INTRODUCTION TO PERFORMANCE MANAGEMENT

•“ Since my last report, this employee has reached rock bottom and shows signs of
starting to dig.”

•“ I would not allow this employee to breed.”

•“ Works well under constant supervision and cornered like a rat in a trap.”

•“ He sets low personal standards and then consistently fails to achieve them.”

•“This associate is really not so much of a has-been, but more of a definitely won’t be.”
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Some Perspectives:

•85% of SA companies have a PMS

•95% of these have a strong commitment of the CEO

•In 94% of these organisations, there is a formal communication strategy

•Only 51% believe employees and managers are adequately educated and trained in
PMS

•37% uses the Balanced Scorecard methodology

•86% allows employees to jointly set targets and objectives with the manager

•91% have clear PMS policies, procedures and systems in place.

•Most companies measure performance using hard and soft measures

•2001 Deloitte & Touche HCC Survey

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“So what is Performance Management”? (if 85% of

companies apply it, what do they actually do)?

Group Discussion:
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A Definition:

Performance management is the process of ensuring

individual and team effort support the organisational
objectives and to realise key stakeholder expectations
and wealth creation in all the identified value drivers of
the organisation.

Thus:
•Planning is crucial
•Stakeholder expectations are key drivers
•Management and employee buy-in and involvement are
paramount
•Link to and alignment with strategy
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Performance Management is the process of:

•Planning Performance (setting KPA’s, objectives and

standards that are linked to corporate strategy,
development plans).

•Maintaining Performance (monitoring, feedback,

coaching and mentoring, regular interactions re goal
achievement)

•Reviewing Performance (formal feedback and ratings –

evaluating performance)

•Rewarding of performance (increases, bonuses,

 Performance Management Model

Planning Performance:
-Setting objectives
-Outlining development plans
-Getting commitment

Reward Performance:
-Link to pay
-Results = performance

PERFORMANCE
MANAGEMENT
PROCESS

Maintaining Performance:
Reviewing Performance:
-Monitoring performance
-Formal reviews
-Coaching
-Assess against objectives
-Feedback

Business strategy, stakeholders, key economic wealth drivers

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Planning – 80% of the process

Planning includes:

•Identifying Key Value Drivers of stakeholders

•Defining Key Performance Areas (KPA’s)

•Defining Objectives
•Defining Targets
•Devel a training & development plan
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STRATEGY, STAKEHOLDER EXPECTATIONS –

THE CHALLENGE OF ALIGNMENT

• “With no harbour, no wind will be the right

wind”

• Between 92-97% of Companies have a vision

and some strategy statement. Only between
3-7% of staff know and work by it.
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A Model for establishing/building a performance management
process

Deriving key value drivers from

Determining and assigning KPA’s
Strategic direction and KPA’S

Determining and assigning individual

Determining organisational objectives
objectives

Execution

Measuring, evaluating and rewarding

Measuring & Evaluating performance
Performance against individual
against organisational objectives
objectives

Reassessing and adjusting business Reassessing KPA’s and adjusting

strategy Objectives to reinforce strategy

Review
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Benefits:

A well implemented performance management process is beneficial to the company,

its managers and employees. The advantages being:
Integration

 Open Communication
 Improved Performance
 Training and Development
 Clarity of Standards/Requirements
 Placement of Individuals
 Increased Objectivity
 Remuneration
 Promotability
 Career planning
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Selecting and evaluating a Performance Management

System:

•Level of employee participation and involvement?

•Competency-based?
•Is it form-driven or REAL performance management
(daily)
•Is linked to rewards AND development?
•Does it focus on both the “what” and the “how” of
result achievement?
•Does the process incorporate training (both process and
soft skills)?
•Is it generic, and can it be customised to your
organisation’s needs and culture?
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Success factors in implementing Performance

Management:

“If you are not managing performance, what are you

managing?”
Some Key Building Blocks

Feedback Training

Reward &
Review Process Process Design
Compensation

Competencies Goal Setting Strategy Focus

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Success factors in implementing Performance
Management:
Fundamental Requirements/considerations:
•Relevance
•Link to strategy, clear job goals, up-to-date job profiles
•Reliability
•Consistent measurement, rating errors
•Discriminability
•Ability to discriminate between good and poor performance
•Freedom from contamination
•External factors should not influence measurement (resources, line
of sight)
•Practicality
•Easy to use, understandable, manageable administration
•Acceptability
•Perceived legitimacy, involvement
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Coaching and mentoring are crucial components of the

Maintaining of Performance Phase:
Planning Performance:
-Setting objectives
-Outlining development plans
-Getting commitment
Reward Performance:
-Link to pay
-Results = performance
PERFORMANCE
MANAGEMENT
PROCESS

Maintaining Performance:
Reviewing Performance:
-Monitoring performance
-Formal reviews
-Coaching
-Assess against objectives
-Feedback

Coaching is a formal process. It is the day to day process of

helping employees recognise opportunities to improve their
performance and capabilities.

Coaching = Give a man a fish a day, and you fed him for
a day; teach him to fish, and you fed him for life.
Confucius
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COACHING:
•Give Feedback (EEC Model)
•Ask for ideas and suggestions
•Discuss
•Use the following questions:
•Where?
•What is happening now?
•What are u going to do next?
•Coaching provides immediate feedback on performance

HOW DOES COACHING DIFFER FROM MENTORING?

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PERFORMANCE AUDITS

Case Study 1: Mining Company in Southwest Africa

Case Study 2: Global Company

Key topics:
•What do you audit
•How do you audit Performance Management?
•What can you expect?
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PERFORMANCE AND REWARD

– What gets measured gets done

– What gets rewarded is sustained
– Measures give rewards relevance, and rewards give
measures meaning (TB Wilson)
– The majority of workers want recognition for
achievement
– Dilemma’s in reward:
• Objectivity
• Transparency
• Affordability
• Baggage

– Retention Value NB
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A Reward Matrix:

Rating 25th 50th 75th

Percentile percentile Percentile

5 17% 15% 10%

4 15% 12% 8%
3 12% 10% 6%
2 0 0 0
1 0 0 0
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LINK TO PAY:
Why does it often fail?
•Lack of objective and quantitative measures
•Poor link between pay and performance (no immediate
reinforcement)
•The aspects that get rewarded are not linked to strategy
– the “wrong” behaviours and achievements are
sustained
•Poor communication re objectives, benefits and
procedures (the “rules of the game”)
•Level of performance-based-pay not proportionate to
effort
•Resistance to change
•Union perceptions and involvement
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The Psychology of INCENTIVES:

KEY KEY SECONDARY

IMPACT OBJECTIVE OBJECTIVES

• Internal Equity
Hygiene Competitive
Fixed Factors in Market
• Cost
Management
Package • Flexibility

• Return on
Variable Motivational
Drive Bottom Line
Behaviour • Reward specific
Package behaviour/results
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Performance
Attract

Retain
REMUNERATION

Skills
COMPONENT:

Guaranteed Package X X X

Short-Term Incentives X X X

X X
Long-Term Incentives
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How do you link Performance Management to Training &

Development Initiatives?

The “Link”:
Desired performance

Measurement

Vision
Mission
Actual performance Development Strategy
Value Drivers
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PERFORMANCE MANAGEMENT IN SMME’S

Key Challenges:
•Strategy not always clear, defined or formalised
•Decisions are not taken to lower levels (“family
business” syndrome)
•There often are:
•Little time
•Few resources and finances
•Little support
•Not adequate skills
•The “we do fine” syndrome
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Q&A