This report states how an effective Performance Management System can help organisations better their service, employee performance and the overall culture of the organisation. It discusses background information about JKL Industries and how it is operating at present. In this report it will discuss both the benefits and the cost of implementing a Performance Management System as well as the components and characters that make up the system. This report states that JKL Industries will benefit greatly by implementing a Performance Management System.
Background Information
JKL is an Australian owned company that sell forklifts, small trucks and spare parts. They are able to lease out the forklifts and trucks for months at a time. JKL has recently been offered to have the sale rights to be able to sell and lease out medium and large trucks to their customers from an overseas supplier. This opportunity will give the business a competitive edge over its competition, it will also however change the organisations goals, direction and the organisations structure to its 200 staff its employs.
Purpose of Report
The purpose of this report is to show and help understand why Performance Management Systems (PMS) in an organisation are so important. This report was developed for the General Manager of JKL Industries in the hope to show how performance management systems can strengthen and move the organisation forward in the business world. It is the purpose to establishing and implementing a PMS framework within the company.
JKL's strategic position is that they plan to remove themselves from the rental market and hopefully close to the end of 2012. JKL Industries are looking to increase their market share in selling and servicing forklifts. This means that the organisational structure will need to be changed it incorporate these big changes. Therefore by implementing a PMS into your company it will help with the continuous improvement of its employees and the company to be able to move forward to increasing the market share.
Performance Management Systems and its relationship to organisational and HRM strategies
In every organisation a performance management system is critical to the survival of the organisation as it is linked to the success and effectiveness or the business. An effective Performance Management focuses on the effectiveness of the employee, not necessarily the busiest, a PMS places the manager's focus on the quality and amount of work completed not just the day-to-day behaviours that might be on show. This system can help remove the personal factors of an employee and their performance review which otherwise might get in the way of the overall result of the evaluation. (www.ehow.com)
Performance Management Systems rely heavily on the organisations strategic plans for it to be useful. the employees behaviours, results and development plans all have to be aligned with the companys vision, mission, goals and startegies. (studentservices.ebsglobal.net)
JKL's vision statement is "to be the leading supplier of forklifts, small, medium and large trucks in Australia" this vision statement cannot be portrayed if the staffs are not motivated to get the company noticed and to make customers want to return. The Performance Management System will fit into the companies objectives in the internal operation objectives as these are what makes the customer satisfaction and happiness.
As JKL Industries are looking to expand the business two three more branches within the next three years, the strategic plan will have to change to accommodate the new staff that will need to be hired for these branches. Having a Performance Management System will help the managers decide who is capable of getting promoted to be able to look after these three other branches. The new Human Resources department will help JKL Industries expand internally and therefore its reputation expands, to be able to sell/rent their trucks for the current mining boom in Queensland and Western Australian. By having this department it encourages the growth of the companies employees with a reward and recognition system that makes the employees want to work harder and therefore make them want to sell/rent the trucks out to the companies that require trucks for everyday business.
Performance Management Systems can help companies model the impact of new policies on past and future data, future training needs, job descriptions, KPI's, WH&S and recruitment and selection (i.e. all selection panels need to have received training.) Accurately modelling the impact of change will help companies manage the expectations of the investment community, manage the planning processes and consider the impact on performance management. (www.pwc.com)
Characteristics of 'best practice' performance management systems
Best practice focus on the qualities and aspects of the successful organisations with the business' competition. Best practice encompass' the aspects of the organisation which include organisational culture, communication and how much customer focus they have.
Characteristics of Performance Management state how the employee's performance is over the working year, how the company's goals and culture align with the employees goals and how effective the system is to help employees achieve their full potential. These characteristics include but are not limited to: (Aguinis & Gottfredson. 2011)
Congruent
Thorough
Practically feasible
Meaningful
Specific
Identifies effective and ineffective performance
Valid and reliable
Acceptance and fair
Inclusive and open
Corrective
Having these characteristics developed into the workplace at JKL will aid the organisation with moving forward to a better workplace environment. These characteristics will help JKL with hiring and promoting staff.
Each of these characteristics is explained below to further help understanding.
Congruent
Employee's goals and strategic values within the organisation must be aligned with the companies' goals and the culture of the organisation. Being congruent means that the all employees understand why they are there, in terms of the overall goal of the organisation (to seel/rent forklifts and trucks).
Thorough
The PMS needs to be thorough to all employees and managers; all responsibilities and major job tasks need to be evaluated fairly. The feedback from the PMS needs to be emphasis on both constructive and adverse performance. This gives the employees a chance to know what they need to improve and what they have been doing well in.
Practically feasible
The Performance Management System needs to be beneficial to all employees, without outweighing the cost of implementing the new system. Having a PMS is encouraging the employees to move forward and to better their skills. This in end will give the company better morale, better working outcomes and less turnover rates. This will end up saving the company costs for hiring new staff, replacement staff, and will earn the company more respect as it is looking after their staff.
Meaningful
The Performance Management System has to be personal and meaningful to each and every employee. The performance appraisal must be relevant to only what the particular employee can control. The appraisal must be taking place at regular intervals (every three months). Having a meaningful Performance Management System give the staff the knowledge that their managers are noticing what they are achieving.
Specific
The PMS needs to be specific and relevant to each person's job. The detailed guidelines are to be about what is expected from both staff and managers, and specify what is expected of them and how they are to reach these expectations. Being specific can help JKL Industries in knowing what training needs to be provided to its employees before they start to expand the company.
Identifies effective and ineffective performance
The Performance Management System allows for the identification on what the employees have achieved on various levels. It helps to distinguish the difference between ineffective and effective performance in employee behaviours and performance results. The Performance Management System provides good and bad feedback to employees, this helps to show where improvement can be made.
Valid and reliable
The System is consistent and as much as possible free of error, when evaluating employees and managers on their performance since the last appraisal. Managers need to document all appraisals from previous years, so that employees are able to see how far they have come over the past year. This shows that the system is reliable in progressing the employees to better their knowledge and skills.
Acceptance and fair
All employees and managers need to be treated fairly according to the company's code of conduct, values and statement. Feedback needs to be given to all employees which is documented with version control, complete and kept confidential. Any issues that arise are dealt promptly and accurately. JKL Industries need to be seen as an Equal Opportunity Employer, this is because they are looking to expand their company which includes the workforce. If the company are not seen as being acceptance and fair of their current employees, it gives the statement to all that they don't care about their staff and are only in business for the money.
Inclusive and open
All employees and managers have the right to voice their opinions throughout the process of the design and implementing the PMS. The system is open and ongoing, with two way communication between employees and employers. If employees feel that their voice is heard they are happier within there working environment and are more likely to be encouraged to work harder.
Corrective
The organisation has to know that no PMS is 100% error-free, therefore the first few years after the system is implemented there will be a few errors. There is an appeal process is available for any employee who disagrees with any unjust decisions. JKL Industries need to understand that it will take time to get the PMS right so that it fits into the company and their way of operation.
Components of 'best practice' performance management systems
The components of a performance management system are what exactly make up an effective management system. These components are what help the performance evaluations be designed and implemented. The components include but not limited to: (power points)
Clear job descriptions and specifications
Formal Review Process
Reward and recognition system
Induction and training
Goal settings
360 degree feedback to employees
Appraisal and assessment of accomplishments
These components are explained below:
Clear job descriptions and specifications
By having clear job descriptions it tells the employees what is expected of them in every day-to-day operations. It lets the employees know what their key responsibilities are and how they are expected to complete these tasks. Clear job descriptions help to reflect the business' vision and mission statements. It helps with performance appraisals as there is a benchmark for the manager to assess the staff personnel on.
Formal Review Process
Having a formal review process helps the staff member interact with their manager about their performance over the last year; it allows them to see where they are in terms of job performance. The review process scores them on their performance and states what they can improve. The process identifies what training needs to be completed to benefit the staff member as well as what training might better help the organisation.
Reward and recognition system
Rewarding and recognising employee's help employees want to work harder towards goal when they know that they will get recognised for the outstanding work they do in the job.
Induction and training
Induction and training is one of the most important things that an organisation can do for its new and exciting employees as it helps to develop the employee's skills. Induction helps to make a new employees feel welcome into the organisation and tracks how they are coping with their new work load and how they are finding the organisation for up to six months.
Goal settings
By setting goals it helps to motivate the staff to work towards the goal, as well as letting the staff know what they need to work towards and by when they need it to be completed by.
360 degree feedback to employees
The 360-degree system must be oriented to reflect the particular needs and culture of the company to obtain better performance information and increase employee development and accountability (best-in-class.com).
Appraisal and assessment of accomplishments
Having the employees appraisals and accomplishments on file show the employee how far they have come since starting at the company. The assessment of accomplishments show each person that they are being recognised for what they have done over the past year(s) and not just a few weeks before the appraisal needs to be completed.
As JKL's policies and procedures state "each employee to understand the legislation relevant to their position in order to avoid violations, and seek an explanation from the relevant company officer if there is any concern or uncertainty as to the propriety of any action or transaction". Having an effective PMS that also leads on the performance appraisals will make sure that all employees do understand the relevant legislation they are employed under. Having the 360 degree feedback system will make sure that all employees understand this legislation.
Benefits and Costs of Performance Management Systems
There are several benefits and costs when associated with performance management systems, however the benefits out way the costs by a considerable amount. These benefits can have a positive outcome on the employees and the managers, these benefits can include: (www.managementstudyguide.com)
Providing all employees with the opportunity to grow and succeed within the organisation
Helps to motivate and engage staff
It helps to recognise and reward good performance through an evaluation with fairness which makes the employees feel valued and appreciated at the company
Benefits also include excellent feedback and openness in which the employees are able to talk to their manager about their job performance
Long term health benefits for the employees by knowing that the work they are completing is being recognised
These benefits immensely outweigh the cost as they boost morale, encourage and support staff and managers and provide all employees with a happy and safe working environment. It gives the staff members a chance to increase their skills while getting feedback of their job performance.
The costs associated with all of these benefits can include:
Extra hours spent by human resource staff members to develop and implement these changes
The worry on the finance department on how to recruit the money for performance management
"Conducting training, re-training and career development workshops" this means that their responsibilities will be put on hold while they are being trained.
The opportunity cost to the company is that they need to decide what projects (Performance Management System) are more important to the company
Have to change the company's strategic goals and objectives for the future years.
Although these costs are important to the organisation, in the long term it will improve the outcome and productivity of the workforce, which in the end will save to company thousands. This is because there will be fewer turnovers when employees are satisfied, there will be less sick days taken which will save having to hire a temp and this will help to create better morale. JKL Industries will benefit for a Performance Management System as they plan to open three new branches in the coming years, this system will help with the intake of new staff and help training in the sales of trucks.
Conclusion
In conclusion it is strongly advised that JKL Industries implement a Performance Management System into the company as it will greatly benefit from an effective P MS as it will help to bring the company and its operations forward. The PMS encourages staff to be at their full potential, develop skills and to reach their goals. By intergrading the Performance Management System into the company it helps to focus on its qualities and aspects that make up the overall culture for the company.
