Question: What good options are available in building a Performance Management System

Performance Management is a critical component of running a successful organisation. It is a critical driver for the actualization of goals. The strategies of an organisation is as good as the many activities that brought about them if little or no attention is paid to the system that will track the actualization of what those strategies are to deliver.

A company that decides on growth needs to define what growth means within the context of the business. Such organisation needs to know how growth will be measured, when it can be said to have been achieved and who plays what role within the structural setup of the organisation. This and many more are what a Performance Management System is expected to deliver irrespective of the organisation, its type of business and the market in which it plays.

For every Performance Management System conceivable, it is important to advise against silo approach. A Performance Management System can only be adjudged successful when it has been able to connect all aspects of a business operation with the right framework that will capture and track performance. With this, all working parts of a business are now connected like a beautiful story. There is need for alignment between the concepts that has been conceived to drive the business and the myriads of task and activities that will birth the expected goals.

Two important questions you should always ask yourself when you are faced with designing a Performance Management System for your organisation should be ‘What do we want to achieve with a Performance Management System and What is it about our organisation?’. These questions will direct you on the path of what can work for your organisation.

The framework below shows the flow for ensuring an effective management of performance within an organisation. The process starts with strategic planning. This helps in deciding on the strategic objectives and goals of the organisation.

Strategic Objectives and goals are appropriate inputs into performance goal setting for all functions within an organisation. The mid-point of the framework is channeled towards how goals are to be achieved and providing support using different interventions. This runs through to evaluation of performance and managing the outcomes of performance evaluation. Outcomes also form inputs into defined Human Resources activities.

This framework is by no means exhaustive of what can happen within a Performance Management System.

To get you started with tailoring the framework for your organisation, please use the tab provided at end of this article to download the editable version of this framework.

Performance Management Options

There are many options available concerning Performance Management Systems. At this stage we will explore the following options:

The Balanced Scorecard

Our Rating
4.6/5

The Balanced Scorecard, widely known as BSC is a comprehensive management tool that allows an holistic view of a business set-up. This system of managing performance within organisations was a brain child of Robert S Kaplan and David P Norton in the 90’s. The first mention of this system was in a Harvard Business Review precisely in the year 1992.

The core definer and what has set the BSC apart is that it allows businesses to focus on four distinct areas of business that are essential to growth irrespective of industry, sector or business model.

The essence of this learning piece is not to bore you with the many stories of the balanced scorecard. However, you are encouraged to watch the video below for clearer understanding of the concept of the balanced scorecard.

To kick start the process of setting up the use of a balanced scorecard in your organisation, there are steps you should follow. The steps provided in this guide is to make the process stress free.

Input: Strategy Document

Output: List of strategic objectives of the company

Input: List of strategic Objectives

Output: A Strategic Map connecting the strategic objectives. This map is expected to show the cause and effect of the pool of strategic objectives. 

Input: Strategic Map & Corporate Organogram

Output:

Tier 1, Tier 2 and Tier 3 Scorecards

Tier 2 is derived from Tier 1 and Tier 3 is derived from Tier 2.

(Please NOTE that it is not compulsory to get to Tier 3 scorecards if you do not intend to deplore the use of balanced scorecards at the level of individuals or better still if you are combining different appraisal/performance management systems)

Example of Editable Scorecard Template in excel has been provided for download. Please make use of the button provided at the end of this article

Input: Corporate Organogram, Job Profiles

Output: Unique Groups where departments have been distributed based on similarities. This makes weighting of the balanced scorecard perspectives easier.

Example of Talent Segmentation has been provided for download. Please make use of the button provided at the end of this article

Input: Talent Segmentations

Output:

Weights for each perspective of the balanced scorecard across the different Talent Segmentations

Example of weighting has been provided for download. Please make use of the button provided at the end of this article

Input: Philosophy for Appraisal.

The big question here is, why are you setting up a performance management system? What do you want it to achieve? What level of performance is noticeable within your organisation? What culture shapes the organisation? These and many more help to decide how or what your rating and grading grid will be shaped. You can also research into model organisation to see what is obtainable or practised

Output:

Rating Scale

Examples of Rating Scales has been provided for download. Please make use of the button provided at the end of this article

Input: Philosophy for Appraisal.

Same questions as Task 6 applies

Output: Appraisal Grading Grid

Examples of editable Grading Grid has been provided for download. Please make use of the button provided at the end of this article

Input: Business Model, Financial Year etc

Output: Appraisal Period/Cycle

Examples of appraisal cycles has been provided for download. Please make use of the button provided at the end of this article

Input: Philosophy for appraisal, Grading Grid

Output: Outcome Management Policy/Framework

Examples of editable Outcome Management Framework has been provided for download. Please make use of the button provided at the end of this article

Input: Balanced Scorecard Framework

Output: Appraisal Manual

Examples of editable Performance Appraisal Manual has been provided for download. Please make use of the button provided at the end of this article

Input: Balanced Scorecard Framework

Output: Balanced Scorecard Appraisal Forms

Examples of editable excel Balanced Scorecard Appraisal forms has been provided for download. Please make use of the button provided at the end of this article

CASE STUDY: Enroll for the course below to learn the application of Balanced Scorecard

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Scoreboard for BSC
Financial and Non-Financial KPIs 90%
Objectivity 80%
Ease of Implementation 45%
Ease in Design 45%

Behaviorally Anchored Rating Scale

Our Rating
2.5/5

The Behaviorally Anchored Rating Scale popularly known as BARS often time being used as a complimentary appraisal system to any other technical job specific KPI oriented appraisal systems. Just like the name connotes, it is focused on the behavioral elements of performance. Building this system also identifies with both qualitative and quantitative features.

The deployment of Behaviorally Anchored Rating Scale can either be the supervisor appraising direct reports or having multiple assessors within the appraisal system. The approach of supervisor appraising direct reports can be tagged as a one-way appraisal system. The video below gives a brief explanation into BARS and why it is different from the regular Graphic Rating Scale:

To get you started with designing a BARS in your organisation, the following sequence of actions should guide you:

Identification of Values that shapes the behaviors within the organisation. Define expected behaviours for each of the values.

Segmentation of the functional sections/departments of the organisation

Distribute the values across the segmentations based on relevance. Review the values again to be sure that the defines values speaks to the functional areas that it has been assigned. There are instances where you might need to be more extensive with the description of a value.

PLEASE NOTE: You can decide not to go this route by simply making the values to be appraised across board. However, to derive the best result and build the desired culture, tailoring and generic descriptions of value is recommended.

Build a scale for the system. With this scale, you make it possible and easy for assessors to assess. There are different options of scales. There is a 5-point scale (1-5), there is a 10-point scale (1-10) and a 3-point scale (1-3).

The 3-point scale is the most preferred when you want to aggressively build a culture that permeates the system. With this point system, there is really no where to hide. It also helps to discover the areas of gap easily and on point. The concluding part of the grading scale is the percentage (%) scoring.

Decide on the participants in the appraisal. At this point, you need to decide on the parties to the appraisal. The schema below shows the possibilities:

Design the appraisal tools. This often time comes like a questionnaire. Should you decide to go with step 3 approach, you are likely to end up with different models of the questionnaire. Your questionnaire is also expected to come with the rating points adopted as described in step 4.

Example of Editable BARS Appraisal  excel Tools has been provided for download. Please make use of the button provided at the end of this article

Think of the medium for deployment. This is where you finally decide on the appropriate tools for transmitting the appraisal tool. To help you decide, you will need to decide if it is going to be manual, semi-tech enabled or via a specialized/customized tech platform. The decision should not be taken in isolation without thinking through the process and the peculiarities/challenges of your organisation.

Design your reporting template

CASE STUDY: Enroll for the course below to learn the application of Behaviourally Anchored Rating Scale

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Scoreboard for BARS
Financial and Non-Financial KPIs 44%
Objectivity 60%
Ease of Implementation 75%
Ease of Design 85%

360 Degree Appraisal System

Our Rating
3/5

The 360 Degree Appraisal System is also known as multi-rater feedback system. The origin of this system can be traced back to the 50’s when earliest set of surveys were deployed for gathering information about employees. It was in the 90’s that it fully became a notable appraisal system within the HR community (body of knowledge)

The video below gives some perspective into the 360 Degree Feedback System. As you watch this video, try to pencil down response to the question: what innovations will I explore in designing a 360 Degree System for my Organisation?

The video below also provide basic but meaningful explanation into the 360 Degree feedback system. Watch this video and while you do, try to answer this question: What will be a ‘NO’ for you in designing your 360 Degree feedback system?

There are somethings you need to note when deciding on a 360 Degree Appraisal System:

  1. Is your organisation prepared for the feedbacks that can come from the exercise. It usually test the level of maturity within the organisation as it relates to receiving feedbacks – especially at the Executive level
  2. Are all parties involved in the appraisal familiar with the individual being appraised from a functional perspective? This is very important in order to prevent ticking of boxes
  3. Is there a supportive system that will prevent the adoption of a recent incident to determine the basis for appraising an individual? This practice defeats the essence of a 360 Degree.
  4. Is the administration of the 360 Degree not cumbersome due to the pool of people that will be involved in the process? This needs to be thought through. You need to decide the medium for executing the appraisal. If it is going to be paper base, you need to be sure that you have the resource in HR to pull through the process. These and many more needs to be considered in the process of designing the system.
Scoreboard for 360 Degree Feedback
Financial and Non-Financial KPIs 70%
Objectivity 70%
Ease of Implementation 30%
Ease of Design 80%

Managing by Objective

Our Rating
4/5

According to Investopedia, Managing by Objective which is popularly known as MBO is a strategic management model that aims to improve the performance of an organization by clearly defining objectives that are agreed to by both management and employees. According to the theory, having a say in goal setting and action plans encourages participation and commitment among employees, as well as aligning objectives across the organization.

The term Managing by Objective was first outlined by Management Guru Peter Drucker in his 1954 book, The Practice of Management 

The video presented below provides some insights into the MBO model for managing performance.

In designing the Management by Objective Model within your organisation, there are some common and our own recommended approach as presented below:

Determine the Strategic Objectives of the Company. Most organisations do have their Strategic Objectives listed. Strategic Objectives are expected to align with the Vision and Mission Statements of an Organisation. At every point of deriving strategic objectives, an exercise to determine the alignment with the Vision and Mission of the organisation. This responsibility is left to the Executive Management Team within an Organisation. Below are examples of strategic objectives:

  • Expand into three (3) regions in the country
  • Diversify the company’s portfolio
  • Introduce white labels
  • Introduced Franchise System
  • Grow Retention of Talents

Map Strategic Objectives to Key Results Area and corresponding Key Performance Indicators. There are Objectives that are derived from the corporate level and can be cascaded to the different sections/departments and portfolios within the organisation. The other type of objectives are job specific objectives which are peculiar to each job. In deriving these objectives, dialogues are expected to be held between Line Managers and their direct reports.

Below is a chart of corporate level mapping of an identified strategic objective:

Build a system that will allow the tracking, method for evaluating and process for carrying out such evaluation. In recommending an approach for evaluating, immediate evaluation comes highly recommended. With this, waiting for a period before evaluating the extent of KPIs achieved is no longer required. This builds a system where individuals are a part of the process. They self track their performance and the system for tracking performance or gathering feedback is built into almost all the different workflow.

In building a system, you will need a rating system as shared while discussing the BSC, a grading scale will be required. You will need to design appropriate tools for agreeing objectives, tracking actualization and for carrying out evaluation. Another important element of your system will be the outcome management. What happens to individuals after grading their performance? This is what your outcome management will address. There are software designed to provide the assistance required. You can also combine Microsoft Applications for this purpose.

CASE STUDY: Enroll for the course below to learn the application of Management by Objectives

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Scoreboard for MBO
Financial and Non-Financial KPIs 80%
Objectivity 80%
Ease of Implementation 82%
Ease of Design 70%

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Compilation of PMS editable templates

  • 360 Degree Questionnaire Template
  • Rating Scale
  • Grading Grid
  • Process Flow
  • Mapping of 360 Degree Assessors
  • Reporting Template
  • Strategic Maps plotted into Tier 1, 2 & 3 Balanced Scorecards
  • Formularized Scorecard (Excel)
  • Example of Talent Segmentation and Weightings
  • Editable Performance Management Framework
  • Editable Outcome/Consequence Management Framework
  • Appraisal Manual Outline
  • Editable Appraisal Forms
  • Editable BARS Questionnaires
  • Editable MBO Performance Agreement Form

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