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What’s the best way to use performance management systems?

13 Nov 2018 By Tom Neil

Tom Neil looks at how businesses can best use their performance management platforms to get the most out of their workforce

Good performance management (PM) is generally considered essential for getting the best out of your organisation. If performance is not managed well, staff are unlikely to live up to their potential.

There’s been debate around whether PM systems should focus more on highlighting an employee’s strengths rather than trying to identify and fix their weaknesses.

New Acas research – Improvement required? – finds that there is currently a rather muddled picture about the best way to use PM systems. An Acas commissioned online survey and workshop highlighted some rather contrasting findings:

One of the three broad values that underpins all organisations’ PM systems is fairness (the others are consistency and transparency), but only 26 per cent of respondents in our survey said their PM systems included the option to customise their arrangements for staff with “special needs, disabilities and neurological conditions”

59 per cent of survey respondents said that employees were ‘strongly’ or ‘somewhat’ motivated by the PM system but 31 per cent said their PM system had no effect on motivation and 11 per cent said it was ‘demotivating’

Two-thirds of respondents (65 per cent) had a written statement setting out what their PM system is designed to achieve but only 36 per cent reported collecting regular data on staff satisfaction with their PM system

The research reveals several key challenges for modern-day PM systems, notably the time-consuming nature of appraisals, managers not having the skills, training or resource to properly meet their responsibilities, and an ongoing failure by employers to make or even consider adjusting performance measurements for employees with additional needs.

So what’s the way forward?

Acas has produced some new practical guidance to help employers and their staff bring out the best aspects of PM systems and to mitigate against some of the common failings. Just to take one example, building and maintaining PM systems that are fair is a very laudable goal, but to ensure fairness, employers need to:

  • avoid surprises. Managers should be discussing and addressing problems along the way and as they arise, and not leaving concerns until the end of year performance meeting.
  • avoid favouritism. Objective criteria should be used to measure performance where possible to reduce the risk of managers being seen to favour certain employees over others.
  • avoid discrimination. Employers should actively consider the diversity of their workforce and ensure that their arrangements do not unfairly disadvantage staff because of a protected characteristic. 

Formality vs informality

The origins of performance management supposedly go all the way back to the second industrial revolution at the turn of the last century, when factory managers were aware that employees’ performance affected their production outputs. The big surprise from our research is that not as much has changed as one might expect. ‘Everyday’ performance managements feels intuitively right but the need for top-down management feedback seems hard to give up.      

There does seem to have been a slight shift towards more ongoing, informal and regular performance feedback, rather than the more formal system based upon an annual appraisal. 

PM systems can be great tools for engaging and motivating staff but when not done well, they can tangle people up in an unnecessarily rigid bureaucracy that simply becomes a tick-box exercise for many managers and staff. If there is one question employers should ask themselves about their PM system, it is ‘does it feel right?’

  • Are relationships professional and amicable?
  • How often are managers talking to their staff?
  • What do the records tell you about how engaged staff are with the performance management arrangements?

It is good practice for employers to review performance management arrangements and check whether they are still appropriate for their organisations. Our new advice has tools and templates that can help.

Tom Neil is a guidance writer at Acas

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