Performance Management in a Tight Economy - Part 1

As we move to a tighter economy, Performance Management is becoming critically important to organisations

Performance Management in a Tight Economy - Part 1

As we move to a tighter economy, Performance Management is becoming critically important to organisations and managers. This Whitepaper explores Performance Management in the context of tightening economic conditions and how to deal with the various issues you can expect in the foreseeable future.

Background

For those that have not tracked Employee Performance Management for the last few years, there has been a tremendous move from traditional reactive Appraisal systems to proactive Performance Management processes.

Performance Management concerns every employee and manager and progressive organisations embrace Performance Management as a tool to include and link every employee and manager to the strategic and operational imperatives of the organisation.

And yet, we still find that many organisations persist with once-per-year Appraisals. Performance Management differs from Appraisal in many ways (please refer to our previous White Paper of Appraisal vs. Performance Management) however the predominant disadvantage of Appraisals is that employees and managers are NOT linked with the Organisational Strategy and this issue alone makes Appraisal a waste of time in tighter economic conditions

Fewer Resources means more Focus

Common with the tightening of economies around the world is access to resources. As organisations tighten their belts, resources including financial capital, human capital and other resources become difficult to attain. This means managers have less access to financial capital for employee incentives/bonuses and less access to human capital to get the job done. This means managers will have to ensure that their employees are focused on achieving critical objectives and stay focused on these objectives rather than being distracted to working on less critical activities.

Performance Management pays a critical role in achieving this focus. If employees have clear and focused objectives that are tied back to the organisations strategy and operational plan then it is more likely that the strategy will be achieved.

Quality of objectives critical to clear Alignment

To achieve this focus, managers need to have very clear objectives for their employee. In times of plenty, interpretation of objectives was not as critical. 

For example, the objective may have been “Increase market share from 15 to 20% by 30 June 20XX”. 

The employee interpreted this to mean that discounting the product set across the product range was the best solution and advised the sales force to do this. The manager was actually seeking profitable market share gains from failing competitors.

In good times, this misalignment may not have been critical. In tougher times, this misalignment will cost the organisation dearly.

What this means is that managers will need better skills in setting objectives to align their employees and prevent employees wasting their time on objectives that were incorrect or resulted in the employee’s focus being misaligned.

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