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Performance management systems that work

In general, the purpose of performance management can be categorized as administrative or developmental. Reviews, as part of the performance management system can also be used to verify the success of various HRM initiatives.

The ultimate success or failure of a performance management program depends on the philosophy underlying it, its connection with the firm’s business goals, and the attitudes and skills of those responsible for its administration.

In developing a performance management system, four basic things need to be taken into account:

• carefully defined performance standards that are reliable, strategically relevant and free from either criterion deficiency or criterion contamination
• performance standards and processes that are fair and legally defensible
• the use of performance information from a variety of sources
• thorough training for appraisers

Several methods can be used for performance reviews: trait approaches (such as graphic rating scales, mixed-standard scales, forced-choice forms, and essays), behavioural methods (such as critical incident ratings, checklists, BARS, and BOS) and results methods (MBO).

Appraisal interviews normally form an important part of the performance management system. Interviewers need to be properly trained to conduct effective interviews. Employee participation and goal setting generally lead to higher satisfaction and improved performance.

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