example of benefits: social insurance(in Bahrain is only for locals), life insurance, medical insurance, dental, retirement plan, savings scheme, uniform, gym membership, company car, breaks, clean-up time, company holidays, vacation, personal das, etc. Work life- in this category is included the followings: workplace flexibility, paid and unpaid time off, health and well-being, caring for dependents, financial support, community involvement, and management involvement/culture change intervention. Performance and recognition - Performance is a key component of the organisational objectives and involves the alignment of organisational, team and individual effort towards the achievement of business goals and organisational success. The recognition acknowledges and gives special attention to employees action, efforts, behaviour or performance. Recognition programs acknowledge the employee contribution immediately after the task has been completed. This type of recognition award can be financial or non-financial (e.g., verbal recognition, certificates, trophies, tickets, dinners, etc.) Development and career opportunity includes learning opportunities (e.g. on the job learning, tuition, seminars and conferences attendance, corporate universities, self development tools and techniques, new technology training, etc.); coaching/mentoring(e.g., leadership training, formal and informal mentoring programs, association memberships, exposure to resident experts, etc.) and advancement

3PRM 12 February 2012 opportunities(e.g., internal job openings, promotions, overseas assignments, internships, succession planning, career pathways, etc.) 6. What factors do you need to consider when managing performance and give an example of how you would manage these varying factors? When managing the employees performance we must have in consideration the following factors: the objective achievement and the behavioural patterns. From my point of view, I believe that in order to have the best results from a performance management process we must base our judgment on the following key factors: Openness between the manager and the individual employee. Managers and employees both having the necessary skills to use the process properly for mutual benefit. Rigour and objectivity in forming and communicating judgements. Taking the time needed to prepare for and manage each of the four components of the system (see question number 2 answer). Also, all the managers has to be trained in how to use the performance management appraisal and to communicate to their employees all the changes that take place during the performance management process. A well informed employee will be easier to apprise, this resulting in less time consuming and good results. 7. Describe at least 2 items of data, including 1 external to the organisation. Gathering performance information from a variety of sources increases objectivity and ensures all factors impacting performance are considered. This information should include objective data like sales reports, call records or deadline reports. Other valuable information includes: feedback from others, results of personal observation, documentation of ongoing dialogue, records of any external or environmental factors impacting performance. Many reviews also include an employee self-evaluation. Other documents that help define performance objectives include: past performance appraisals, current departmental and organizational objectives and documented standards related to career goals. In order to gather feedback from other employees, organizations will often use a 360 feedback process. Along with the completion of a self-assessment, selected peers, subordinates, and managers are asked to contribute feedback around pre-identified areas. The feedback is based upon specifically identified skills or competencies and the final results are compared against the employee's self-assessment. This type of feedback increases self-awareness and in some

3PRM 12 February 2012 cases is used to support the performance evaluation process.

8. Explain the frequency, purpose and process of performance review, giving an example of those within your own organisation, or one which you are familiar. For Oil Spill Response (the company) the performance management review process works to an annual cycle which dovetails with the business planning and budgeting processes. In essence the system works through a three-stage process annually beginning and ending in January to match the business financial and reporting year. Stage One The first phase, which should take place in January, consists of an individual reaching a work agreement, competencies, occupational standards and personal development plan with his/her line manager. Stage Two Throughout the year the second phase takes place in the form of an on-going updating process aimed at keeping the work agreement up to date, on target and relevant to the dynamic environment in which the company operates. A mid-year progress meeting is mandatory. Stage Three At the end of the year a review of each individuals performance takes place, judgements are made and justified against objective benchmarks and decisions about reward, development and career progression. Stages One and Three should run together once the system is in use.

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Activity 2 Although in my day to day job Im not dealing with conducting performance management reviews I found it very challenging. The performance review meeting helped me to put in practice what Ive learned in the previous modules, especially the coaching and mentoring modules. A good performed performance review can do miracles for the person that is upraised and for the organization but only if the person that conducts it is well prepared. In order for me to conduct the performance review I had to prepare myself in advance and do some research regarding this. Ive learned that when you start a performance review you have to, first off all, know the process and also to explain it to the appraised person. Giving attention and time, being supportive, open and honest can only help you in bringing out what is the best in that person. Even if the person didnt do well and didnt accomplish his/her objectives we should offer, as much as possible, a positive feedback. Ive also learned the performance management review is not only for the past, its for the future as well.

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Bibliography:
1.

DANIELS, A. (4th edition, July 2004). Performance Management: Changing Behavior that Drives Organizational Effectiveness.

2. Chartered Institute for Personnel and Development 2009 - Discussion Paper on Performance Management, Issued on 2009; Reference: 4741 3. MARTIN, M., WHITING, F. and JAKSON, T. (5th edition). Human Resource Practice: page 168, Fig 6.3 4. RICHARD, L.; DAFT, PATRICIA G. LANE (2007). The leadership experience, 234-235 5. GARY, P. LATHAM (2007), Work motivation: history, theory, research and practice, page 60-70