Misunderstanding the reasons behind the implementation of a PMS is common and very problematic. For instance, a few years ago, my then employer planned to implement a PMS. Management sold the idea by saying the lack of a PMS was preventing rewards of bonuses to staff.
Let me begin the discussion of an effective PMS by dispelling four myths about them, amongst many others.
Myth 1: Performance management is only about performance appraisals and promotions to reward high performers with salary increases or bonuses. An effective PMS will base salary increases and bonuses on measurable and quantifiable objectives, and not opinions or subjective ratings that vary depending on who is giving them.
Myth 2: Since we don’t have control over what we don’t measure, we must measure everything. The desire for perfection drives the obsession with having everything under control by trying to measure everything. Applying Pareto’s Principle (80/20 rule) will burst this myth. Identify 20% of the strategic KPIs to measure that will give you 80% value regarding strategy execution.
Myth 3: It is only about the work that I do. No, it is also about supporting and helping others utilise their full potential in achieving common goals. An effective PMS ought to measure team productivity to harness the synergy of teams.
Myth 4: We only need a performance management platform with some Key Performance Indicators (KPIs). Those two are just part of a wider PMS. In reality, an organisation’s culture is also a critical component.
A PMS is not a process, neither a framework for performance management. Being a system, it is a collection of elements organised for a common purpose.
A mature PMS will have the following 10 outlined components:
A well-defined Integrated Strategic Business Plan (ISBP) underpins the design of an effective PMS.
The Theory of Change (TOC) is a high-level depiction of strategy execution, showing how and why changes will occur because of the suggested interventions or strategies.
A Logic Model, a Logframe or Logical Framework, setting out the objectives, KPIs, resources, activities, key assumptions, outputs, outcomes, sources of data, and how to be monitored and evaluated.
Performance Management Plans (PMP), at the minimum, will include action plans stipulating the activities, date of data collection and evaluation, responsible party, etc.
Processes premised on two philosophies: The first philosophy of annual performance reviews, where the company holds the employee accountable and assesses the employee’s value to the company. The second philosophy of continuous performance management is currently gaining traction. The assumption here is employees want to perform well, but they also want to improve, grow and develop. In this case, the company’s role is to support the employee on this journey of mutual benefit.
Performance Improvement Plan (PIP), deviations from expected performance documented, and an action plan to bridge the gap formulated.
The Performance Development Planning (PDP) feeds from the PIP, which is a process that enables you and the people who report to you to identify personal and business goals that are most significant to the organisation’s success.
A communication strategy defines the communication needs of each stakeholder, the frequency of communication, the channels or platform to use, and the focus of the messages.
An OCM framework or strategy is a roadmap for transforming an organisation into a results-driven one. The culture of an organisation is bound to influence its productivity.
A platform that is mainly performance management software. A good PMS platform will attempt to integrate all the components listed above. Fortunately, this is not very difficult because some of them will be document attachments only.
A PMS is a work in progress, built and revised over time until maturity. Therefore, rather than spending months designing the perfect system, create a roadmap and focus on communicating to all employees the reasons and benefits of such systems, the connecting strategy, measurements, and decision-making.
As a system, other activities in its environs may require improvement. For example, business process reengineering (BPR) may be necessary to align with expected new outcomes. PMS implementation will not cause an organisational restructuring, unless the business model changes. The manifestation of restructuring is in new job titles or descriptions, or even new departments.
To summarise, an effective PMS has flexibility built in and used for learning, rather than for control purposes. The implementation of a PMS is likely to be in phases due to the broad scope. Finally, the glue of a PMS is the organisation’s culture.
*Robert Gatonye is pursuing a doctorate in business administration (finance) at the UNAM Namibia Business School (NBS), an ICT expert, and a Certified Public Accountant (CPA).