SUCCESS in any market is achieved through giving customers the goods and services they require of a high quality and at an affordable price.

Price competitiveness is therefore a key component in the success of any organisation, and this is ultimately achieved by cutting costs or increasing productivity.

Performance management lies at the heart of increasing productivity and has become one of the major areas of focus of all organisations, whether in the private or public sector.

Results-oriented approach

Performance management is a means of getting better results from the organisation, teams and individuals within an agreed framework of planned goals, standards and competence requirements.

It is a process for establishing shared understanding about what is to be achieved and how such achievement will be measured.

While human resource departments have long been associated with the design and implementation of performance management systems, it is a process that must be owned and driven by line managers.

Without their total commitment, the process will fail or become an annual ritual of irrelevance.

Performance appraisals are conducted once a year, but performance management is carried out every day of the week, every week of the month, every month of the year. It is the cornerstone of effective management.

The performance review process has become, paradoxically, a contentious issue distrusted by fearful staff and sceptical line managers alike.

While this inevitably leads to heated debate at the micro level, I am convinced that it ensures greater fairness and transparency at the macro level.

One thing is sure — performance standards are being raised universally, with high performers being rewarded better than ever before and poor performers being more clearly identified and remedial measures being introduced.

Performance management requires managers to develop their key interpersonal skills in order to interact better with staff.

They need to improve their questioning and listening skills while honing their verbal and non-verbal communication styles. They need to praise and encourage while giving constructive feedback, a key component of the performance review process.

The art of goal setting

At the heart of performance management is the art of goal setting.

Goals should be “smart” — that is, specific, measurable, agreed, relevant and time-bound.

Goals identify what needs to be achieved during the coming year, and key performance indicators must be established to measure the success or otherwise of the goals identified.

Core competencies and behavioural indicators may also be identified at this stage. Whatever the system or process used, the principle remains the same.

Staff should agree what is expected of them during the coming year and know how their performance will be judged and evaluated.

At the end of the performance cycle, the performance review takes place.

This process may be broken down into three simple stages:

* Preparation,

* Conducting the review, and

* Follow up.

It is important to give both the appraiser and appraisee adequate time to prepare properly so that the review is conducted in a fair and constructive atmosphere.

Conducting the review is both a “backward” look at how well previously set performance measures and standards were achieved and factors affecting their achievement, as well as a “forward” look at new performance goals and standards to be achieved during the next performance period.

Follow up is the final yet equally important part of the review. Here, things agreed during the review are implemented such as necessary training or coaching that may have been identified.

Better communication needed

Ultimately, a performance review is about constant communication between two parties with the expectations of the line manager clearly expressed and understood.

Adopt a policy of no surprises — identify problems and work on them as they arise so they are not left till the appraisal. Build relationships and analyse performance.

Finally, be aware of this startling statistic — research shows that at least 85 per cent of all employees honestly believe their performance is equal to or better than their peers.

You will not be able to persuade some staff otherwise.