Why Performance Management Is Important For Business

Performance management is the way a company determines how well their business and employees are functioning day to day. By employing performance management strategies, companies can track the consistency of effective business tactics and compare them with ineffective business tactics. Performance management will generally focus on each individual employee, a department or the business as a whole.

First it is important to determine what your definition is for the word performance and how it relates to business. How exactly is your business meant to be performing in the everyday world? Does performance mean increased profitability or beating out the competitors at any cost?

When it comes to employees, companies have been conducting performance appraisals for years. Employees are constantly being sent for extra training which is both time consuming and expensive. It is vital to evaluate whether these tactics truly do enhance performance, or if they are conducted merely for the sake of doing them. For example, most employees will not bother to increase their performance at work if there is not some kind of motivation for them involved. They are constantly forced to undergo training that increases their qualifications, and then must complete performance appraisals. But if the employee does not gain from these performance management techniques personally, then they may be discouraged to increase their actual performance. Why be more qualified and still be paid the same lower wage? Therefore, should companies wish to keep their employees at the top of the game and at the same level with their competitors, it is essential to provide personal incentives.

Performance management techniques should not only be aimed towards individual workers. They can be directed towards entire departments in order to determine the level of productivity that is coming out of each area of your business. Just because members in a department are extremely busy, they may not be able to manage themselves effectively enough to be performing at the top of their capabilities. Performance management also can be turned into time management techniques and completing individual projects based on their level of importance. By effective scheduling, it is possible to increase the entire level of performance of an entire company, meaning that your business will thrive.

Performance management has to consider every aspect of the business arena to make sure that the techniques are fully productive ones. For every part of your

business that runs smoothly and efficiently, you are making an overall improvement on the business as a whole. For example, billing and invoicing procedures should be consistent and all departments such as administration, sales and computer aspects should be working in perfect conjunction with one another. It is vital that departments create an open dialogue with one another and communicate any problems that may affect other members of the team immediately.

By maintaining open streams of communication with all of the members on your team, you can ensure that your business is performing at the height of its abilities. Performance management is a great way to get the most out of your business.

Techniques like performance management and data mining are growing in popularity because of their effectiveness in a business setting. Utilizing these trends will provide optimal results and eventual results for your business!

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Why a Performance Management System Is Important

A performance management system can serve many important purposes within an organization by motivating employees, strengthening organizational goals and facilitating discussion of ideas and areas for improvement.

Function

A performance management system is designed to promote interaction and feedback between management and employees, establish expectations for individual work performance, and serve as a foundation for rewarding top employees.

Features

Performance management systems require a structured method of communication between various levels of an organization. Companies that require and promote this feedback loop can learn and grow from the information acquired.

Types

Performance management systems may involve direct employee and supervisor input as well as observational techniques or skills testing.

Identification

A performance management system is usually comprised of periodic conversations between an employee and his manager to set and review goals, discuss problem areas, and recognize achievements. These mandatory interactions ensure employees have a forum to ask questions or voice concerns.

Considerations

An organization that does not properly implement and support a performance management system may not experience all of the possible benefits of increased communication and workforce development.

Read more: Why a Performance Management System Is Important | eHow.com

Application

This is used most often in the workplace, can apply wherever people interact — schools, churches, community meetings, sports teams, health setting, governmental agencies, and even political settings - anywhere in the world people interact with their environments to produce desired effects. Armstrong and Baron (1998) defined it as a “strategic and integrated approach to increasing the effectiveness of organizations by improving the performance of the people who work in them and by developing the capabilities of teams and individual contributors.”

It may be possible to get all employees to reconcile personal goals with organizational goals and increase productivity and profitability of an organization using this process. It can be applied by organisations or a single department or section inside an organisation, as well as an individual person. The performance process is appropriately named the self-propelled performance process (SPPP).[citation needed]

First, a commitment analysis must be done where a job mission statement is drawn up for each job. The job mission statement is a job definition in terms of purpose, customers, product and scope. The aim with this analysis is to determine the continuous key objectives and performance standards for each job position.

Following the commitment analysis is the work analysis of a particular job in terms of the reporting structure and job description. If a job description is not available, then a systems analysis can be done to draw up a job description. The aim with this analysis is to determine the continuous critical objectives and performance standards for each job.

Benefits

Managing employee or system performance facilitates the effective delivery of strategic and operational goals. There is a clear and immediate correlation between using performance management programs or software and improved business and organizational results.

For employee performance management, using integrated software, rather than a spreadsheet based recording system, may deliver a significant return on investment through a range of direct and indirect sales benefits, operational efficiency benefits and by unlocking the latent potential in every employees work day (i.e. the time they spend not actually doing their job). Benefits may include:

Direct financial gain

Grow sales Reduce costs in the organisation Stop project overruns Aligns the organization directly behind the CEO's goals Decreases the time it takes to create strategic or operational changes by

communicating the changes through a new set of goals

Motivated workforce

Optimizes incentive plans to specific goals for over achievement, not just business as usual

Improves employee engagement because everyone understands how they are directly contributing to the organisations high level goals

Create transparency in achievement of goals

High confidence in bonus payment process Professional development programs are better aligned directly to achieving

business level goals

Improved management control

Flexible, responsive to management needs Displays data relationships Helps audit / comply with legislative requirements Simplifies communication of strategic goals scenario planning Provides well documented and communicated process documentation

Organizational Development

In organizational development (OD), performance can be thought of as Actual Results vs Desired Results. Any discrepancy, where Actual is less than Desired, could constitute the performance improvement zone. Performance management and improvement can be thought of as a cycle:

1. Performance planning where goals and objectives are established 2. Performance coaching where a manager intervenes to give feedback and

adjust performance 3. Performance appraisal where individual performance is formally

documented and feedback delivered

A performance problem is any gap between Desired Results and Actual Results. Performance improvement is any effort targeted at closing the gap between Actual Results and Desired Results.

Other organizational development definitions are slightly different. The U.S. Office of Personnel Management (OPM) indicates that Performance Management consists of a system or process whereby:

1. Work is planned and expectations are set 2. Performance of work is monitored 3. Staff ability to perform is developed and enhanced 4. Performance is rated or measured and the ratings summarized 5. Top performance is rewarded

Performance appraisals, performance reviews, appraisal forms, whatever you want to call them, let's call them gone. As a stand-alone, annual assault, a performance appraisal is universally disliked and avoided. After all, how many people in your organization want to hear that they were less than perfect last year? How many managers want to face the arguments and diminished morale that can result from the performance appraisal process?

How many supervisors feel their time is well-spent professionally to document and provide proof to support their feedback - all year long? Plus, the most important outputs for the performance appraisal, from each person's job, may not be defined or measurable in your current work system. Make the appraisal system one step harder to manage and tie the employee's salary increase to their numeric rating.

If the true goal of the performance appraisal is employee development and organizational improvement, consider moving to a performance management system. Place the focus on what you really want to create in your organization - performance management and development. As part of that system, you will want to use this checklist to guide your participation in the Performance Management and Development Process. You can also use this checklist to help you in a more traditional performance appraisal process.

In a recent Human Resources Forum poll, 16 percent of the people responding have no performance appraisal system at all.

Supervisory opinions, provided once a year, are the only appraisal process for 56 percent of respondents. Another 16 percent described their appraisals as based solely on supervisor opinions, but administered more than once a year.

If you follow this checklist, I am convinced you will offer a performance management and development system that will significantly improve the appraisal process you currently manage. Staff will feel better about participating and the performance management system may even positively affect - performance.

Preparation and Planning for Performance Management

Much work is invested, on the front end, to improve a traditional employee appraisal process. In fact, managers can feel as if the new process is too time consuming. Once the foundation of developmental goals is in place, however, time to administer the system decreases. Each of these steps is taken with the participation and cooperation of the employee, for best results.

Performance Management and Development in the General Work System

Define the purpose of the job, job duties, and responsibilities. Define performance goals with measurable outcomes. Define the priority of each job responsibility and goal. Define performance standards for key components of the job. Hold interim discussions and provide feedback about employee

performance, preferably daily, summarized and discussed, at least, quarterly. (Provide positive and constructive feedback.)

Maintain a record of performance through critical incident reports. (Jot notes about contributions or problems throughout the quarter, in an employee file.)

Provide the opportunity for broader feedback. Use a 360 degree performance feedback system that incorporates feedback from

the employee's peers, customers, and people who may report to him.

Develop and administer a coaching and improvement plan if the employee is not meeting expectations.

Immediate Preparation for the Performance Development Meeting

Schedule the Performance Development Planning (PDP) meeting and define pre-work with the staff member to develop the performance development plan (PDP).

The staff member reviews personal performance, documents “self-assessment” comments and gathers needed documentation, including 360 degree feedback results, when available.

The supervisor prepares for the PDP meeting by collecting data including work records, reports, and input from others familiar with the staff person’s work.

Both examine how the employee is performing against all criteria, and think about areas for potential development.

Develop a plan for the PDP meeting which includes answers to all questions on the performance development tool with examples, documentation and so on.

The Performance Development Process (PDP) Meeting

Establish a comfortable, private setting and rapport with the staff person.

Discuss and agree upon the objective of the meeting, to create a performance development plan.

The staff member discusses the achievements and progress he has accomplished during the quarter.

The staff member identifies ways in which he would like to further develop his professional performance, including training, assignments, new challenges and so on.

The supervisor discusses performance for the quarter and suggests ways in which the staff member might further develop his performance.

Add the supervisor's thoughts to the employee's selected areas of development and improvement.

Discuss areas of agreement and disagreement, and reach consensus.

Examine job responsibilities for the coming quarter and in general.

Agree upon standards for performance for the key job responsibilities.

Set goals for the quarter. Discuss how the goals support the accomplishment of the

organization's business plan, the department's objectives and so on.

Agree upon a measurement for each goal. Assuming performance is satisfactory, establish a development

plan with the staff person, that helps him grow professionally in ways important to him.

If performance is less than satisfactory, develop a written performance improvement plan, and schedule more frequent feedback meetings. Remind the employee of the consequences connected with continued poor performance.

The supervisor and employee discuss employee feedback and constructive suggestions for the supervisor and the department.

Discuss anything else the supervisor or employee would like to discuss, hopefully, maintaining the positive and constructive environment established thus far, during the meeting.

Mutually sign the performance development tool to indicate the discussion has taken place.

End the meeting in a positive and supportive manner. The supervisor expresses confidence that the employee can accomplish the plan and that the supervisor is available for support and assistance.

Set a time-frame for formal follow up, generally quarterly.

Following the Performance Development Process Meeting

If a performance improvement plan was necessary, follow up at the designated times.

Follow up with performance feedback and discussions regularly throughout the quarter. (An employee should never be

surprised about the content of feedback at the performance development meeting.)

The supervisor needs to keep commitments relative to the agreed upon development plan, including time needed away from the job, payment for courses, agreed upon work assignments and so on.

The supervisor needs to act upon the feedback from departmental members and let staff members know what has changed, based upon their feedback.

Forward appropriate documentation to the Human Resources office and retain a copy of the plan for easy access and referral.

Comments Welcome

What do you think? Share what you do in your organization for performance management and appraisal. Talk to the HR community in the HR Community Connection Forum.

Writing Great Specific Goals

Once you have determined a general goal and you think you know why it appeals to you, you are ready to write it in a way that will help you make it happen.

Studies of successful people have shown that they write goals that contain similar elements. To write a goal like winners do, be sure that:

1. It is stated in a positive way. (eg. I will..." not, "I might"or "I hope..."

2. It is obtainable. (Be realistic, but don't sell yourself short.) 3. It involves your behavior and not someone elses. 4. It is written. 5. It includes a way to measure successful completion .

6. It includes the specific date when you will begin working on the goal.

7. It includes a projected date when you will reach the goal. 8. If it is a big goal, it is divided into manageable steps or sub

goals. 9. The projected dates for working on and completion of sub

goals are specified.

Despite the length of the list, great goals are easy to write. The following are examples of goals containing the necessary components.

1. General Goal: I will be a better basketball player during this year.

Specific Goal: I will get 18 baskets in 20 tries by June 1, 2009.

I will begin working on this goal January 15, 2009.

2. General Goal: I will become an electrical engineer some day.

Specific Goal: I will have a job as an electrical engineer by January 1, 2015.

I will begin working on this goal February 1, 2009.

3. General Goal: I will go on a diet.

Specific Goal: I will lose 10 pounds by April 1, 2009.

I will begin dieting and exercising February 27, 2009.

Now, write your general goal. (Be sure to start with "I will.")

The Importance of Goal Setting

Goal setting is an important exercise for small business owners; without goals, we would just drift along. Goal setting allows us to be proactive, instead of just being reactive. We've all had days where we just seem to leap from one crisis to another, but we know that it's not a preferred mode of operation!

However, goal setting isn't enough. Goal setting is just the first step to achievement. Imagine, for instance, that your goal is to lose weight. Knowing that goals need to be specific if you're going to have any chance of success, you decide that you will lose 15 pounds by a date set four months from now. Time passes. Four months later, you get on the scale. Are you surprised to discover that you haven't lost any weight?

Goals Need Action

You shouldn't be. While you started out well, by setting a specific goal to achieve, you didn't perform any action to help you achieve the goal. What's missing from this scenario is a goal setting strategy to help you accomplish the goal you have set. Without a goal setting strategy, or series of actions, that you are going to use to work towards the goal, whether or not you achieve the goal you have set is just a matter of blind chance. And blind chance is no way to run a successful business! To be successful, you need to make things happen, not just let things happen.

The Winnning Goal Setting Formula

So when you're setting business goals (or any other goals!), use a goal setting formula that incorporates a strategy or strategies for accomplishing the goal. For example, suppose that you want to increase sales. When you're setting this goal, don't just write, "I will increase sales." This goal is too general.

First, specify the goal. "I will increase sales this month by 25 percent". Setting a specific goal builds in the criteria you will use to evaluate your success; in this case, at the end of the month, you'll either have increased sales by 25 percent compared to the previous month, or you won't.

Then, specify the strategy that you will use to work towards accomplishing the goal. "I will increase sales this month by 25 percent by offering a 10 percent off sale on all inventory and advertising this sale in local media."

Every goal you set needs to follow this basic goal setting formula: "I will (specific goal) by (specific actions I will follow to accomplish the goal)." As in the example above, you may have several specific actions you will take to achieve your goal, rather than just one.

Goal + Action = Success

What happens when you go beyond the basic step of goal setting? Evaluating your success or failure is easy, because your goal is specific rather than general. And suddenly, instead of just having a goal that you may or may not achieve, depending on chance, you have a specific battle plan to follow to achieve the goal you've set. Instead of setting yourself up for failure, you've set yourself up for success.

What one change can you make to increase your success ten fold? Learn how to set specific goals when goal setting and use specific goals in all your business planning. Goals need to be specific if we have any chance of accomplishing them. Setting specific goals when we're goal setting sets us up for success rather than failure.

Setting Specific Goals

A specific goal is a goal that incorporates an action plan that outlines how you will achieve the goal, and a performance measure that tells you how you will evaluate the goal.

This is the goal setting formula for ensuring that you're setting a specific goal:

"I will (goal + performance measure) BY (specific actions)."

The performance measure in the goal is often a date or a length of time, but it could be any objective criteria that you can use to determine whether or not you've accomplished the specific goal that you've set.

Suppose you're goal setting because you want to lose weight. An example of a specific goal to help you meet this objective is:

"I will lose 10 pounds in two months BY running on a treadmill for half an hour six days a week."

Setting Goals For Business Success

Before you can set specific goals designed to increase your business success, you need to know what you mean by success. I personally think that success means enjoying what you do, to the point that your work energizes you and creates happiness that spills over to your personal life. But what does "increased business success" mean to you?

Is it working less hours so you have more time to spend with your family? Is it having more energy to tackle your many tasks? Is it developing more confidence so you can sell your product or service more successfully or try something new?

Examples of Specific Success Goals

Depending on what the purpose of your goal setting exercise is, you might decide to set specific goals such as:

"One month from now, I will spend entire weekends with my family BY reorganizing my work schedule and learning how to delegate."

"I will develop enough confidence to present my business plan to the bank BY faithfully completing every assignment in the "Increase Your Business Success in 10 Weeks" program."

Goal Setting Tips

Success isn't just a matter of a healthy bank account; think about what you really want to accomplish, no matter how outlandish it seems at first thought and set your goals accordingly.

A goal doesn't have to be sweeping to be valuable; small goals are worth working on, too, because they can lead to big changes. For instance, "One month from now, I will work three hours less a week BY becoming better organized", is a perfectly acceptable specific goal.

Use this same specific goal setting formula in all your business planning, and you'll quickly see an increase in the number of goals you accomplish!

Goal Setting Related Reading

Setting Goals Is Only The First Step To Achievement

10 Goal Setting Tips

Achieve More With SMART Goal Setting Techniques

Homework Assignment: Goal Setting

Practice setting specific goals by determining how you want your work schedule to be different one month from now.

Look back over your weekly activity record from Week 1 and evaluate your work schedule. Are there activities that you feel you spend too much time on or activities that aren't there because you didn't have time to do them? These are important clues to possible changes you might want to make to improve your success.

Think about what success truly means to you, and what you hope to achieve four weeks from now. Then write down two specific goals, following the formula laid out above, starting with, "One month from now, I will...".

You can create more than two goals if you wish, but if you do, choose only two of the specific goals you've created to focus on over the next four weeks. Too many goals will be too distracting.

Share

Do you need help forming goals? Want to debate the true meaning of success? Or just want to share the goals you've chosen with others? Join us in the Small Business Canada Forum and share how you are feeling about your commitment and challenges.

10 Goal Setting Tips

"I'm going to lose twenty pounds." "I'm going to sell a lot more this year." "I'm going to live a healthier lifestyle."

If you're setting goals like these, you might as well be writing them on little slips of paper and tossing them into the fireplace. This kind of goal setting is good for a little amusement on New Year's Eve, but not much else. It's goal setting for disappointment, not for achievement.

You see, goal setting isn't just an exercise that you can finish in five minutes; goal setting is a process, a route to achievement. Learn how to set goals that you can and will actually achieve with these goal setting tips.

1) Choose goals that are worthwhile.

You would think it would go without saying but lots of people set meaningless goals - and then wonder why they don't feel any sense of achievement. Remember that the purpose of goal setting is to move us forward and spur positive change. If a goal doesn't have this motivating, transformational quality, don’t bother with it. You'll just be disappointed.

2) Choose goals that are achievable stretches.

The fact that goals have to be achievable is standard goal setting advice. Pretty well everyone knows that there's no point in setting a goal that you will never be able to accomplish. All you'll do is get frustrated and abandon it. Less well known is the fact that goals need to stretch you in some fashion. If a goal isn't engaging, you'll get bored and abandon it. (See 3 Rules for Setting Business Goals for more on this.)

3) Make your goals specific.

The big problem with the sample goals I've used to open this article is that they're vague. To decide that you're going to lose twenty pounds, for instance, is nice, but provides you with no

guidance for doing that. Think how much easier it would be to accomplish this goal if you knew exactly what you were going to do to lose the weight. So when you're goal setting, use a goal setting formula that gives your goal a built-in action plan. You'll start accomplishing more than you thought possible.

4) Commit to your goals.

You need to dedicate yourself to accomplish the goal you have chosen. That's why writing your goals down is a common goal setting tip; it's the first step to committing to achieving your goals. But you also have to realize that accomplishing a goal is not an overnight process and that you are going to have to work regularly at transforming your goal into an accomplishment. And you have to set aside the time you will need to work on your goal.

5) Make your goal public.

Making your goal public is a goal setting technique that is really effective for many people. Think of organizations such as TOPS (Take Off Pounds Sensibly) and their weekly weigh ins. Knowing that others are going to be monitoring your results ensures commitment to the goal and is extremely motivating. You don't have to join an organization or broadcast your goal on a Facebook page to make your goal public; having a goal buddy, a single person interested in your efforts, can be just as effective.

So far we've looked at how you can set the right goals, and the importance of making your goals specific and committing to working on them. Here are five more goal setting tips to help you accomplish what you want to accomplish.

6) Prioritize your goals.

Goals don't have to be huge projects that take months or even years to attain, but because they require commitment and need to be worked on regularly, every single goal that you set will be demanding. So don't sabotage yourself by taking on a bunch of goals at a time. Assuming that you are following all the other goal setting tips presented here and setting goals that are worthwhile, I would recommend working on no more than three at a time, and even then you should choose one goal as your top priority.

7) Make your goals real to you.

Goal setting is basically a way to approach the process of accomplishment. It's a very successful way, if done right, but like all such processes, it's a bit abstract. Using techniques such as visualization to focus on what actually accomplishing your goal will be like and what it will do for you can be very powerful - and a great help in staying motivated. Choosing and posting pictures that represent successfully accomplishing your goal is another way of doing this.

8) Set deadlines to accomplish your goals.

A goal without a deadline is a goal that you have not fully committed to and a goal you will not achieve. For one thing, if working on achieving a goal is something you can do whenever, you won't. For another, having a deadline will shape your plan of action. To return to the weight loss example, it makes a great difference whether your goal is to lose twenty pounds in four months or in ten. You will have to do a lot more exercising and cutting down of your food portions if you want to lose the weight more quickly.

9) Evaluate your goals.

Remember that goal setting is a process - and evaluation is an important part of that process. Don’t just settle for a 'good' or 'bad' assessment; think about what you did, how you did it and what you got out of it. Whether you successfully accomplished your goal or not, there's always something to be learned; what works or doesn't work for you, whether achieving your goal lived up to your expectations, why you failed. Extracting these lessons will increase your accomplishments even more as you apply them to your future goal setting experience.

10) Reward yourself for accomplishment.

Internal satisfaction is a great thing, but external rewards can be immensely satisfying, too. When you accomplish a goal, you've devoted time and effort to your success, so take the time to celebrate your success, too. One caveat; don't undermine your efforts by choosing an inappropriate reward. Eating a huge slab of cheesecake is not an appropriate reward for losing twenty pounds; for example, a new outfit would be a more suitable choice.

Set the Stage for Your Goal Setting Success

So don't defeat your goal setting efforts before you even start to work on accomplishing your desired goals. Set yourself up for success rather than failure by applying these ten goal setting tips and start achieving what you want to achieve.

Setting Good Goals

Whether this is your first experience with setting goals or you've been setting them all of your life, here are some helpful suggestions and ideas. Experienced goal-setters will notice that myGoals.com does a few things differently from traditional paper-based systems, owing to the power and flexibility of the Internet.

What makes a good goal?Traditional goal-setting wisdom has taught us that a good goal must be a) written, b) challenging, c) believable, d) specific, e) measureable, and f) have a specific deadline. Unfortunately, it's not too difficult to think of an example that directly challenges any of the above goal-setting criteria. For instance, the goal "to live a more spiritual life" may be a valuable, meaningful goal for many, but it's hardly measurable and assigning a deadline makes little sense for a permanent alteration of lifestyle.

This traditional checklist of things that "make a good goal" is largely a product of old technology: pen and paper. The old-school of goal-setting suggested that people write down goals on a small slip of paper and keep it in their wallet or purse. Suffice to say that slips of paper rapidly dissolve into lint. Today we have email.

So what makes a good goal? All of the above criteria are still good components of most goals. However, they are not necessarily all required when using myGoals.com. For our purposes, a good goal is one that is worthy of individual pursuit. And that is so highly subjective, far be it from us to define what is your worthy pursuit.

A different question is, "What makes a good Goalplan?" On this, our position is precise: A good Goalplan is one that when followed, offers a reasonably high probability of success, given sufficient time.

Let's take each of the traditional points one-at-a-time:

Must all goals be written?It's important to record your goals, whether you enter them into myGoals.com or physically write them down on paper. The problem with the paper method is that hand-written goals are difficult to update and manage, and of course, hand-written goals provide none of the additional features that are made possible by the Web.

Must all goals be believable?You must believe that it is at least possible for you to achieve the goal or you will not be motivated to try. More importantly, it is you who must believe, not others (see what to do about naysayers). Also, just because you should believe that the goal is possible does not mean that you must expect it to be easy or even probable. Indeed, some argue that completion of only the most difficult goals will have enduring value to you. Similarly, some of history's greatest moments were the result of people attempting the "impossible," such as flying or putting a man on the moon. See more about setting "realistic" goals.

Must all goals be challenging?No. We recommend setting at least one easy goal and at least one challenging goal. You could have several of each but you should limit the number of challenging goals or tasks coming due at any one time to avoid becoming overwhelmed or frustrated. The easy goals build good habits of follow-through and reward you with quick gratification. The challenging goals force you to grow. A mix of the two is ideal.

Must all goals be measurable and specific?Your goals should be measurable and specific enough for you to know unambiguously whether they have been completed yet or not. However, to save space on the computer screen, abbreviated goal titles such as "to reduce my stress" might be more convenient than titles such as "to reduce my stress by practicing yoga three nights a week and lowering my blood pressure by 10 points." Instead, make individual tasks in myGoals.com measurable and specific as much as possible, even if the details must be written in the task's "notes" area.

Must all goals have deadlines?Here's the big shocker: Goals no longer have to have a deadline! Technology has allowed us to expand the definition of what a goal can be to include a direction, commitment, or lifestyle enhancement as opposed to a

mere end-point. The technology utilized in myGoals.com allows a new and completely revolutionary look at the need for a goal to have a deadline. We offer a new type of goal called an "on-going" goal, that is sustained over time, managed, and tracked, but by design, never-ending. Why, for instance, would you want to end a goal, "to keep myself in excellent physical condition" or "to be an honest and trustworthy person"? Such goals should have no end-date, and now they don't have to. This concept may sound revolutionary to long-time power goal-setters. It is revolutionary. We invite you to try it.

Should my goals be short-term or long-term?We recommend that you always have at least one short-term and one long-term goal at any given time. Short-term goals are usually simpler and easier than long-term. Setting them helps assure that you'll have frequent victories, building a strong track record and momentum with each one you complete.

Long-term goals (two years or longer) keep you headed in the right direction and can provide a sense of greater purpose, not to mention something exciting to work toward.

It's okay to change goals as you go.With long-term goals, it's important not to focus on the goal so much that you lose sight of the underlying reason you set the goal in the first place. The world changes and so can you. While follow-through and persistance are among the most important traits related to long-term accomplishment, so is the ability to re-assess along the way. So long as you are honest with yourself, it's okay to change your mind, change goals mid-stream, shelve one for a later day, or cancel one altogether. Again, the trick is to be honest with yourself, and not change your mind so frequently that you never accomplish anything. (See also "What if my goals change?")

Should my goals be lofty or practical?Only you can decide what is "lofty" or "practical" and how many

goals of either flavor you'd like to set. Indeed, one person's lofty might be another's practical, and vice-versa. This service is here to help you accomplish anything you set out to do, from painting the house to reforming public education. And while we're always thrilled to hear success stories from our users who've done newsworthy and inspiring things, we also know that these can't be done without also taking care of the simpler items on life's to-do list.

But assuming you've covered your bases and been mindful of the balanced whole, and if you've got the energy and passion to apply to something beyond the ordinary, then—by all means—reach for the stars!

Along these same lines, be sure to also see:

Must all goals be challenging? Must all goals be believable? How do I know if a goal is realistic?

With lofty goals, pay extra attention to whom you're willing to discuss your goals with, particularly when you first begin and have no demonstrable milestones achieved. The old adage, "show, don't tell," exists because naysayers are quick to label lofty goal-setters as fools or dreamers, and deeds shut them up faster than promises. Your personal support group of family and friends (at least, those whom you trust to be supportive) is an exception. Use them as a resource whenever appropriate.

For more on dealing with naysayers, "Should I keep my goals private?"

How do I know if a goal is realistic?A goal is realistic if you stand reasonably good odds of accomplishing it, given enough time and effort—and indeed, mountains can be moved if given enough time and effort. "Good odds" is a subjective measure, but one that you have most control over when success or failure depends on what you do, as opposed to what other people do or random events (such as goals "to

become an astronaut" or "to win the lottery").

The majority of the goals you set should be very realistic or you risk becoming frustrated if you do not accomplish any of them. However, there is nothing wrong with attempting things that defy the odds or that you expect to be extremely difficult. Such goals require courage, defined here as "attempting something even though you might not succeed."

Almost any goal, no matter how difficult, can be made easier by breaking it down into several smaller goals, to be tackled one at a time. The completion of so-called "baby steps" is one of the best ways to build confidence, momentum, and a track record of performance.

And finally, when you create or update a Goalplan, ask yourself, "Will completing these steps lead to completion of the goal?" If not, then modify the obstacles, tasks, or due dates until a viable plan exists.

How many goals should I have at the same time?You can set many goals without worrying about spreading yourself too thin because we make a distinction between "setting" a goal and "working on" a goal. These are not necessarily the same thing because, with myGoals.com, you can set goals that do not begin until some future date, even years from now. The idea is that you should be thinking of goals you'd like to shoot for in the future even if you are focused on other things going on in your life right now.

How many goals can I set?A goal is "set" when you create a Goalplan, even if you only create a partial plan with the intention of filling in the details later. In fact, you might just write down the name of the goal, for no other reason than to remind you that's it's something you'd like to do later. (You can always edit any of your Goalplans at any later date.)

myGoals.com imposes no limit on the number of goals you can set, regardless of when they start and end.

How many goals can I "work on" at the same time?Here, "working on" refers to goals that have begun—meaning the start date you entered has passed. For instance, you might have a goal to run a marathon next year but you might not intend to begin working on this goal (training, etc.) until six months from now. So you would set the start date to occur in six months. So for six months, nothing happens, but you'll see the goal every time you visit, thereby being reminded that this goal exists on the horizon. Only after the start date elapses would the Goalplan become active, sending you task reminders related to that goal.

While there is no technical limit to how many goals you can be working on simultaneously at myGoals.com, it would be easy to overload yourself with too many goals-in-progress. You only have so many hours in a day and so many things you can adequately address at a given time.

We therefore suggest you limit the number of goals you're working on to some manageable number, which for most people will be somewhere between 5 and 10 goals, depending on a few common-sense factors:

o How focused can you be?If you've got a lot going on in your life right now, little spare time, or if you really need to focus intently on a small number of important things, then don't attempt to take on too many goals at once. It's better to keep your number of goals down to a manageable amount so that you can actually accomplish a few of them now and then (which is much more fun than having many goals that rarely ever get accomplished).

With that said, also be mindful of the importance of balance. Even if you are very focused on one important goal, don't forget the other important things such as your health or personal relationships.

See also: What if my goals conflict with each other? How should I prioritize my goals?

o How difficult are your goals?Some people use myGoals.com for goals as simple as "To clean my desk." Others use it for goals like "To sell my company." (We suggest you use it for both challenging and easy goals, at least one of each.) The simpler your goals are, the more goals you can be working on simultaneously without causing problems. You might be able to handle twenty "clean my desk"-type goals simultaneously but only one or two "sell my company"-type goals.

o Are your goals short-term or long-term?We also recommend using myGoals.com for both short-term and long-term goals (at least one of each). Keep in mind however, that the more short-term goals you have, the more tasks you're likely to have coming due soon. To avoid having too many tasks come due at the same time, you might want to have fewer goals if they are mostly short-term goals.

What if my goals conflict with each other?Almost all goals require some of your resources: time, money, effort, attention, and so on. Because these resources are limited, goals can often appear to be at odds with one another—working on one can mean slipping on the other.

Good management of your goals as a group is important for avoiding frustration:

Stay focused. Don't set too many goals to come due at the same time. A large number of goals (7+) is okay if the goals are small or simple (such as a goal to shampoo the carpet)

but be realistic and don't expect to build a business while getting a law degree while training for a triathlon while raising a family.

Always have at least one simple goal and one difficult goal at any given time. The simple goals motivate you as you accomplish them rapidly. The difficult goals keep you challenged and growing.

Always have at least one short-term and one long-term goal at any given time. As with simple goals, short-term goals help assure that you'll have frequent victories. Long-term goals (two years or longer) keep you headed in the right direction.

Prioritize but be flexible. Decide which of your goals (and tasks) are most important and assign your due dates accordingly. Be willing to change due dates or even put a goal on hold for a while if necessary.

Spread out your due dates. Avoid setting a large number of difficult goals with tasks due at the same time.

Look for ways to combine goals and tasks. For instance, if you have a goal to take a vacation and a goal to get better at photography, consider taking a travel photography class that spends a week in the wilderness snapping pics.

Most of all, strive for balance. Make sure to set goals (whether easy or hard) across different areas of your life: health, finance, family, relations, learning, experiencing, career, etc. For instance, don't set ten career goals but then neglect your health, friends, and family.

The Discipline of Setting and Achieving Weekly Goals

September 2007

Discipline is a topic I refer back to again and again, both in my writing and in my talks, for a very simple reason. Without disciplining both your thoughts and actions, you are unlikely to achieve success, happiness or personal fulfillment.

Many people think that Mind Power is a magic wand, an easy way to manifest your goals; that you just “think” something a few times and soon it happens. I wish it were so, but it takes more than that. Mind Power is an effective and powerful tool in creating your reality, but it will only happen if you have the ability to do your exercises regularly and consistently, week in and week out, and follow up these exercises with action. And this will only occur if you have discipline. Discipline to persist with your mental exercises beyond the initial euphoria and novelty of working with your mind in this new way, and discipline to set and achieve weekly goals. As this website advises, “Mind Power is a practice, not a philosophy.”

Discipline is not a dirty word, and it is not something you should avoid or approach with trepidation. If you dislike the sound of discipline, change your attitude about it immediately and let discipline be your friend, your mentor, your teacher and your coach.

The professional sports team that neglects discipline in either their preparation or on the sports field will always, in the end, be soundly beaten by the team that possesses discipline. An undisciplined team will not have the conditioning, the strategy or the execution necessary to win it all. They may have moments of brilliance, even dominance, but those moments will eventually give way to disorganization and ineptitude. So too in our life. A disciplined life will always be more successful and enjoyable than an undisciplined life.

Now a couple of questions: Are you disciplined? Do you play to win in your life? What is your strategy for achieving your goals?

How well are you executing that strategy? It’s amazing to me how many people want to be happy, successful and personally fulfilled in their lives, and yet they have no discipline or strategy to achieve it. They think it is going to happen if they just want it badly enough. Wanting something to happen in your life without having discipline or a strategy is like a sports team entering a game with no game plan, just hoping it will all work out. Don’t hope it will work out. Design a strategy and then execute it.

If you know what you want in life but fail to set and achieve weekly goals, you are missing one of the surest ways to success. I have worked and been successful in many different fields and have a lot to share on this subject, and I do so in my books and CDs. But if I were limited to sharing only one piece of advice on what is most important to success, it would be, “Master the discipline of setting and achieving weekly goals.” Why weekly? Because a week is a long enough time to accomplish a number of tasks, and a short enough time to notice where you are executing well, and–most importantly–where you are not. A weekly review lets you catch your procrastination, inertia, bad habits and all the distractions and details that sabotage your best intentions.

Now another secret revealed: Your best intentions do not count. The only thing that counts is your ability to set goals and achieve those goals. Everything else is illusory. Yes, you might have moments or weeks or even months of brilliance, but you are unlikely to achieve your life goals of success, happiness and personal fulfillment. To achieve these goals you need discipline. You need action in both the inner world of your thoughts, and the outer world of your activities.  

So first the discipline of setting goals: Ask yourself these questions. What do I want to achieve for myself in this life? Then ask what do I want to achieve for myself this year? What can I begin to do immediately, this week, to achieve these goals? Set yourself a weekly goal that will move you in the direction of the yearly goal. Make the goal measurable. Do not push yourself too hard or you will rebel against the regime. Do not make it too easy or you will lack motivation to pursue it. Choose a middle ground between the two extremes and then begin the week with a set of

Mind Power techniques you will practice, and a number of activities you will accomplish. After each week review what was done and what was not done.

When noticing what didn’t get done, be conscious of the reasons it didn’t get done. This is valuable information that you need for the next week. Plan your next week and work your plan. Review at the end of each week and then plan the next week’s activities. Following this weekly process you will soon discover your weak areas, where you avoid doing certain tasks or exercises. Knowing this is extremely valuable. We all have strengths and weaknesses. We all have our own particular idiosyncrasies that trip us up. Until you monitor yourself weekly you might not be aware of them.

You must become aware of them so you can design strategies that surmount these problem areas. Discipline yourself to see and know yourself at an intimate level, and to have the courage to make the changes that will cause you to be more effective at setting and achieving weekly goals.

When you don’t achieve your weekly goal, design a new strategy for the following week and be determined to succeed the following week. There is no need for remorse or recrimination. As the great boxer Mohammed Ali said, “ A heavyweight fight is fifteen rounds and you don’t have to win every round to win the fight.” Each week is a new week and a new opportunity to be successful.

When you accomplish your weekly goal, acknowledge yourself. This builds a success vibration. Nothing succeeds like success, and you build a success vibration week by week by simply accomplishing your weekly goals.

Gradually, as you master this system, you will notice that you are accomplishing an amazing amount. The goal of setting and achieving weekly goals is not to learn how to push yourself harder and do more work–actually if you practice this system you should be able to work less–but rather to get into the habit of being able to plan and execute your intentions.  “Execute the basics; master the basics,” says my good friend Jim Murphy, a sports coach and

mentor to many professional athletes. “When you master and execute the basics, the rest comes naturally.”

So too in our life; the same principle applies. Master and execute the basics. One of the basics, in having a happy and successful life, is simply mastering the ability to set and achieve weekly goals. Having a successful life is simply having the ability to know what you want, and then having the methods to accomplish it. When you can master setting and achieving weekly goals, you can master anything your mind can conceive of. This simple practice will revolutionize your life.

Creating Effective Performance Appraisals.

Executive Summary

Performance appraisals can be a good way for organizations to boost employees'

motivation and hone their competitive edge. But creating useful performance

appraisals -- and making sure they are used effectively throughout an organization

-- isn't easy. The 10 lessons here can help your company move closer to appraisals

that help staff perform their best.

"The irony is that our organization has been doing formal appraisals for at least 30

years and we still struggle to do them right. It takes a clear purpose, a good system,

and effective managers all operating together to get the job done." -- Director of

human resources, Fortune 500 manufacturing organization

It is common knowledge that most managers and employees find participating in

formal performance appraisals as appealing as having a root canal. However, it is

also true that -- for better or worse -- formal performance appraisals are an

inescapable part of organizational life.

There are two main reasons that formal performance appraisals are here to stay.

First, formal appraisals are required to justify a wide range of human resource

decisions such as pay raises, promotions, demotions, terminations, and selection

validation. They also are key to evaluating recruitment results and determining

training needs. Second, formal appraisals are required to maintain a competitive

edge. In a recent study of high-performance organizations, the practice of

employing a value-added performance appraisal process was cited as one of the

top 10 vehicles for creating competitive advantage. The manufacturing

organizations in this study clearly stated that an effective appraisal and review

process created focus, a platform for measurement, a vehicle for employee

improvement, and a means of linking key outcomes to performance.

During the 1990s, we and many other researchers have studied the formal

performance appraisal process. The lessons presented here were culled from this

research.

Effective performance appraisals

Our lessons for developing and sustaining a high-performance appraisal system are

based upon two key tenets. The first tenet suggests that if appraisal processes

operate as a system, a systems perspective must be applied to identify the critical

appraisal system components and stages to make sure that organizational

procedures and practices work in harmony. The second tenet is that individual

managers play a pivotal role in achieving effective appraisals and that they need

the right tools and support to be effective.

To identify the characteristics of effective performance appraisal systems, we

conducted in-depth focus groups with 60 mid- and upper-level human resources

executives from 28 U.S. manufacturing and service organizations. They were

asked to identify the keys to effective appraisal systems (see Figure 1).

The keys to effective performance appraisal systems can be organized into three

critical components: effective systems design, effective managerial practice, and

effective appraisal system support. Within those categories, we identified 10

lessons that managers can apply to boost appraisal effectiveness.

Effective system design

Without a proper foundation it is impossible to build a successful appraisal

program. A good system design lays the groundwork and provides the manager

with the necessary tools.

Lesson 1: Clearly define why the organization conducts formal appraisals. The

organizational leadership must identify and communicate to all employees why

performance appraisals are being conducted and the specific goals of the appraisal

system. Carefully developed and clearly articulated goals will enable managers to

choose appraisal criteria that support the organization's goals. Also, clear goals

increase managers' motivation to conduct appraisals properly and boost their

interest in performance management. When managers know that information

collected during their appraisals is likely to affect decisions about employee

development, planning, performance improvement, compensation, and

performance planning, they will be motivated to execute their responsibilities

competently. This is especially true if managers are held accountable for the

quality of their appraisals and performance management activities. Without clearly

defined goals, managers may simply go through the motions of conducting

appraisals and performance management, which can severely compromise the

effectiveness of the system.

Lesson 2: Employee/manager involvement in systems design is critical. Effective

appraisal systems include input from managers and employees about appraisal

practices and the criteria used to evaluate performance. Involvement of employees

at all levels facilitates acceptance of the system and increases cooperation. When

employees are allowed to participate in the design of the appraisal system, their

sense of ownership increases. Attempts to save time by bypassing employee and

manager input can short-circuit ownership of the system, lower the system's

credibility, produce a system that does not meet staff's needs, damage the

perceived connection between pay and performance, and lose the performance-

enhancing effects of employees' commitment to organizational goals.

Lesson 3: Develop user-friendly procedures and job related forms. Effective

appraisal systems need forms that are simple and easy to understand. Performance

criteria, rating procedures, and feedback should be expressed in terms that are

focused and meaningful for both managers and employees. It is essential that the

forms assess the degree to which employees perform their job duties and achieve

specific organizational goals. Forms that include matters unrelated to performance

of essential job functions or are deficient in measurement of important activities

performed within a job function decrease the effectiveness of the system. Forms

should be designed to aid communication between managers and employees about

behaviors, work processes, and opportunities for improvement.

Again, involvement of managers and employees in the design of the forms and

procedures is the best way to ensure that an appraisal system has these important

attributes. Unclear, poorly focused, and cumbersome forms and procedures

decrease ownership of the system and negatively affect essential trust and

communication between supervisor and subordinate. When performance on key

aspects of your employees' jobs is ignored, it sends the message that those aspects

are unimportant and should be ignored.

Lesson 4: Employees and managers must know how the process operates and

understand their roles. Surprisingly, managers frequently report that they receive

very little training beyond a description of the rating form. An effective formal

appraisal system cannot exist without the ongoing education of all key players in

the appraisal process.

There are four basic integrated stages in the performance appraisal process, and

they require different appraisal competencies on the part of managers. Failure of

managers to properly execute their responsibilities at any stage

undermines the effectiveness of the entire system.

* Stage 1: performance planning

* Stage 2: performance management and ongoing coaching

* Stage 3: the written performance appraisal

* Stage 4: the performance appraisal review

In our research, managers were asked to identify the skills and abilities needed to

conduct effective appraisals. The results are ranked in Figure 2. These critical

skills are necessary to complete the four basic stages of the performance appraisal

process.

Once the appraisal system foundation is in place, managerial appraisal practices

will determine how well appraisal plans are translated into action.

Managerial systems practices

The following standard operating procedures reflect and influence the

organizational performance appraisal culture.

Lesson 5: Managers must conduct effective performance planning. At the

beginning of the appraisal cycle, managers must work closely with employees to

review their job descriptions and duties, set clearly defined goals, and

communicate expectations of behaviors and results for which the employee will be

held accountable and be rewarded. Important behaviors and activities that critically

affect performance and the appraisal form itself (which should include evaluation

of these behaviors and activities) should be discussed early in the performance

evaluation cycle. When managers conduct effective performance planning, the

credibility of the formal performance appraisal is enhanced and employees are

motivated to perform behaviors and activities that support the organization. Failure

to plan effectively eliminates a valuable performance enhancing tool and decreases

managers' and employees' satisfaction with the process and its results.

Lesson 6: Managers should provide their direct reports with ongoing informal

performance feedback. Effective appraisal systems do not consist solely of once-a-

year formal performance reviews. Failure to provide ongoing informal feedback

allows minor, easily correctable problems to grow into more serious ones. Lack of

ongoing coaching can lead to employees disengaging from work, looking for

alternative employment, and demonstrating decreased productivity. Lack of

ongoing coaching also makes it difficult to conduct reviews of employee

performance and can fray the bonds between managers and their employees, since

employees may interpret the lack of feedback as a sign of supervisors' disinterest in

employees' professional growth.

Lesson 7: Raters must be motivated to conduct eftective appraisals. An

organization will never achieve effective appraisal practices if the managers are not

motivated to follow procedural guidelines and use information from training to

conduct effective written and face-to-face performance reviews. Unmotivated

managers can undo even the best performance appraisal system because they most

directly impact the overall quality of the appraisal process and the motivation of

employees to perform. Managers will be motivated to conduct effective appraisals

when their supervisors conduct effective appraisals on them. Effective appraisal of

managers by their supervisors signals the importance of appraisals in the

organization and models proper procedure. In addition, a manager's motivation to

conduct effective appraisals will increase when manager appraisals are based in

part on how effectively they execute their role in the appraisal process and how

well they coach their employees. Failure to motivate supervisors to conduct

effective appraisals can lead to poorly documented, poorly run appraisals in which

ratings of subordinates are inflated or deflated for expediency or in the pursuit of

personal agendas. This, in turn, tends to reduce employee faith in the performance

appraisal system, motivation to perform, and willingness to accept and pursue

organizational goals.

Even a properly designed system will fail if these suggested managerial practices

are not followed. The manager responsible for employee performance must be

proficient at these activities if appraisals are to get desired results.

Appraisal system support

Appraisal system support directly affects managerial motivation to perform

required appraisal activities diligently; it also protects the system from problems

caused by inconsistent or improper execution of appraisal procedures. The lessons

below can help companies develop effective appraisal system support.

Lesson 8: Top management must support and demonstrate effective appraisal

practices. For appraisal systems to be effective, they must get support from top

management. Support for effective appraisal practices can be demonstrated

through written and oral communications with managers and employees in memos,

testimonials, videotaped messages, and company newsletters. Top executives

can also show support by practicing the same appraisal practices when they

appraise managers. Our research clearly indicates that when top managers don't

practice what they preach, lower-level managers emulate those practices instead of

stated policies.

Lesson 9: Effective appraisal systems link performance ratings to organizational

rewards. Research consistently indicates that, to maximize the effectiveness of a

pay-for-performance program, organizational rewards must link greater rewards to

superior job performance. When employees feel that their rated performance is

accurate and reflects the full range of their contributions to the organization, their

motivation to perform increases. On the other hand, when employees feel that

performance ratings are inaccurate or a function of politics, they tend to perform

only to minimum standards, be absent more often, engage in theft, or quit.

Lesson 10: Appraisal systems require ongoing systems review and corrective

action. It is important to systematically and regularly review system operations to

make sure that processes and practices are being followed and are effective.

Examples of measures that can be used to assess the health of your appraisal

system include employee acceptance and trust of the appraisal system; the

relationship between level of performance and rewards; level of individual

performance and organizational financial performance; consistency of

implementation of policies and practices across levels, departments, and locations;

and turnover and absenteeism rates compared to other organizations or to levels at

the organization itself before and after the start of the performance appraisal

system.

All the support components function to encourage effective rating practices on the

part of individual managers who determine the ultimate effectiveness of most

appraisal systems.

This approach is outlined in Figure 3. Ineffective appraisals lead to a number of

serious problems that negatively affect both individual and organizational

performance. To avoid these problems, it is important to focus on the three critical

appraisal system components and make sure that managers have the skills needed

to complete each stage of the appraisal process effectively. Attention to all three

appraisal system components and all four appraisal system stages is vital for a

formal performance appraisal system to motivate employees and to improve

manufacturing organizations' competitiveness.

Conclusion

"If your organization does formal appraisals, it is imperative to do them right. This

requires time, effort, discipline, and proper support. If you do appraisals in a

cavalier or ineffective fashion you are making trouble for yourself in a time when

the last thing organizations need is more problems."

-- Veteran automotive plant manager

In these days of re-engineering, total quality management, and continuous

improvement, progressive organizations will do well to conduct a self-assessment

of their current appraisal practices against the benchmarks of high-performance

appraisal systems. The self-appraisal tool in Figure 5 is a good way to start the

continuous improvement process. If your appraisal system is not a value-added

activity, then it just might be time for a change.

For further reading

Fink, L.S. and Longenecker, C.O. "Training as a Performance Appraisal

Improvement Strategy," Career Development International, 1998.

Locker, H.A. and K.S. Teel, "Appraisal Trends," Personnel Journal, SEP00tember

1988.

Longenecker, C.O. "Why Managerial Performance Appraisals Are Ineffective:

Causes and Lessons," Career Development International, 1997.

Longenecker, C.O. and D.J. Dwyer, "The Role of Human Resources Management

in Creating Competitive Advantage," HR Advisor, May/June 1998.

Longenecker, C.O. and L.S. Fink, "Keys to Designing and Running an Effective

Appraisal System," Journal of Compensation and Benefits, November-December

1997.

Longenecker, C.O. and S.A. Goff, "Performance Appraisal Effectiveness: A Matter

of Perspective," SAM Advanced Management Journal, Spring 1992.

Smith, B.N., J.S. Hornsby, and R. Shirmeyer, "Current Trends in Performance

Appraisal: An Examination of Managerial Practice," SAM Advanced Management

Journal, Summer 1996.

The Authors

Clinton O. Longenecker, Ph.D., is the Stranahan distinguished professor of

management at the University of Toledo. He holds a B.B.A. in marketing and an

M.B.A. in management from the University of Toledo, and a Ph.D. in management

from Pennsylvania State University. He is a management consultant whose clients

include a number of Fortune 500 firms.

Laurence S. Fink, Ph.D. is an assistant professor of management at the University

of Toledo. He holds a B.A. in psychology from the State University of New York

at Albany and a Ph.D. in organizational behavior/human resource management

from Purdue University. He is a researcher in performance management, selection

and recruitment, turnover, and compensation.

Keys to an effective performance appraisal system

* Clearly defined value-added purpose for appraisals

* Employee/manager involvement in appraisal system design

* User-friendly, job-related ratings forms and procedures

* Properly trained personnel

* Effective performance planning

* Ongoing appraisals and coaching

* Raters who are motivated to conduct effective and candid appraisals

* Top management support/appraisal practice

* Appraisal outcomes linked to performance ratings

* Ongoing systems review and corrective action

Top 10 skills for giving effective appraisals

1. Knowledge of organization's rating forms and procedures

2. Ability to clarify and communicate job duties and performance expectations

3. Effective decision-making skills/sound judgment

4. Coaching skills

5. Effective written/verbal communication skills

6. Delegation/empowerment skills

7. Effective observational/work sampling skills

8. Employee development/career counseling

9. Conflict resolution problem-solving skills

10. Knowledge of legal/compliance issues

How to Assess Employee Performance

performance appraisal is a method by which the performance of an employee is measured in terms of quality, quantity, cost and time. It consists of systematically evaluating an individual employee's job-related strengths and weaknesses and addresses adherence to a set of pre-defined organizational standards.

Difficulty: Moderately Challenging

Instructions

Consult the employee's official job description. Align the organization's goals with the job's objective. Note any discrepancies and brainstorm ways to bring the discrepancies back in line.

Communicate management's expectations to the employee. A common understanding must exist between management and the employee regarding the work expectations, the nature of work to be accomplished and the standards by which the work is evaluated.

Offer the employee feedback concerning his performance and it's relationship to the expectations set forth by management. Be constructive instead of destructive with your comments while being honest about your appraisal.

Coach the employee. Provide the resources required for her to meet and exceed management's expectations. Coaching needs to

be a constant and consistent effort made by management in order to clarify and modify performance before it is too late.

Assess the employee's strengths and weaknesses. Do this by using a narrative form, a checklist, peer and selfevaluations, or by using ranking charts. The employee needs to understand why you have come to your conclusions so he is able to correct any problems.

Decide what type of career development or continuing education might be beneficial to assisting the employee in developing her skills and improving her performance. Be open to all options.

Read more: How to Assess Employee Performance | eHow.com http://www.ehow.com/how_2076753_assess-employee-performance.html#ixzz1GYIV6qe9

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Objectives of Performance Appraisals

Performance appraisal is a method of evaluating the job performance of an employee. It is an ongoing process of obtaining, researching, analyzing and recording information about the worth of an employee.

Objectives

The main objective of performance appraisals is to measure and improve the performance of employees and increase their future potential and value to the company. Other objectives include providing feedback, improving communication, understanding training needs, clarifying roles and responsibilities and determining how to allocate rewards.

Provide Feedback

The feedback received by the employee can be helpful in many ways. It gives insight to how superiors value your performance, highlights the gap between actual and desired performance and diagnoses strengths and weaknesses as wells as shows areas for improvement.

Improve Communication

The method of performance appraisals helps superiors strengthen relationships and improve communication with employees.

Training Needed

These appraisals also identify the necessary training and development the employee needs to close the gap between current performance and desired performance.

Clarify Expectations

Performance appraisals should clarify roles, responsibilities and expectations of all employees.

Allocate Rewards

Performance appraisals reduce employee grievances by clearly documenting the criteria used to make organizational decisions such as promotions, raises or disciplinary actions.

Problems in performance appraisal

PROBLEMS IN PERFORMANCE APPRAISAL

1. Problems with leniency and strictness:

• The leniency bias crops when some raters have a tendency to be liberal in their rating by assigning higher rates consistently.• Equally damaging one is assigning consistently low rates.

2. Problems with central tendency:

• Some raters appraise all the employees around the middle point of the rating scale and they avoid rating the people higher or lower level.• They follow play safe policy because of answer ability to management or lack of knowledge about the job and person he is rating or least interest in his job.

3. Problems with personal prejudice:

If the rater dislikes any employee, he may rate them at the lower end and this may distort the rating purpose and affect the career of these employees.

4. Problems with halo effect:

• To minimizing the halo effect, you should appraise all the employees by one trait before going to rate on the basis of another trait.• A person outstanding in one area tends to receive outstanding or better than average ratings in other areas as well, even when such a rating is undeserved

5. Problems with recent performance effect:

In general, raters remember the recent appraisal of the employee and they usually follow

360 degree performance appraisal

1. Definition of 360 degree performance appraisal

360 Degree Feedback is a system or process in which employees receive confidential, anonymous feedback from the people who work around them.

2. Who should conduct 360 degree performance appraisal?

• Subordinates.• Peers.• Managers (i.e. superior).• Team members.• Customers.• Suppliers/ vendors.• Anyone who comes into contact with the employee and can provide valuable insights and information.

3. What’s 360 degree measures?

• 360 degree measures behaviors and competencies.• 360 degree addresses skills such as listening, planning, and goal-setting.• 360 degree focuses on subjective areas such as teamwork, character, and leadership effectiveness.• 360 degree provide feedback on how others perceive an employee.

4. 360 degree appraisal has four components:

• Self appraisal• Subordinate’s appraisal• Peer appraisal.• Superior’s appraisal

5. Related 360 degree performance appraisal

• Performance appraisal methods• Performance appraisal examples• Self appraisal sample• Appraisal questionnaire of 360 degree system• Advantages of 360 degree appraisal

• Appraisal by subordinates form• Peer appraisal form• Supervisor performance appraisal• Manager performance appraisal form

Best performance appraisal resources

1. Employee Performance Appraisals Forms. Benefits of this ebook include: Make your “fair” help good & make your “good” help great; Improve efficiency; Save hours upon hours of time; Get what you want out of every hourly dollar you pay your employees! Even your best employees need to know they are appreciated; Impress your boss or, if you are the boss, motivate your staff by giving them the feedback they NEED to be a better employee etc

2. Phrases For Performance Appraisals. Benefits of this ebook include: A collection of hundreds of ready-to-use impactful appraisal comments and phrases; Phrases to highlight your key strengths and achievements; Phrases to downplay your weaknesses to soften the impact on your overall performance; A comprehensive list of phrases covering most of the categories of KPIs used by many companies; Guidebook provided in Microsoft Word softcopy for your easy copy, paste and modify in your appraisal form; Guidebook provided in Microsoft Excel spreadsheet so that you can use it also for your employees’ appraisals and easy moderation! etc

3. Employee Performance Review: Tips, Templates & Tactics.  Contents of this ebook include: Probation policies and templates, performance review tips, performance appraisal tips; Performance review tips, performance appraisal tips performance review policies and templates; Performance review tips, performance appraisal tips learning & development policies and templates; Performance review tips, performance appraisal tipspoor work performance policies and templates etc

4. Managers Guide to Performance.  Contents of this ebook: How to deal with an employee who displays negative behavior….help them deal with their own issues and change their behavior; How to coach an employee to higher performance….employees want your leadership and will follow a strong manager; How to be clear about what you expect from them….an employee always wants to know how to best perform; How to give your employees the opportunities to perform……if they can’t or won’t, then how to let them go.

720 degree performance appraisal

What is 720 degree appraisal / feedback?

Today, these are two points of view about 720 degree performance appraisal as follows:

Internal and external of appraisal:

In traditional 360 degree appraisal, raters include:

• Boss• Peers – immediate & functional colleagues• Direct reporters• Colleagues and internal customers

Then, 540 degree appraisal add more external customers and suppliers

Of courses, 720 degree would also take the feedback from stakeholders & family. So that in 720 degree appraisal, feedback is taken from external sources such as stakeholders, family, suppliers, communities….

Continuos improvement of appraisal

We have 360 feedback/appraisal and it is1st feedback=360, then 2nd feedback=720, 3rd feedback=1080 and so on.

Author’s opinion:

We can refer to definition of Wikipedia: In human resources, 360-degree feedback, also known as ‘multi-rater feedback’, ‘multi-source feedback’, or ‘multi-source assessment…

Although you can follow any point of view, these are two matters that we can pay attention to:

• Improvement of appraisal.• Enough raters (boss, supervisors, peers, subordinates, family, stakeholders, customers, suppliers, communities…)

Developing an effective system for performance appraisal

Evaluations can be a headache -- or a valuable tool for upgrading staff

For many an employee, the three certainties in life may well be death, taxes and the performance evaluation. The prospects for the performance evaluation, though, need not be so grim.

On the contrary, the effective performance evaluation provides an opportunity to set goals, clarify expectations, reinforce a job well done, initiate change, and foster a healthy working relationship between supervisor and employee. The approach adopted by staff leaders and the value they place on their performance appraisal system is crucial to improving quality of care and staff motivation. The strength of this system contributes

significantly to issues of leadership training, staff turnover, managing outcomes of care and continued quality improvement.

Unfortunately, a number of problems plague the performance evaluation process. The greatest of these is lack of training of those responsible for performing the evaluations. Invariably, an administrator assumes that department directors have both the ability and willingness to accomplish this task. And directors of nursing who, in turn, request that a charge nurse simply "fill out a form" on an employee they supervise, are often met with staunch resistance. The reluctance to complete timely, relevant evaluations can, in large part, be explained by the old axiom that "few are willing to do something they have never been taught to do."

In many instances, problems arise because a facility simply lacks a"system" and employs poorly

In many instances, problems arise because a facility simply lacks a"system" and employs poorly structured tools that fail to encourage growth and development among employees. Forms are too complex, lengthy and

impractical, and amount to little more than meaningless check lists, with no goal setting identification or documentation of employee achievements.

The litigious mood of today's society also contributes to the reluctance, and even fear, felt by some supervisors when assessments suggest corrective action or changes in behavior.

Teaching the Fundamentals

Developing an effective performance appraisal system is challenging and should involve all those who are responsible for completing the evaluations. What is needed in most nursing homes is a paradigm shift -- an approach that focuses on relationships, job expectations, system design, role models, and education.

Administration should begin this process by clarifying the purposes of performance evaluations for all employees. The following statements of purpose should be communicated in the most positive light possible:

* To strengthen communication, understanding, and therefore, the relationship between supervisor and employee.

* To create an opportunity for change, growth and continuous improvement.

* To determine current knowledge and skill levels and identify areas of greatest competency and those in need of further education.

* To clarify job responsibilities, role definition, and standards of expectation.

* To use a concensus approach in setting simple, measurable, relevant and realistic goals for the department position for the upcoming year.

* To discuss the manager's goals for the nursing home and the ways the employee can assist in attaining those goals.

Once the purposes of the appraisal system have been clarified, it is imperative that administration "role models" the application and expectations of the system. Teaching, supporting and coaching others in

the process is essential; management staff must be instructed in the "dos" and "don'ts" of performance evaluation.

Whether appraisals are done after a 90-day introductory period or annually, a self-evaluation tool can serve as a valuable adjunct to the supervisor's written report. The employee is asked to answer written questions about their strengths, goals, and areas needing assistance or further instruction while the supervisor completes the standard performance evaluation. In about seven to ten days, the completed forms are discussed in a private meeting and the combination of the two forms becomes the completed performance appraisal.

These sessions should be treated as important business meetings: setting a mutually convenient time, sticking to it, holding all calls and not permitting interruptions. During this time, the supervisor should solicit honest feedback on his or her leadership style.

Administrators who perform upper-level management evaluations must remember to be consistent. If, for example, one department director is taken to lunch to discuss the appraisal, the same should be done for all.

Meanwhile, supervisors will require additional instruction and reminders on completing the evaluation form itself, being reminded to:

* Concentrate on job requirements rather than personal characteristics.

* Avoid value judgements such as "your work is too slow," or "your station is sloppy." The employee deserves to know specifics: what, when, where, how and ultimately why they are required to perform a particular task.

Prepare and review the file before meeting with the employee. Preparation is paramount to effective, meaningful evaluations.

* Know your expectations and be crystal clear in communicating them.

* Gather accurate data that reflect the goals and achievements made over the evaluation period.

Many authors cite a lack of clearly defined expectations as one of the biggest downfalls of many organizations. Outcomes and expectations are a product of clearly defined standards which are often unwritten and ill-defined. Defined principles of right and wrong, objectives, and levels of decision making authority are essential in applying a measureable outcome based system. The challenge is in developing expectations in an objective, understandable manner that is clearly understood and accepted by the employee being evaluated.

Equally important is the supervisors' responsibility to determine if employee skills and personal strengths and weaknesses match the type of job duties required. Employees and primary areas of responsibility are often mismatched -- for example: the personable, outgoing nurse placed in charge of computerized care plans who spends most of her hours on data input and content analysis. Or the "left-brained," detail-oriented "numbers person" placed in a position of constant interpersonal interaction and problem-solving.

In addition, the historical responsibilities of a job title should not be etched in stone. Because an assistant director of nursing has always been in charge of the care planning process, for instance, doesn't mean that a newly hired, more suitable and willing individual can't assume that role.

Conclusion

Defining management as "getting things done through others" teaches us that assessing, delegating, and evaluating outcomes is primary in the role of administration. Management has both an opportunity and responsibility to foster a working environment that engenders trust, open communication, commitment and professional growth. The nursing home that effectively redesigns its performance appraisal system and involves department directors in those efforts can be assured that continuous improvement in care becomes a reality.

Julie Ditzler, RN, BSN, is Executive Administrator for the Thro Company, a nursing home company based in Mankato, MN. She has over 18 years

experience in long term care as a Director of Nursing, Resident Services Director and Administrator. Ms. Ditzler developed a Long Term Care division for Creative Nursing Management, a national nursing consulting firm, and has done extensive teaching in management, regulatory compliance and reimbursement.

Competency-based performance management

Performance management is about achieving results in a manner that is consistent with organizational expectations. Integrating competencies within the performance management process supports the provision of feedback to employees not only on “what” they have accomplished (i.e., performance goals), but also “how” the work was performed, using competencies for providing feedback. Assessing competencies as a part of performance management is an important means of assisting employees in understanding performance expectations and enhancing competencies. Multi-source feedback, while not an HR application per se, is a method that is often used in performance management to assess and provide employees with feedback on “how” they performed their work (i.e., their demonstration of the competencies).

Best Practices

Performance Management

Performance management programs are set up to provide feedback to employees on how effectively they are performing in their jobs. Such programs normally include a set of goals or objectives the employee must accomplish within the review period as well as the standards or criteria for determining whether the defined goals have been accomplished.

Effective performance management include the following features:

Linking individual goals to the corporate and work unit business plans and goals;

Focusing on results, behaviours (competencies) as well as process improvement;

Regular reviews and updating of performance plans to address changing demands;

Training for both managers and employees on how to effectively give and receive feedback, including providing feedback to employees who experience challenges in performing to the standards required in their jobs / roles;

Training for managers on how to provide performance evaluations that are valid, fair and unbiased.

Integrating Competencies in the Performance Management Process

Competencies can be integrated into the regular Performance Management (PM) process in one of two ways:

By defining the competencies needed to perform each Performance Goal / Objective

In this case, the manager and employee identify the key competencies required to achieve each performance goal / objective (typically 1 to 3 competencies per goal / objective). At the end of the performance cycle, the employee’s performance is evaluated in relation to the performance goals / objectives as well as the key competencies associated with each goal. Using this approach, the competencies included in the employee’s performance plan may or may not completely coincide with the standard competency profile for the employee’s role / job. The advantage of using this method is that the competencies being assessed are entirely consistent with the employee’s performance goals for the performance review cycle. The disadvantage is that not all competencies within the competency profile for the employee’s role / job will necessarily be assessed within the cycle.

By integrating the competencies for the employee’s job into the PM process

In this case, the performance plan includes the performance goals / objectives for the review period as well as the complete set of competencies from the competency profile for the employee’s role / job. The performance goals / objectives address “what” must be accomplished during the review period, and the competencies measure “how” the employee conducted him/herself to accomplish their work. The

advantage of this method is that all competencies defined in the competency profile for the employee’s role / job are evaluated. The disadvantage is that due the specific nature of the performance goals / objectives, key competencies for the effective performance during the review cycle, but not included in the competency profile, will not be assessed.

In both cases, feedback provided on the employee’s competencies typically feeds into the development of a learning or action plan to address gaps in performance and development within or beyond the employee’s current role / job.

Multi-source / 360 Degree / Upward Feedback

In Multi-source, 360 Degree and Upward feedback, the behavioural indicators for the competencies needed within the target role / job are used as the standard for assessing the performance of the employee. In Multi-source / 360 feedback, different stakeholder groups provide ratings, including the employee, their supervisor, as well as others with whom the employee interacts (e.g., peers, team members, clients both within and outside the organization, reporting employees; etc.). In Upward Feedback, all employees reporting directly and / or indirectly to the supervisor provide feedback on the supervisor’s performance.

The results are compiled and a report is provided to the employee. The report includes the results for all competencies, highlighting both the competencies that are strong as well as those rated lowest by the different stakeholder groups. In almost all cases, individual ratings from others (except for the employee’s supervisor) are combined in such a way (e.g., averaged ratings) as to protect the anonymity of the individuals providing the feedback. The report is set up to show similarities and differences in ratings across the different stakeholder groups. The results of the process are normally used to develop learning and action plans for improvement (see section on Learning and Development). They can also feed into broader assessment programs (e.g., management assessment centres; development programs) to support employee career development and / or succession management within the organization.

Upward and Multi-source / 360 Degree Feedback programs must be managed well in order to protect those providing, as well as those receiving, feedback. The Society for Industrial / Organizational Psychology has published guidelines for the effective development and implementation of Multi-source Feedback.

Implementation Stages

The following implementation stages are suggested for mid to large organizations implementing competencies within Performance Management on a corporate-wide basis

Stage 1:

Determine policy for integrating competencies within the Performance Management process

Design a Performance Management process consistent with the policy (as required)

Design communications and training program to support implementation Pilot the process Revise and finalize ready for full implementation

Stage 2:

Communicate and implement the Performance Management process Review and evaluate the process during the first cycle of implementation

(e.g., first year) and make revisions, as required.

Vendors

Vendors of Comptency-based Management Systems include:

Sentrico Human Resource Systems Group Cornerstone on Demand Kenexa

What is Competency Mapping?

Competency mapping is a process through which one assesses and determines one’s strengths as an individual worker and in some cases, as part of an organization. It generally examines two areas: emotional intelligence or emotional quotient (EQ), and strengths of the individual in areas like team structure, leadership, and decision-making. Large organizations frequently employ some form of competency mapping to understand how to most effectively employ the

competencies of strengths of workers. They may also use competency mapping to analyze the combination of strengths in different workers to produce the most effective teams and the highest quality work.

Competency mapping can also be done for contract or freelance workers, or for those seeking employment to emphasize the specific skills which would make them valuable to a potential employer. These kinds of skills can be determined, when one is ready to do the work, by using numerous books on the subject. One of the most popular ones is Now, Discover Your Strengths by Marcus Buckingham and Donald Clifton, initially published in 2001.

Buckingham and Clifton’s book, and others like it, practice competency mapping through testing, having the person sift through past work experiences, and by analyzing learning types. However, the disadvantage to using a book alone is that most people may have a few blind spots when they analyze their own competency. Their perception of how others react to them may not be accurate.

Competency mapping also requires some thought, time, and analysis, and some people simply may not want to do the work involved to sufficiently map competencies. Thus a book like the above is often used with a human resources team, or with a job coach or talented headhunter. Competency mapping alone may not produce accurate results unless one is able to detach from the results in

analyzing past successes and failures. Many studies find that people often overestimate their abilities, making self-competency mapping results dubious.

The value of competency mapping and identifying emotional strengths is that many employers now purposefully screen employees to hire people with specific competencies. They may need to hire someone who can be an effective time leader or who has demonstrated great active listening skills. Alternately, they may need someone who enjoys taking initiative or someone who is very good at taking direction. When individuals must seek new jobs, knowing one’s competencies can give one a competitive edge in the job market.

Usually, a person will find themselves with strengths in about five to six areas. Sometimes an area where strengths are not present is worth developing. In other cases, competency mapping can indicate finding work that is suited to one’s strengths, or finding a department at one’s current work where one's strengths or needs as a worker can be exercised.

A problem with competency mapping, especially when conducted by an organization is that there may be no room for an individual to work in a field that would best make use of his or her competencies. If the company does not respond to competency mapping by reorganizing its employees, then it can be of little short-term benefit and may actually result in greater unhappiness on the part of individual employees. A person identified as needing to learn new things in order to remain happy might find himself or herself in a position where no new training is ever required. If the employer cannot provide a position for an employee that fits him or her better, competency mapping may be of little use.

However, competency mapping can ultimately serve the individual who decides to seek employment in an environment where he or she perhaps can learn new things and be more intellectually challenged. Being able to list competencies on resumes and address this area with potential employers may help secure more satisfying work. This may not resolve issues for the company that initially employed competency mapping, without making suggested changes. It may find competency mapping has produced dissatisfied workers or led to a high worker turnover rate.

What is Career Planning?

Career planning is a lifelong process, which includes choosing an occupation, getting a job, growing in our job, possibly changing careers, and eventually retiring. The Career Planning Site offers coverage of all these areas. This article will focus on career choice and the process one goes through in selecting an occupation. This may happen once in our lifetimes, but it is more likely to happen several times as we first define and then redefine ourselves and our goals.

Career Planning: A Four Step Process

The career planning process is comprised of four steps. One might seek the services of a career development professional to help facilitate his or her journey through this process. Whether or not you choose to work with a professional, or work through the process on your own is less important than the amount of thought and energy you put into choosing a career.

Self

Gather information about yourself (self assessment)

Interests Values Roles Skills/Aptitudes Preferred Environments Developmental Needs Your realities

Options

Explore the occupations in which you are interested Research the industries in which you would like to work Research the Labor Market

Get more specific information after you narrow down your options by:

Job Shadowing Part time work, internships, or volunteer opportunities Written materials Informational interviews

Match

During this phase of the process, you will:

Identify possible occupations Evaluate these occupations Explore alternatives Choose both a short term and a long term option

Action

You will develop the steps you need to take in order to reach your goal, for example:

Investigating sources of additional training and education, if needed

Developing a job search strategy Writing your resume Gathering company information Composing cover letters Preparing for job interviews

Career Planning Career Planning is a lifelong process, which includes such facets as:

choice of occupation; job search; growth in the job; career transition (changing careers).

Career Planning answers questions such as,

"Where do I want to go?" "What do I want to do?" "What kind of a career should I pursue in the university?"

Making the right plans for your future in the university can be difficult. Career Planning is a process that can help you decide what career path to follow and how to follow that path using your skills, competencies and abilities.

The Career Planning process consists of three phases:

Self-assessment

This phase can answer such questions as What do I like doing? What are my skills and abilities?

Getting to know your competencies, values, interests, skills, developmental needs, etc. allows you to make appropriate career choices that match your abilities, competencies and preferences.

Exploration of work choices

How do I get from my present work situation to where I want to be in five years? What options are available for me to gain training and/or experience?

With the Career Advisor’s assistance you can investigate possible work experience and/or training to attain your developmental goals. Alternative work possibilities could be job shadowing, job rotation, volunteer opportunities, and informational interviews. Your training needs may include language or computer skills, or may be technical training to master a specific skill. The Career Advisor’s guidance and coaching will enable you to select your career goals and match your values, abilities, competencies and skills to those goals.

Identification of a possible career

Decision-making on a career path and devising an action plan. I now know what direction I want my career to take, how do I implement my career choice?

The last stage in Career Planning (although this may not be the final stage as you redefine your goals in the course of your career) is to develop the practical steps in order to reach your career goal. The Career Advisor is there to help you identify the action steps you will need to attain your career goals.

Career DevelopmentCareer Development invites you to review your work history and all the factors (psychological, sociological, economic) that influenced your career choices.

Besides looking at your work history, Career Development is also future-oriented. Knowing the different aspects of your personality, your competencies and the skills you possess provides you and the Career Advisor with a ‘roadmap,’ which indicates what career is best for you. It offers a method of setting necessary objectives and goals in order to attain your desired career path. Questions such as, Where am I going in the university? What will I be doing in the years to come? How can I become more competent in my role in the university? are questions for which you and the Career Advisor will try to find answers.

Career Development examines your present job situation and features of the job that will enable you to use your aptitudes: values, skills, competencies. Your concern may center on your present role in your job and how to improve your skills in fulfilling your role, with an eye on your future development in roles where your talents are most suited. A career plan is meant to set goals to develop the required skills that you need and will need in the future.

Your Career Development is linked to Concordia University’s future! The goal of Career Services is to create an improved approach to employee development by recognizing and

responding to each individual’s need for a satisfying and rewarding career.

Succession planning

Succession planning is a process for identifying and developing internal people with the potential to fill key leadership positions in the company. Succession planning increases the availability of experienced and capable employees that are prepared to assume these roles as they become available. Taken narrowly, "replacement planning" for key roles is the heart of succession planning. Effective succession or talent-pool management concerns itself with building a series of feeder groups up and down the entire leadership pipeline or progression (Charan, Drotter, Noel, 2001). In contrast, replacement planning is focused narrowly on identifying specific back-up candidates for given senior management positions. For the most part position-driven replacement planning (often referred to as the "truck scenario") is a forecast, which research indicates does not have substantial impact on outcomes.

Fundamental to the succession-management process is an underlying philosophy that argues that top talent in the corporation must be managed for the greater good of the enterprise. Merck and other companies argue that a "talent mindset" must be part of the leadership culture for these practices to be effective.

Research indicates many succession-planning initiatives fall short of their intent (Corporate Leadership Council, 1998). "Bench strength," as it is commonly called, remains a stubborn problem in many if not most companies. Studies indicate that companies that report the greatest gains from succession planning feature high

ownership by the CEO and high degrees of engagement among the larger leadership team [1]

Companies that are well known for their succession planning and executive talent development practices include: GE, Honeywell, IBM, Marriott, Microsoft, Pepsi and Proctor and Gamble.

Research indicates that clear objectives are critical to establishing effective succession planning.[2] These objectives tend to be core to many or most companies that have well-established practices:

Identify those with the potential to assume greater responsibility in the organization

Provide critical development experiences to those that can move into key roles

Engage the leadership in supporting the development of high-potential leaders

Build a data base that can be used to make better staffing decisions for key jobs

In other companies these additional objectives may be embedded in the succession process:

Improve employee commitment and retention Meet the career development expectations of existing employees Counter the increasing difficulty and costs of recruiting employees

externally

Field of Succession Management

There is a substantial body of literature on the subject of succession planning. The first book that addressed the topic fully was "Executive Continuity" by Walter Mahler. Mahler was responsible in the 1970s for helping to shape the General Electric succession process which became the gold standard of corporate practice. Mahler, who was heavily influenced by Peter Drucker, wrote three other books on the subject of succession, all of which are out of print. His colleagues, Steve Drotter and Greg Kesler, as well as others, expanded on Mahler's work in their writings. "The Leadership Pipeline: How to Build the Leadership Powered Company," by Charan, Drotter and Noel is noteworthy. A new edited collection of

materials, edited by Marshall Goldsmith, describes many contemporary examples in large companies.[3]

Most large corporations assign a process owner for talent and succession management. Resourcing of the work varies widely from numbers of highly-dedicated internal consultants to limited professional support embedded in the roles of human resources generalists. Often these staff resources are separate from external staffing or recruiting functions. Some companies today seek to integrate internal and external staffing. Others are more inclined to integrate succession management with the performance management process in order simplify the work for line managers.

Large consultancies, such as McKinsey, have recently[when?] focused on the broader talent issue, but most consulting support to executive succession and development practices probably comes from numerous boutique firms and retired executives in the field.

The leading professional affiliation for succession-planning professionals is, arguably, The Human Resources Planning Society (publishers of People and Strategy Journal at http://www.hrps.org/), an international association with academic and practitioner membership from around the world.

Family Business

Arieu proposed a model in order to classify family firms into four scenarios: political, openness, foreign management and natural succession.

POLITICAL SCENARIO: This is the case of a company linked to a large family, where it is expected that through inheritance, the property was spray quickly, possibly faster than the growth of own business, resulting in a dividend per head lower and lower. Identifying suitable members in the family can incorporate to address and possibly distinguish who may occupy the general direction afterwards. However, the existence of many members in the family can turn into conflicts of power, making it necessary to establish agreements and occasionally reorganize the business in terms of those individuals who, because of the obvious professional and human qualities can be recognized as leaders. In many cases this may mean separate reorganization to create new companies and business units.

OPENESS: When members of the next generation are numerous and among them is not possible to identify a person who possesses the characteristics necessary to

assume leadership positions with expertise in family business, we have a scenario that we call Open, since the strategy more suitable for this type of organization is to shift some capital to others who can provide not only management skills but also liquidity for family members. This will succeed in securing the future of the business, creating more value for society and retention of jobs for their employees, not to please the family, getting money and avoid future complications.

FOREIGN MANAGEMENT: This scenario occurs when family members who control the business are not many, and yet, not having any of its members with a natural profile of leadership succession when they choose to appoint a non-family CEO .

NATURAL SUCCESSION: Families seeking to preserve its legacy business are the most favorable conditions in the presence of a stage of natural succession. This is the case of a company controlled by a few families, few heirs who in turn have identified among them a worthy successor, a strong name also is associated with the adequacy enough to drive its growth, the ability to run the organization, understanding market and commitment which means only a part of the family patrimony is also a source of value to society, other shareholders, customers, suppliers and even their own employees (stakeholders).

Arieu Family Business Succession Model (Spanish)

Process and Practices

Companies devise elaborate models to characterize their succession and development practices. Most reflect a cyclical series of activities that include these fundamentals:

Identify key roles for succession or replacement planning Define the competencies and motivational profile required to undertake

those roles Assess people against these criteria - with a future orientation Identify pools of talent that could potentially fill and perform highly in key

roles Develop employees to be ready for advancement into key roles - primarily

through the right set of experiences.

In many companies, over the past several years, the emphasis has shifted from planning job assignments to development, with much greater focus on managing

key experiences that are critical to growing global business leaders. North American companies tend to be more active in this regard, followed by European and Latin American countries.

PepsiCo, IBM and Nike are current examples of the so-called "game planning" approach to succession and talent management. In these and other companies annual reviews are supplemented with an ongoing series of discussions among senior leaders about who is ready to assume larger roles. Vacancies are anticipated and slates of names are prepared based on highest potential and readiness for job moves. Organization realignments are viewed as critical windows of opportunity to create development moves that will serve the greater good of the enterprise.

Assessment is a key practice in effective succession planning. There is no widely accepted formula for evaluating the future potential of leaders, but there are many tools and approaches that continue to be used today, ranging from personality and cognitive testing to team-based interviewing and simulations and other assessment center methods. Eliot Jaques and others have argued for the importance of focusing assessments narrowly on critical differentiators of future performance. Jaques developed a persuasive case for measuring candidates' ability to manage complexity, a robust, but operational definition of business intelligence.[4]

Companies struggle to find practices that are effective and practical. It is clear leaders who rely on instinct and gut to make promotion decisions are often not effective. Research indicates that the most valid practices for assessment are those that involve multiple methods and especially multiple raters [5] "Calibration meetings," composed of senior leaders can be quite effective judging a slate of potential senior leaders with the right tools and facilitation.

Professionals in the field, including academics, consultants and corporate practitioners, have many strongly-held views on the topic. Best practice is a slippery concept in this field. There are many thought pieces on the subject that readers may find valuable such as "Debunking 10 Top Talent Management Myths", Talent Management Magazine, Doris Sims, December 2009. Research-based writing is more difficult to find. The Corporate Leadership Council, The Best Practice Institute (BPI) and the Center for Creative Leadership, as well as the Human Resources Planning Society are sources of some effective research-based materials.

Monitoring Future Needs

Succession management identifies and monitors various talent pools within the organization to match the future needs of the organization with the bench strength of available talent. Not having the right talent in place is often a growth-limiting factor in achieving business potential. With the impending retirement of baby boomers and increased demands for diversity, leading organizations are building systems that provide talented, high performers opportunities to grow. For example, Sonoco identifies eight separate pools that are sorted by division or business unit. PanCanadian focuses on “bright lights” and critical skills but also looks across the organization, especially for high potential young managers reporting to senior executives.

Talent Assessment

Talent assessment is a semi-transparent process in best-practice organizations. Most managers receive feedback and information about their developmental needs and suggested activities for further growth. Individuals who have been designated as high potential are seldom told of this designation to avoid raising expectations. At Lilly, an eight-page talent identification questionnaire is used to evaluate the assumed potential of 15,000 associates on performance, potential derailment factors, and learning agility. Similarly, Dell uses scaling calls to determine an individual’s level of talent.

Best-practice partners use a core set of competencies or behaviors to establish a standard of comparison for assessment. Most organizations use a subset of leadership competencies that are aligned with the core set. All use these competencies as a basis for performance management and four out five use these for identification of high- potential employees. Furthermore, best-practice partners used fewer competencies than study sponsors, feeling that simplicity and focus were stronger advantages than comprehensive efforts. Dow has moved from having different competencies for each global business to a common set of seven used throughout the corporation. Dell focuses on “global corporate talent,” which consists of individuals who have the capability to “run significant portions of a …. Business…on a global basis.” They also track “functional high potentials.”

Technology Used to Integrate Data

The use of technology in succession management varies widely within the best-practice organizations. Yet, web-based systems seem to offer great potential for

worldwide access and large-scale integration of data. As suggested previously, Dell has moved from more extensive global software applications to a much simpler MS Excel workbook to organize data. Sonoco moved to integrate four commercial applications (PeopleSoft, HRCharter, Lotus Notes, and ExecuTRACK) into a seamless system that can be globally accessed and updated daily.

Developmental Activities

Meet Organizational Needs Best-practice partners employ a wide range of developmental activities to engage leaders and extend their capabilities. These firms spend considerable time creating stretch developmental opportunities that are consistent with the organization’s needs, as well as with those of the individual. Several firms reported that they would give people a temporary assignment as a part of, or tied in with, an action learning assignment.

Dow Chemical offers mentoring, coaching, and action Iearning along with university-based programs. Dow’s internal research indicates that graduates of their internal executive education program showed improvements in strategic thinking, external focus customer orientation, and global view. Dow also offers an extensive array of training courses on-line. They report 14,000 on line courses were completed online in one week. Eli Lilly uses individualized developmental plans, 360-degree feedback, job rotation and a formal mentoring program as part of their developmental arsenal.

Subject Firms Measure Performance

All best-practice partners use some variety of a nine-box matrix for classifying the performance of their managers. In most instances, this matrix (originally popularized by General Electric) assesses individuals on the basis of performance, corporate values, and perceived potential. An individual who is performing well may not be judged as highly as someone who has not gotten comparable results but has persevered in a real stretch assignment. A popular competency was “learning agility.” This refers to the ability and willingness to learn new material and adapt to new situations.

The major metric by which succession systems are evaluated is the percentage of openings filled from within the firm. Sonoco finds that the performance/promotability matrix is 80 percent to 90 percent accurate in identifying candidates for key positions. At Dow, the hit rate of the succession plan

is the key measure. If the person elected for an open position was on the list of potential successors, the system is believed to be working. The current hit rate of 75 to 80 percent shows considerable improvement from the past and is viewed as a reasonable target. Other key metrics include diversity and cross-functional assignments. Lilly has a measurement system that ensures its senior management cadre includes diversity in gender, ethnicity, and geographic origin. Finally, a unified approach to succession management can help to maintain consistency between different business units and geographic areas, and can contribute to objectivity in an organization’s strategic human resources. For many firms, the first step in realizing these benefits will be to place succession management on the strategic radar. Then, an organization is prepared to benefit from the following best-practice principles.

KEY BEST-PRACTICE INSIGHTS

Deploying a Succession Management Process

Best-practice organizations make succession planning an integral corporate process by exhibiting a link between succession planning and overall business strategy. This link gives succession planning the opportunity to affect the corporation’s long-term goals and objectives.

Human resources is typically responsible for the tools and processes associated with successful succession planning. Business or line units are generally responsible for the “deliverables” -i.e., they use the system to manage their own staffing needs. Together, these two groups produce a comprehensive process.

Technology plays an essential role in the succession planning process. Ideally, technology serves to facilitate the process (make it shorter, simpler, or more flexible) rather than becoming the focus of the process or inhibiting it in any way.

Identifying the Talent Pool

Best-practice organizations use a cyclical, continuous identification process to focus on future leaders.

Best-practice organizations use a core set of leadership and succession management competencies.

Engaging Future Leaders

Best-practice organizations emphasize the importance of specific, individualized development plans for each employee.

Individual development plans identify which developmental activities are needed, and the “best practice” firms typically have a mechanism in place to make it simple for the employee to conduct the developmental activities. Typically, divisional human resource leaders will monitor employee follow-up in developmental activities.

Best-practice partners rely on the fundamental developmental activities of coaching, training, and development most frequently and utilize all developmental activities to a much greater extent than the sponsor organizations.

In addition to traditional executive education programs, best-practice partners increasingly use special assignments, action learning, and web-based development activities.

Monitoring and Assessing the Program

Best-practice organizations develop methods of assessment to monitor the succession planning process. These methods vary according to business goals and company culture.

Recommendations for Success

When the firms who had been recognized as “best-practice organizations” were asked for any insights that might be helpful to other firms interested in improving their succession management, they responded with the following recommendations.

1. Keep the process simple. Most refinements to succession management systems involved making the process more logical and simple so that busy line executives would not feel that bureaucracy was burdensome.

2. Engage technology to support the process. Information technology makes it possible for managers throughout the world to monitor and update developmental needs and activities on a timely basis. Making information timely and reducing the time required to manage the system are major contributions of technology.

3. Align succession management within overall business strategy. Line executives are much more likely to support a system that clearly reinforces corporate goals and objectives.

4. Secure senior level support for the process. None of the best practice firms would have been as successful without top management endorsement and support.

The last two recommendations suggest that there is a “virtuous cycle” when the succession system supports corporate strategy in a tangible way. Obviously, senior executives are much more supportive when the system gives the achievement of their strategies a higher probability of success.

Executive development

Executive development is the whole of activities aimed at developing the skills and competencies of those that (will) have executive positions in organisations. While "executive" and "manager" and "leader" are often used interchangeably, "executive" is commonly used to signify the top 5% to 10% of the organization. Similarly, "development" and "training" and "education" are often used as synonyms, however "development" is generally seen as the more encompassing of the three in terms of activities that build skills and competencies.

While it is typical to find organizations that have dedicated corporate training & development people and processes, it is not always the case that an organization will have a dedicated executive development set of activities. In some organizations (typically large multi-nationals), there is a separate executive development team, in other organizations executive development is handled as one of many activities by the larger corporate training group, and in yet other scenarios there is no executive development activity to speak of.

In contrast to other corporate training & development activities, which have as their core purpose to build tactical skills for employees, executive development plays a different role for the organization. Indeed some executive development is conducted for the purpose of building tactical skills (sometimes referred to as "hard skills" such as business fundamentals- finance, marketing, operations and also "soft skills" such as communication and team building), yet executive development is also used to evaluate future potential future executives as well as a mechanism for the CEO and the executive team to cascade their strategies, goals, and even elements of the culture to the rest of the management team and ultimately the organization. In the best of cases, executive development not only helps an organization execute its key strategies, it can also help provide input to the strategy

creation process. In this way, executive development is much more strategic than typical corporate training & development which is used for most employees of an organization.

Philosophies and Practices

There is a wide range of practices in the field of executive development today. On one hand, there are organizations that have for many years, if not decades, had very thorough executive development functions that conduct a wide variety of high profile and highly regarded set of activities (GE's Crotonville is the classic example). On the other end of the spectrum, there are some organizations that have curtailed many of the executive development activities and spending in the wake of the economic crisis of 2008/2009. As one looks across different companies, and against the backdrop of different periods, there exists a wide variety of executive development activity.

As well, the main philosophy of executive development is quite different depending on the organization. For some, the development process has and continues to play a very strategic role in the organization- is it with and through executive development activities that organizational strategies are formed, communicated, and reinforced with senior management. In other organizations, development of executives is seen as an inherently positive activity, which akin to insurance, is probably better to have than not. In organizations where development has not had an opportunity to prove its value, it may be seen as a waste of time and rarely something that the organization commits its leaders' precious time toward.

[edit] Reporting & Structure

Most often the executive development function reports into the head of Talent Management, the head of HR, or into the Chief Learning Officer (CLO). In rare cases, it reports into an operating executive (i.e. COO). Executive development can be very effective under any reporting structure – what is key is executive level sponsorship and access to senior line leaders who can help ensure development is aligned with and supports the company's strategy.

Most often, the head of executive development will have additional resources working along side him/her. These may be in the form of direct reports, and/or HR business partners and shared resources in the Talent Management function. While the majority of executive development professionals are the more senior talent management professionals in the organization (based on expertise, education such

as graduate degree, and tenure), in some cases and perhaps more frequently organizations are putting “outsiders” in charge of executive development who have not spent the bulk of their career in Talent Management or Human Resources (some examples include CBS Corporation and the U.S. Navy). Among the reasons for this are to bring a fresh perspective into the role and to bring strategy and operational expertise into the function. On the supplier side, there exists a rich ecosystem of development professionals; essentially any part of the executive development process can be procured from an outside firm or set of individual consultants and coaches.

[edit] Primary Activities

Executive Development activities generally fall into two broad categories: Assessment and Development as outlined below.

[edit] Assessment

Capability Requirements – Provide input into the organization’s strategy formulation process by identifying what is required of executives from a capability perspective

Capability Assessment – Measure existing capabilities against required capabilities

Gap Analysis – Identify gap between requirements and current assessment, with an eye toward what capabilities cab be “built” (development) vs. “bought” external hiring

[edit] Development

Segment executive population– Create groupings of executives, by level, geography, business unit, or other affiliation (C-suite track, high potential’s, critical roles etc.)

Architect – Create development activities and experiences for the different segmentations

Deliver – Coordinate across the ecosystem of internal and external partners to deliver development experiences and manage execution of executive development initiatives, etc.

Measure & Refine – Conduct post activity ROI (typically Kirkpatrick Level I-IV), make course corrections, summarize and report results

Some of the adjacent Talent Management activities that executive development may have involvement with include the succession planning process (typically not CEO or CEO -1, but below), executive onboarding (ideally both external hiring and internal changes), structuring on the job developmental assignments, and working with alumni of development programs, and alumni of the organization.

[edit] Developmental Options

Executive development professionals have a wide variety of activities they can choose to deploy including in order of most commonly found:

OTJ (On the job) stretch assignments, line and staff roles, rotational assignments

Executive coaching Mentoring Custom workshops and activities Action learning Business school open enrollment courses Online courses and resources

[edit] Best Practices

The following are a set of best practices most often found in organizations that have long standing development activities which are highly regarded in and outside of the organization.

Articulate a clear and compelling vision – Leaders have many competing priorities, and need a compelling set of reasons to support development activities. The development team needs to build a compelling case and consistent themes across its development strategy.

Build support across key sponsors - Executive development professionals need to have a deep set of contacts both inside of the organization and across many functions and outside with thought leaders and experts. Many organizations have found that Advisory Boards, which seek to create a formal process of soliciting the input from stakeholders as highly effective. Relationships with internal executives, who are increasingly used as “faculty” to delivery development, are important to nurture. A strong professional network is the “currency” of the development professional.

Ground development in business challenges – When in doubt, development that is rooted in solving current and significant business challenges will always prevail over development that is designed to round out a leader or a group of professionals.

Shorten the timeline – Especially in light of budget cutbacks that are all too common in organizations today, it is important that development is focused on solving current operating cycle issues and challenges. Development plans that span many quarters risk never being fully implemented.

Market successes – Successful development professionals, like any other professionals in the organization, are quite good at highlighting their impact for the organization and making sure to create "buzz" for their work and activities. Whether through formal ROI studies or informal anecdotal reviews that are circulated to strategic individuals, it is key to promote success.

[edit] Executive Development 2.0

Below are key factors that are impacting the field of executive development:

Time frame – The speed with which organizations need to revise strategies, launch new products and services, expand their global footprint, etc. continues to accelerate; more rapid means of enabling the organization and its leaders to make these changes are required from the development function.

Share of mind – Executives are incredibly taxed with an increasing set of responsibilities; mid-level management has been reduced and the number of stakeholders (community, environment, government, etc.) has increased, all putting incredible pressure on leaders. Development that is not of immediate value risks elimination.

Budget – The current economic situation has put great pressure on all expenses across the organization, executive development is no exception. Centralized development budgets are all targets, while certain activities such as executive coaching that may be paid out of a business unit budget may be more insulated from cutbacks.

"Bottom line" HR – As many organizations have become more results oriented and quantitative for all support functions, there is increased pressure for HR and all of its components to "raise its game" and prove in business terms its impact.

These factors are creating a new operating context for executive development professionals. In response to this new environment, The Institute of Executive Development has articulated a vision of what Executive Development 2.0 will look like:

The purpose of the function is to drive the organizational strategy (not solely build skills)

The content will be based on current business imperatives The timeline is focused on the immediate 12 months, not longer The format will include more on the job and action learning (vs. formal

workshops and programs) The audience will include stakeholders such as customers and partners The budget will be measured more in terms of investment of executive's

time (vs. funds)

While executive development continues to become enriched by many approaches, one approach, adult development and its subfield Positive Adult Development is beginning to create opportunities for what has been essentially reserved for academic research to become an increasing part of executive practices.

Seven Steps to Successful Performance-Based Rewards

. DEVELOP CLEAR EXPECTA1TIONS. Before they can develop effective performance-based rewards, senior management must know what it expects of employees and be able to articulate those expectations through clearly defined goals. Because overall organizational goals may not apply to all employees, it is important to break down broad organization goals into specific goals for each division, department, group and, sometimes, individual employees. Big Foods understood this need and communicated its priorities to its sales force by providing the highest per unit incentive products in its Develop category.

2. CREATE A CLEAR LINE OF SIGHT. Employees must see that their direct efforts will impact the results that management wants. No one wants to be held accountable for something they cannot directly effect. With the proper training and direction, the more experienced sales people in Big Foods were quickly able to redirect their sales efforts to increase market share in the Develop product lines in order to earn worthwhile incentive payouts.

3. SET ACHIEVABLE GOALS. Performance-based rewards must be tied to either individual or group goals that have a reasonable chance of being achieved. If the goals are such a stretch that most employees believe that they cannot be attained, the program is doomed from the outset. Few will be motivated to try to achieve such goals; others will become discouraged early on. On the other hand, goals should not be so easy that incentives are paid for results that would have otherwise been achieved through normal effort. To prevent either of these scenarios, Big Foods trained employees to sell its new products and to recognize the characteristics of the customers most likely to buy them. Through the training program, management communicated to the sales force the potential of the new products and convinced them of the probability of success.

4.ESTABLISH A CREDEBLE MEASUREMENT SYSTEM. Sales incentive plans, like the one developed by Big Foods, are among the easiest performance-based rewards programs to establish because sales can be measured quantitatively. In all types of performance-based rewards programs, it is essential to provide quantitative measures of results. The less quantifiable the measurement, the greater the role of subjective judgment in deciding rewards, and the greater the potential for dispute and participant dissatisfaction. If performance-based rewards are to succeed, participants must have faith in the fairness of the measurement system. In addition, the calculation of the measurement should be understood and agreed upon by both management and participants at the beginning of the performance period.

In many cases, the performance of staff professionals is measured using Management by Objectives, which includes both quantitative and qualitative goals. In these situations, a company must rigorously establish qualitative measures that do not leave too much of an employee's performance to supervisory discretion. When much of the appraisal is subject to judgment, the credibility of the performance-based program is at risk. Employees are concerned that management can manipulate the results to reward those they favor instead of those whose performance is outstanding.

EMPOWER EMPLOYEES.

Employees need to believe not only that the goals against which theyare measured and rewarded are achievable, but that they are capable of achieving those goals. Have employees been adequately trained in the skills that they need for superior performance? Do employees have the information they need to make intelligent decisions? Are employees empowered to make decisions on their own? Are other departments cooperating and providing these employees with information on a timely basis? In short, is the entire system geared to maximum productivity, communication and cooperation? If the answers to these questions are no, companies must be prepared to see the incentive system backfire and result in more stagnation, resentment and mistrust of management.

To avoid this, Big Foods segmented the marketplace based on its new product categories (Develop, Maintain and Harvest) and provided employees with the latest market research. Big Foods also focused its more seasoned sales people on the Develop products while assigning the less experienced sales people to the Maintain and Harvest product lines. This approach not only freed the experienced sales people to devote more time to the new products, it provided a better training opportunity to less experienced personnel. Although the Maintain and Harvest products had lower per unit incentives, these products were easier to sell in an already established marketplace.

6. MAKE REWARDS MEANINGFUL. Researchers in the fieldof compensation have long held that, for incentives to be truly effective, the actual reward must be significant--that is, 15% to 20% of base pay. Big Foods set its annual target awards at 25% of base pay for achieving goal; however, the award could increase to as much as 40% of base pay for superior performance. This was a significant increase over the old plan which had a maximum award of 30% of base pay. Performance-based rewards programs that provide marginal rewards-that is, less than 10% of base pay-are rarely motivational enough to change behavior and are probably not worth the trouble and expense involved in implementation.

7. MAKE PAYOUTS IMMEDIATE. There should be as little time as possible between employee performance and therelated payout. Employees need to "feel" the impact of their efforts by quickly experiencing the results.

Many performance-based rewards programs are based on full-year performance results because it makes sense from a management point of view. After all, company performance is most often judged on annual results. However, for the

connection between performance and reward to be truly motivational, companies should strive for a much shorter time frame for incentive payouts whenever possible for example, on a quarterly or semiannual (as Big Foods has chosen to do) basis. This is particularly important in companies developing incentives for lower-level, nonexempt employees. The time from performance to payout for this population should be as short as possible. Unlike exempt employees who tend to be accustomed to annual incentive systems, nonexempt employees often live from paycheck to paycheck and need to see an immediate connection between their efforts and their rewards.

These seven steps should guide every performance-based rewards program from gainsharing plans that reward production workers for minimizing production costs to stock-based programs that reward executives for increasing shareholder value. No matter what type of performance-based rewards program a company adopts, these steps must be completed and reviewed periodically to ensure that the program is achieving its objectives.

How to Reward Staff Performance

Most employees love recognition for a job well done. Here's how to give some praise and perks that won't be too draining on your budget.

Make your employees feel valued by praising them and having other managers praise them.

Create a treasure chest containing items with logos, such as letter openers, mugs, T-shirts and so on. Give it to an employee who's gone the extra mile.

Reward good behavior on-site, so the good work is recognized throughout the company. Even a bunch of helium balloons will do it.

Ask employees for suggestions - via e-mail - if you're having a work-related problem.

Create a family album or photo gallery of employees, including name and hire date. This helps employees identify each other and gives you a place to note accomplishments.

Make company benefits more accessible. If your company reimburses tuition, have administrators from local colleges come to your company so staffers can find out about various programs without having to make an extra trip.

Bring in representatives from your benefit providers on evenings or over the weekend, so spouses as well as employees can ask questions.

Establishing an Incentive Compensation Program for Employees

Why?

The fundamental basis for any incentive compensation program is simple: It should equitably and consistently recognize and compensate employees for superior performance. Otherwise, employees may treat bonuses merely as an entitlement, rightfully expecting their bonuses to be paid simply because they show up to work each day and put in eight hours. If the bonus program ultimately treats unequal employees equally, the ability to use the bonus as a motivational tool is severely compromised. Giving ample rewards and recognition to star performers has the benefit of providing a role model for other employees. As a result, standards of performance are elevated and morale is strengthened.

A second premise of a well-crafted incentive compensation program is that it must direct individual behavior toward achieving common company goals. To many people, money is a motivator, pure and simple. To others, it is simply a form of recognition for a job well done. Regardless, it can and should be used to induce desired behavior toward carefully crafted corporate objectives.

A third premise of an effective incentive program is that it should be designed to affect favorable change within your organization. People, by nature, are fearful of and resistant to change. Incentive compensation can be used as a "carrot" to induce desired organizational change.

A fourth premise of a thoughtfully designed incentive program is that it should allow a substantial portion of compensation to be a variable cost. Ideally, the plan should reward results rather than actions. In other words, a manager who consistently works 14-hour days should not necessarily be rewarded for their work ethics. Only if the employee achieves clearly defined results, such as meeting schedules, should they be rewarded. Therefore, if a portion of an individual's compensation is tied to their results, the more successful the company the greater the. As a result, what was a fixed expense (salary) is broken into an expense with both variable and fixed components. Naturally, the fixed and variable components of any employee's compensation will vary depending on the type of employee your

company needs. A high variable component (i.e., larger bonus opportunity) will tend to attract risk-takers who will expect a larger reward for the amount of risk they take. Conversely, a compensation plan with a high salary, or fixed component, will tend to attract more conservative employees who value the security and stability of their position. Every organization needs a mixture of both of these employees. For example, most companies probably would not want an aggressive risk taker as a controller, conversely, a conservative, security-conscious manager may not be what is needed to maximize profits. Therefore, the overall compensation program must equitably reward the contributions of both.

Finally, the program should have some degree of flexibility in order to meet the unique needs of both your company and employees. Clearly, the program should recognize the contributions of different groups of employees. For example, the efforts of your controller and sales manager may be equally vital to your company's success, yet the bonus program should be tailored to reward them based on the unique contributions of their individual positions. The controller might be rewarded based on average age of accounts receivable and the timeliness and accuracy of job cost reports, whereas the sales manager might be rewarded based on sales, and new business opportunities identified. Additionally, the performance of employees within a given classification may vary as to their relative impact on your company's success. The program must be designed so that individuals in similar positions are rewarded commensurate with their contribution.

How?

There is no such thing as "cookie cutter" approach to designing an incentive compensation program. Every company is different in some respect, be it in the market in which it competes, its organizational culture, or its own unique blend of employees. As a result, no two companies' bonus programs should be identical. However, there are several fundamental components that are common to most effective plans. In broad terms, the company's owners must make three critical decisions.

• How to calculate it?

• Who is included?

• How much?

What are some of the objective factors you should consider when determining the answers to the above questions?

• Quality Issues

• Formal/informal surveys

• Type of business

• Inventory management

• Sales volume

• Operating costs and profits

• Financial performance

• Safety

The other critical determination that must be made is who in the company will assume more of the risk ... the owner or the employees. Naturally, the more risk one assumes the greater the potential of the ensuing financial reward.

What are the Advantages and Disadvantages of Performance Management?

Disadvantages

1. Time Consuming

It is recommended that a manager spend about an hour per employee writing performance appraisals and depending on the number of people being evaluated, it can take hours to write the department’s PA but also hours meeting with staff to review the PA. I’ve know managers who had 100 plus people to write PAs on.

2. Discouragement

If the process is not a pleasant experience, it has the potential to discourage staff. The process needs to be one of encouragement, positive reinforcement and a celebration of a year’s worth of accomplishments. It is critical that managers document not only issues that need to be corrected, but also the positive things an employee does throughout the course of a year, and both should be discussed during a PA.

3. Inconsistent Message

If a manager does not keep notes and accurate records of employee behavior, they may not be successful in sending a consistent message to the employee. We all struggle with memory with as busy as we all are so it is critical to document issues (both positive and negative) when it is fresh in our minds.

4. Biases

It is difficult to keep biases out of the PA process and it takes a very structured, objective process and a mature manager to remain unbiased through the process. See Performance Appraisal Rater Errors Article .

Advantages

1. Performance based conversations

Managers get busy with day-to-day responsibilities and often neglect the necessary interactions with staff that provide the opportunity to coach and

offer performance feedback. A performance management process forces managers to discuss performance issues. It is this consistent coaching that affects changed behaviors.

2. Targeted Staff Development

If done well, a good performance management system can be a positive way to identify developmental opportunities and can be an important part of a succession planning process.

3. Encouragement to staff

Performance Appraisals should be a celebration of all the wonderful things an employee does over the course of a year and should be an encouragement to staff. There should be no surprises if issues are addressed as they arise and not held until the annual review.

4. Rewards staff for a job well done

If pay increases and/or bonuses are tied to the PA, process staff can see a direct correlation between performance and financial rewards.

5. Underperformers identified and eliminated

As hard as we try, it is inevitable that some employees just won’t “cut the mustard” as they say. An effective PA process can help identify and document underperformers, allowing for a smooth transition if the relationship needs to be terminated.

6. Documented history of employee performance

It is very important that all organizations keep a performance record on all employees. This is a document that should be kept in the employee’s HR file.

7. Allows for employee growth

Motivated employees value structure, development and a plan for growth. An effective performance management system can help an employee reach

their full potential and this is positive for both the employee and manager. A good manager takes pride in watching an employee grow and develop professionally.

Organizations should take a global look at their performance management system and have very objective goals that are tied to strategic initiatives and the performance management process.  Successful organizations have learned the secret to this and while not always perfect, a constant striving to improve the process can help organizations reach their Vision.