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By Angela Baron (January 2005 Issue)
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‘Performance management’ is not a new term; it’s been around since at least the mid-1980s. But what is recent is an approach to the management of performance that embraces all aspects of people management and development and is focused on individuals both in terms of what they contribute and what they achieve.

When the Chartered Institute of Personnel and Development (CIPD) first carried out research into performance management in 1993, the term ‘performance management’ was in common use among practitioners, yet there were a number of different interpretations. For some it meant objective setting; for others it meant performance-related pay. What it certainly did not mean was a holistic approach to the management of the performance of individuals. Even now it is common to find organisations claiming to practise performance management when in reality they operate a mechanistic appraisal process. When we carried out research again in 1997, although there was more consensus that performance management meant an integrated approach, there was a definite split between performance management (which was development led) and reviews (which were geared towards informing pay decisions).

As we leave 2004 and move into 2005, the majority of organisations appear to recognise that managing performance is more than simply setting a few objectives and reviewing progress and that they must look both at what individuals put into their work as well as what they achieve in the form of outputs if they are accurately to assess performance. As one of our interviewees commented: ‘Performance management can only succeed if it is part of an integrated approach to management.’

Michael Armstrong and I carried out the research for our book Managing Performance: Performance Management in Action in late 2003 and early 2004, and 516 people management practitioners responded to our survey, which was sent out in November 2003. We also interviewed 30 personnel practitioners, many of whom are quoted in the book. The majority of our survey respondents either agreed or strongly agreed with the following statements about performance management.

* The most important aspect of performance management is the setting of challenging and stretching goals (67 per cent).
* Performance management will only succeed if it is part of an integrated approach to management (98 per cent).
* Performance management will only succeed if it integrates the goals of individuals with those of the organisation (95 per cent).
* It is essential that line managers own the performance management system (93 per cent).
* The focus of performance management should be developmental (82 per cent).
* Performance management should be a continuous and integrated part of the line manager/employee relationship (99 per cent).
* Performance management should be about motivating individuals (96 per cent).
* Performance management is an essential tool in the management of organisational culture (94 per cent). * Everyone must be trained in performance management techniques for any performance management system to be successful (77 per cent).
* It is essential that performance management is accompanied by extensive communication to ensure its aims are fully understood (94 per cent).
* Quantifiable measures of performance are essential to successful performance management (84 per cent).

The most popular features of performance management were appraisals, objective setting, coaching and mentoring, and career management. At first glance this did not appear to differ substantially from our findings in 1997. However, when we carried out follow-up interviews we found quite a different picture with most of the organisations we visited taking a much broader definition of reward incorporating both financial and non-financial reward and a more flexible and innovative approach to objective setting.

For many of our interviewees, performance management was about encouraging line managers to manage their people appropriately, to ensure they were having meaningful conversations about what is expected of individuals, and how they should go about meeting these expectations. Many talked about ensuring a clear line of sight between the business objectives of the organisation and the contribution of the individual, ensuring that everyone understood how they were contributing to overall business aims and objectives. As one manager commented: ‘If performance management is to achieve anything it must integrate the goals of individuals with those of the organisation.’

Most of the people we interviewed had strong views about the role of line managers in delivering performance management. More than one commented: ‘It is essential that line managers own the performance management process if it is going to be successful in raising performance.’ The majority agreed that without management buy-in to the performance management process little would be achieved. Performance management in the 21st century is a key HR practice generating data to value the human contribution to the business. It’s about recognising, rewarding and nurturing talent, ensuring management principles are applied consistently. But its success relies on being inclusive and embedded across the organisation.

The full findings of this research together with practical solutions and strategies for the management of performance can be found in Managing Performance: Performance Management in Action by Michael Armstrong and Angela Baron, CIPD, 2004.

 

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