How to Place an Effective Performance Management System for Your Organization? (Part 2)

Last time, we discussed how we can use the performance evaluation as basis for salary increases and adjustments.  Now, I will be sharing with you how we align training to Performance Management.

Training is not always the answer to improve the performance of an employee.  When we hire employees, we expect that somehow, they have some level of know-how and skills required for the position.  Employees should have aptitude and interest on a particular job function to ensure that a specific training would improve the efficiency of an employee. 

Also, training is given to employees if there are new technologies and processes in place.  Some organization have standardized training programs for new employees or for the staff.  These trainings are designed to ensure that the basic competency-requirements by the organization would be present from all its employees. 

But there are specialized and technical trainings that we give to our employees, particularly for those whom we expect to rise up the organizational career ladder.  Usually, these technical and special trainings are costly.  Training exposure on best practices, and out-of-town trainings can be used as a motivational reward or incentive to employees who performed very well. 

Excellent performance are usually a result of the employees' hard work, interest, dedication and commitment to his/her job.  Without these, employees performance may only be at an average or may also be poor.  Poor performances may also be the result of loss of interest on his/her job, demoralization, or lack of commitment.  Thus, it would only be fair to send performing employees to specialized training that would move him/her up his career.  Poor performers will not value the learning that they will get from training.  But high performing employees have tendencies to seek development and growth so that they will be able to continue excelling in their field.

So how can we align the training to the performance management system?  First is HR should be able to identify the career interest or career path that the employees would want to take.  Training that would be given should address the gap between their current position to the next post or job that they wanted.  If he/she wants to become a supervisor or a manager, then give trainings on leadership development.  But if he/she wanted to take another route and change departments, then provide trainings that will help him/her get to the new post that he/she desires. 

During performance evaluation, the supervisor or manager should be able to assess as well the training need of the employee.  He/she should inform the employee what training has been identified out of the performance evaluation.  Below shows a sheet that may be used as guide in identifying the career path and training requirement of an employee:

FIG. 1

FIG. 2

FIG. 1 is an example of a career path plan of an employee.  The given example are descriptive and not yet specific.  If there would be discussion with the employee, it should be more specific.

FIG. 2 is an example of identified Training Needs of an employee.  The mid year comment and full year comment is not yet filled-up because it will be used later during the next performance evaluation period.  An organization may have to performance evaluation period - mid year and end of year.  During those evaluation schedules, make sure not to miss checking on the employees if they indeed were able to attend the identified training needs. 

Next blog post, I'll describe next on how to align the PE with Succession Program and designing a compensation-benefit package.  I hope this article helped you understand how you'll be able to get an ROI out of your training programs, by including it to your Performance Management System.  Please do comment or ask if you have some questions.  I'll try my best to respond to your queries.

How to Place an Effective Performance Management System for Your Organization? (Part 1)

I have been to several organizations in different industries.  As far as I have seen, organizations that have an efficient Performance Management System are able to do so because they were able to document and standardized their processes and operational policies.  Also, they are gaining and were able to tie-up the results of performance evaluation with their compensations and benefits packages.

Let us say your company or cooperative is doing well and you want to ensure that those employees who are excelling in their performance are rewarded, then you really have to make some changes in your compensations and benefits packages.  Let us look at the following:

Salary Increases - How do you increase the salaries of your employees?

From a previous company I worked with, they have a regular schedule of giving annual increases to all employees.  The manner they give it is "across the board".  A certain percentage of the organization's profit goes to the budget for salary increase.  They set a condition that if the organization met their business targets, then everyone will receive an equivalent increase regardless of the employees' poor performance.  As a result, those who used to perform well and exert effort in doing their jobs felt cheated and demoralized.  And you would then know the aftermath of this -- employees just give enough what they thought is due to what they are being paid for.  As a new HR during that time, I saw that the employees have developed a habit of just going on the usual 8 - 5 work schedule.  They don't waste time... but they don't also share creative thoughts or contribute to improving their services.  When asked for any suggestions or contributions, they would just keep quiet.  Also, when employees are being promoted, they were disinterested.  They said that they don't want bigger responsibilities because they don't see any significant difference on the pay of a supervisor to that of a regular agent.

It was really a challenge changing their mindset when we tied-up the salary increases to the employees' performance.  So how did we go about it?  Here's how...

We first informed the employees that the scheduled increase for the following year would be based on performance.  That was about a year prior to actual implementation.  At the same time, we first developed a salary structure that is aligned with their market value and we conducted a job evaluation to align all employees' salaries, considering their loads, accountability, length of stay and the market value of their position.  Thus, during the year of announcement, all employees were happy because they received an increase based on salary alignment.

Then, we presented to all employees their revised job description.  Also, during business planning, we get the commitment of the employees on the new targets and each one has to sign a "performance target contract".  It's the basis of their next performance evaluation.   We made it clear to them that the next evaluation would be based on their individual targets.  Then we identified the percentage of salary based on their performance.  On the first year of the new performance management system, we provided the following guidelines on salary increase:

• Low to below average performance - No increase
• Average performance - 50% of the next step increase
• Above Average performance - 75% of the next step increase
• Excellent/Outstanding - 100% increase or the next Salary Step Increase

If you look at the above criteria, you would say it's fair enough.  But if you really want to stretch the employees capability, then I suggest the following:

• Low to Average - No increase (because average is actually expected of them)
• Above Average - 50% of the next step increase
• Excellent/Outstanding - 100% increase or the next Salary Step Increase

We informed the employees after the 1st year of implementation of the change.  Thus, they were not surprised when we finalized the later criteria.  

The key to change management is clear communication and complete understanding of the objectives.  Taking it a step at a time will make it easier for the employees to accept the new condition.