The Management of Performance

In the last decade of the 20th century the reward systems operated within most companies changed from those involving an automatic rise within a particular grade until a maximum is achieved, to those that are more directly linked to the performance of the individual in the job. This reward method is known as performance related pay (PRP), which can take several forms. In many companies the grade for the job still applies but there is a much wider individual merit band, ranging from 80-120% of the job grade. An individual can move up and down within this band, depending on their performance appraisal as part of an annual salary review. In others, bonuses are paid to both individuals and teams based on the actual performance of the company or a certain business sector in a particular year. Whatever the reward mechanism, for PRP systems to work in a fair and equitable manner, it is necessary to have a personnel process that includes sound methods for evaluating an individual's performance, and hence their contribution to a group's results. These personnel processes are known as performance management systems [A-10].

All employees do not universally like performance related pay. Cogent criticisms have been made by some independent commentators against many aspects of the way in which performance related pay has been introduced into some companies. These criticisms include, the setting of unrealistic performance objectives, inconsistent appraisals, apparent favouritism and inadequate funding [A-11]. A line manager within the company should recognise that these criticisms, often based on peoples perception of the system, exist and must work to minimise their impact. Any hint of unrealistic performance criteria being set, that the management line is being inconsistent in carrying out the performance appraisals, and there will be problems.

Some scientists working in R&D often say, or at least think, that there is a particular difficulty in judging their performance. They consider that the type of jobs which they perform, ranging from the longer term, strategic or so called 'blue sky' research to the very specific provision of a service such as mass spectrometry, are not appropriately handled by a general company system. It is true, that in the more service orientated jobs it is relatively easy to put measurable parameters on the output, in a similar way to a commercial or manufacturing post. For people in the more speculative research jobs this is very much more difficult but, with some minor adjustments, PRP is eminently suited to R&D work. The selection of the performance criteria and the methods of measurement to be used for R&D jobs do need to be carefully thought about. The point to be remembered is that these criteria must be just as achievable as those set for any other types of job. R&D Managers must recognise that, for those people at the more speculative end of the R&D spectrum, the difficulty in providing meaningful quantification to support their performance does lead to some worries, as emphasised elsewhere in this book. A fair and effective setting of performance criteria, which they can both understand, agree with and be able to self-monitor, can allay these fears. The performance criteria for support technicians, for instance people who are carrying out day to day practical work, will also be very different to those set for the professionally qualified member of the group. The same management standards must always apply when setting the criteria and judging the performance any group of staff.

The basic method which is used in performance management is as follows (see Figure A2):

• Each member of staff has an individual job description that includes accountabilities, objectives and key result areas (see Section A, 1.2.1).

• Based on these job accountabilities and key result areas, personal performance expectations or standards, including a time frame for their achievement, are set in agreement with the job holder.

• Training, which may be required by the job holder in order to be able to achieve the designated goals, is discussed and then provided.

Figure A2. The Performance Management Process

• Performance against the targets is then reviewed regularly with the job holder (performance appraisal), using data collected during the intervening time period, and the targets modified as necessary.

• The results from the reviews are then used in determining the reward for the individual and in determining career development opportunities.

Even if the company does not operate a full performance related pay system, R&D Managers can still apply the principles used in performance management to good effect and hence get the best out of their staff. However, to be really effective, performance management must in some way be connected, however loosely, to a system of reward.

Project Management Made Easy

Project Management Made Easy

What you need to know about… Project Management Made Easy! Project management consists of more than just a large building project and can encompass small projects as well. No matter what the size of your project, you need to have some sort of project management. How you manage your project has everything to do with its outcome.

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