Systems

Performance Management Architecture


The performance management system at individual level is of critical importance to the effective and efficient functioning of the organisation as a unity. It is a unique combination of elements that may be a discrete or explicit system or a collection of existing sub-systems, aiming to manage the action’s effectiveness of employees for generating the desired outcomes (Neely et al. 2007).

 

Total Performance Scorecard (TPS)

Represents a concept of improvement and change management, based on a set of rules that form the basis for continuous process and individual improvement. It aims  to reach an optimum level of using the organisation internal capabilities for reaching higher performance level (Ramperstad, 2003).

 

Performance appraisals

Individual Performance Appraisals aim to assess and measure the performance reached by each employee, in a well defined framework, such as quarterly or annual individual evaluation. They mostly have a component of behaviour ranking and improvements.

For thorough implementation, there are several sub-processes that can be implemented:

  • Individual goal setting - the process of establishing SMART goals for the employees, together with the manager, based on the main job responsibilities and projects. This process aims to increase the probability of success and goals achievement for the individuals.
  • Coaching – the process of planning, conducting and evaluating individual results. This is mostly used in larger organisations, where Human Resources processes are well-implemented and directed towards top performers.
  • 360 degree Feedback – the method / tool of providing employees with the opportunity of receiving performance feedback from the supervisors, colleagues and subordinates. It is usually followed by improving initiatives and another round of feedback after a given time period.

 

Employee compensation system (Pay for performance compensation system)

Employee compensation systems aim to generate the desired behavior and performance results from the employees. A well implemented and accepted compensation system among employees will encourage them to perform better and achieve the targets established.

The system needs to be coherent, well defined and known in advance by the employees, in order to bring the expected benefits. In order to apply such a system, it is important to respect some requirements:

  • A culture that supports pay for performance;
  • Effective and fair supervisors;
  • A rigorous performance evaluation system;
  • Adequate funding;
  • A system of checks and balances to ensure fairness;
  • Appropriate training for supervisors and employees; and
  • Ongoing system evaluation (U.S. Merit Systems Protection Board, 2006).

 

Management by Objectives (MBO)

Aims to align goals and subordinate objectives throughout the organization, being cascaded at individual level. MBO's are often perceived as a form of planning. MBO can be easily associated with the development, deployment, and maintenance of a performance managment system applied also at individual level.

 

References:

  • Neely, A. et al. (2007), TOWARDS A DEFINITION OFA BUSINESS PERFORMANCE MEASUREMENT SYSTEM, International Journal of Operations and Production Management, Vol. 27, pp. 784-801
  • Rampersad, H., K. (2003), Total Performance Scorecard, Redefining Management to Achieve Performance, Oxford, UK.
  • U.S. Merit Systems Protection Board (2006), Designing an Effective Pay for Performance Compensation System, available at:  http://www.mspb.gov/netsearch/viewdocs.aspx?docnumber=224104&version=224323&application=ACROBAT (accessed 16 August 2010)
 

Further reading:

Individual : Architecture

 

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