Performance Management

In order to get the most from their workforces, many businesses have now formulated a performance management strategy. Whether through meetings with superiors, personal development plans or informal feedback, companies recognise the importance of managing an employee's behaviours, values and performance.

Explaining the aim behind such initiatives, the Chartered Institute of Personnel and Development (CIPD) cited Michael Armstrong and Angela Baron's landmark text Managing Performance: Performance Management In Action, which said they allow companies to more effectively manage their teams and increase the likelihood of achieving higher levels of organisational performance.

Employee reward and recognition schemes are intended to achieve similar ends. A well-designed programme will recognise and reward the behaviours that the company would like to see displayed by their workforce,while offering incentives against actions that go against their corporate values.

However, do many businesses' performance management processes miss out on the valuable insights which could be found in examining their employee reward and recognition schemes?

Previous research from Towers Perrin suggested that companies are not using their employee reward and performance management initiatives in a complementary manner. The study, which was published in 2007, found that most firms rely on technology to gather information for performance management rather than using the so-called 'soft-touch' methods favoured by recognition schemes, such as the findings of face-to-face meetings between managers and their staff.

Furthermore, the study discovered that 43 per cent of respondents have not effectively linked performance management procedures to business needs, while 42 per cent believe their systems do not allow them to adequately reward high performers.

Ravin Jesuthasan, managing principal and practice leader at Towers Perrin, commented:"It's encouraging to see that companies are emphasising performance and talent retention [but] what they're doing to reward and improve performance is not particularly effective or inline with overall business performance and strategy."

Despite this, standard performance management theory does suggest there is room for the input of staff reward and recognition initiatives when evaluating the performance of workers. The CIPD pointed out that a technique known as 360 feedbacks seeks to find information on the worker being assessed by consulting a number of sources rather than just relying on the views of their line manager or automated data collection.

"Its supporters claim that this gives managers and individuals better information about skills and performance, and working relationships," the organisation commented. If the information gathered in recognition schemes is included in this process, it could demonstrate how committed the worker is to their organisation or how their performance has created noticeable results.

The Forum for People Performance Management and Measurement also believes that staff rewards have a valid purpose in this process. The group's Leadership and the Performance of People in Organisations: Enriching Employees and Connecting People study pointed out that many companies are using their performance management processes to encourage employees to work towards personal goals such as training and skills development.

Claiming that such an approach can result in improved financial performance as well as being beneficial to the individual, the research said:"Reward systems need to be adapted to reflect a leadership approach that ultimately satisfies people's basic needs for achievement, a feeling of control over one's life and a sense of belonging."

One organisation which appears to have taken on board the view that employee reward and recognition can be an important element of performance management processes is the prestigious Massachusetts Institute ofTechnology (MIT).

A key belief behind MIT's recognition scheme is that the initiative must"reinforce and encourage work that advances employee, departmental and/or institutional goals and values". Managers at the university are required to use appropriate methods of recognition to promote good performance in the staff and to encourage the success of their departmental goals. In addition, MIT has established five best practices which it considers to be essential for effective performance management - and these rank employee recognition alongside ongoing feedback, performance reviews,goals and development, and accountability.

Just as MIT is seen as a trail-blazer in the field of science and technology, it could have hit on a winning formula for integrating employee reward and recognition with performance management. Maybe more organisationswill soon start to realise the benefits of using these two important management techniques together?

If you would like some advice on performance management and how we can implement a solution for your organisation, please talk to us today