Managing for Performance

‘All proposals for new ventures, capital investment, or new products

and services
should be directed towards the company’s programme for
performance.’
Peter Drucker (1963) Managing for Results, Heinemann, London
Managing for results means managing for performance. This involves developing
a
high-performance culture and high-performance work systems for the
organization as
a whole, and managing the performance of individuals and teams.
High-performance culture
A high-performance culture is one in which striving for improved performance is
a recognized
way of life. The characteristics of an organization in which such a culture exists
can be as follows:
• people know what’s expected of them – they are clear about their goals and
accountabilities;
• people have the skills and competencies to achieve their goals;
• high-performance is recognized and rewarded accordingly;
• people feel that their job is worth doing, and that there’s a strong fi t between
the
job and their capabilities;
• managers act as supportive leaders and coaches, providing regular feedback,
performance reviews and development;
• a pool of talent ensures a continuous supply of high performers in key roles;
60
Managing for Performance 61
there’s a climate of • trust and teamwork, aimed at delivering a distinctive
service to the
customer.
Examples of high-performance working in a number of companies are given in
Table 6.1.
Table 6.1 Examples of high-performance working ingredients
Organization High-performance working ingredients
Halo Foods A strategy that maintains competitiveness by increasing added
value through the efforts and enhanced capability of all staff.
The integration of technical advance with people development.
Continuing reliance on team working and effective leadership,
with innovation and self- and team management skills.
Land Registry Organizational changes to streamline processes, raise skill levels
and release talents.
Managers who could see that the problems were as much cultural
as organizational.
Recruitment of people whose attitudes and aptitudes match the
needs of high-performance work practices.
Meritor Heavy Vehicle
Braking Systems
Skill enhancement, particularly of management and self-management
skills, using competence frameworks.
Team working skills and experience used in improvement projects.
Linking learning, involvement and performance management.
Orangebox A strategy that relies on constant reinvention of operational
capability.
Engagement and development of existing talent and initiative in
productivity improvement.
Increasing use of cross-departmental projects to tackle wider
opportunities.
PerkinElmer A vision and values worked through by managers and supervisors.
Engagement of everyone in the organization and establishment of
a continuous improvement culture.
Learning as a basis for change.
United Welsh Housing
Association
Linking of better employment relations with better performance.
Using staff experience to improve customer service.
Focusing management development on the cascading of a partnership
culture.
Source: Stevens (2005)
62 Approaches to Management
Developing a high-performance culture
A high-performance strategy focuses on what needs to be done to reach the
organization’s goals.
The approach to development is therefore based on: (1) an understanding of
what those goals are
and how people can contribute to their achievement; and (2) assessing what type
of performance
culture is required. This provides the basis for creating a high-performance work
system.
High-performance work systems
High-performance work systems provide the means for creating a performance
culture. They
embody ways of thinking about performance in organizations and how it can be
improved.
They are concerned with developing and implementing bundles of
complementary practices
that as an integrated whole will make a much more powerful impact on
performance than if
they were dealt with as separate entities.
As defi ned by Appelbaum et al (2000), a high-performance work system (HPWS)
consists of
practices that can facilitate employee involvement, skill enhancement and
motivation. Research
conducted by Armitage and Keble-Allen (2007) indicated that people
management basics
formed the foundation of high-performance working. They identifi ed three
themes underpinning
the HPWS concept:
1. An open and creative culture that is people-centred and inclusive, where
decision-taking
is communicated and shared through the organization.
2. Investment in people through education and training, loyalty, inclusiveness,
and fl exible
working.
3. Measurable performance outcomes such as benchmarking and setting targets,
as well as
innovation through processes and best practice.
Sung and Ashton (2005) defi ned what they call high-performance work practices
as a set of 35
complementary work practices covering three broad areas: high employee
involvement work
practices; human resource practices; and reward and commitment practices.
They refer to
them as ‘bundles’ of practices.
As described by Appelbaum et al (2000), a HPWS is ‘generally associated with
workshop practices
that raise the levels of trust within workplaces and increase workers’ intrinsic
reward from
work, and thereby enhance organizational commitment’.
Components of a HPWS
Descriptions of high-performance systems usually include lists of desirable
practices and
therefore embody the notion of ‘best practice’. However, such lists vary
considerably and doubt
Managing for Performance 63
can be expressed over any concept of best practice that implies that there are
ways of doing
things that are universally applicable. The practices adopted by an organization
must fi t their
circumstances. Best fi t is more important than best practice.
However, there are a number of typical features of a HPWS, such as those listed
by Thompson
and Heron (2005):
• information sharing;
• sophisticated recruitment;
• formal induction programme;
• fi ve or more days of off-the-job training in the last year;
• semi- or totally autonomous work teams, continuous improvement teams,
problemsolving
groups;
• interpersonal skill development;
• performance feedback;
• involvement – works council, suggestion scheme, opinion survey;
• team-based rewards, employee share ownership scheme, profi t-sharing
scheme.
Impact of high-performance working
US studies conducted by Appelbaum et al (2000), King (1995), Varma et al
(1999) and others
have demonstrated that high-performance work systems are associated with
highperformance.
In the United Kingdom, Sung and Ashton (2005) conducted a survey of 294 UK
companies.
Their research included 10 case studies. Its aim was to study the relationship
between the
adoption of high-performance working practices and a range of organizational
outcomes. A
list of 35 high-performance practices was drawn up under the three headings of
high-involvement
practices, human resource practices, and reward and commitment practices. The
survey
provided evidence that the level of high-performance practice as measured by
the number of
practices in use is linked to organizational performance. Those adopting more of
the practices
as ‘bundles’ had greater employee involvement and were more effective in
delivering adequate
training provision, managing staff and providing career opportunities.
Developing a high-performance work system
The development programme requires strong leadership from the top.
Stakeholders – line managers,
team leaders, employees and their representatives – should be involved as much
as possible
through surveys, focus groups and workshops. The steps required are described
below.
64 Approaches to Management
1. Analyse the business strategy:
– where is the business going?
– what are the strengths and weaknesses of the business?
– what threats and opportunities face the business?
– what are the implications of the above on the type of people required by the
business,
now and in the future?
– to what extent do we – can we – obtain competitive advantage through people?
2. Defi ne the desired performance culture of the business and the objectives of
developing a
HPWS – use the list of characteristics above as a starting point and produce a list
that is
aligned to the culture and context of the business and a statement of the
objectives of
developing a HPWS.
3. Analyse the existing arrangements – start from the headings defi ned at stage
2 and analyse
against each heading:
– what is happening now in the form of practices, attitudes and behaviours (what
should people do differently)?
– what should be happening?
– what do people feel about it (the more involvement in this analysis from all
stakeholders
the better)?
4. Identify the gaps between what is and what should be – clarify specifi c
practices where
there is considerable room for improvement.
5. Draw up a list of practices that need to be introduced or improved – at this
stage only a
broad defi nition should be produced of what ideally needs to be done.
6. Establish links – identify the practices that can be related together in ‘bundles’
in order to
complement and support one another.
7. Assess practicality – the ideal list of practices, or preferably bundles of
practices, should be
subjected to a reality check:
– is it worth doing? What’s the business case in terms of added value? What
contribution
will it make to supporting the achievement of the organization’s strategic
goals?
– can it be done?
– who will do it?
– have we the resources to do it?
– how do we manage the change?
Managing for Performance 65
8. Prioritize – in the light of the assessment of practicalities, decide on the
priorities that
should be given to introducing new or improved practices. A realistic approach is
essential.
There will be a limit on how much can be done at once or at any future time.
Priorities
should be established by assessing:
– the added value the practice will create;
– the availability of the resources required;
– anticipated problems in introducing the practice, including resistance to change
by
stakeholders (too much should not be made of this as change can be managed,
but
there is much to be said for achieving some quick wins);
– the extent to which they can form bundles of mutually supporting practices.
9. Defi ne project objectives – develop the broad statement of objectives
produced at stage 2
and defi ne what is to be achieved, why and how.
10. Get buy-in – this should start at the top with the chief executive and
members of the
senior management team, but as far as possible it should also extend to all the
other stakeholders
(easier if they have been involved at earlier stages and if the intentions have
been
fully communicated).
11. Plan the implementation – this is where things become diffi cult. Deciding
what needs to
be done is fairly easy; getting it done is the hard part. The implementation plan
needs to
cover:
– who takes the lead – this must come from the top of the organization; nothing
will
work without it;
– who manages the project and who else is involved;
– the timetable for development and introduction;
– the resources (people and money required);
– how the change programme will be managed, including communication and
further
consultation;
– the success criteria for the project.
12. Implement – too often, 80 per cent of the time spent on introducing a HPWS
is spent on
planning and only 20 per cent on implementation. It should be the other way
round.
Whoever is responsible for implementation must have considerable project and
change
management skills.
66 Approaches to Management
Managing individual performance
The management of individual performance involves fi ve elements: agreement,
measurement,
feedback, positive reinforcement and dialogue. The process of performance
management is
illustrated in Figure 6.1.
planning
performance
reviewing
performance
monitoring
performance
Figure 6.1 The performance management cycle
This model illustrates that performance management is a continuous process – it
proceeds
from planning (defi ning expectations) to monitoring (managing performance
throughout the
year) to reviewing performance against expectations and reformulating the plan
on the basis
of that review.
Planning performance
Performance planning involves managers and individuals reporting to them
reaching an agreement
(often called a performance and development agreement) on what needs to be
done by
both parties to improve performance. The starting point for the plan is a role profi
le, which
defi nes the results, knowledge, skills and behaviours required. This should be
agreed as the
basis for deciding on objectives and performance measures or key performance
indicators.
Performance development plans are derived from an analysis of role
requirements and an
assessment of the performance displayed in meeting them.
Monitoring performance
Performance management is what managers do. It is an integral part of the
continuing process
of management. Managers should therefore be ready, willing and able to deal
with performance
issues as they arise. It should not be left to the annual performance review. The
process of
continuing assessment should be carried out by reference to agreed objectives
and to work,
development and improvement plans. Progress reviews can take place informally
or through
an existing system of team meetings. But there should be more formal interim
reviews at predetermined
points in the year, eg quarterly. For some teams or individual jobs these points
could be related to ‘milestones’ contained in project and work plans. Deciding
when such
Managing for Performance 67
meetings should take place would be up to individual managers in consultation
with their staff
and would not be a laid-down part of a ‘system’. Managers should be encouraged
to consider
how to accommodate the need for regular dialogue within the established
pattern of briefi ngs,
team or group meetings, or project review meetings.
In addition to the collective meetings, managers may have regular one-to-one
meetings with
their staff. If performance management is to be effective, there needs to be a
continuing agenda
through these regular meetings to ensure that good progress is being made
towards achieving
the objectives agreed for each key result area.
Reviewing performance
Although performance management is a continuous process, it is still necessary
to have a
formal review once or twice yearly. This acts as a focal point for the
consideration of key performance
and development issues, provides an opportunity to take stock, and forms the
basis
for performance and development planning. Many managers are extraordinarily
reluctant to
conduct such meetings at all, or at best their reviews are perfunctory. All sorts of
reasons are
given for this: ‘I haven’t got enough time’, ‘It’s not necessary – I am already
reviewing performance
on a day-to-day basis’, ‘I don’t like sitting down and making formal criticisms of
someone’.
The answers to these objections are simple:
• ‘Surely you can spare an hour or so to spend quality time with your staff, if only
to show
that you are interested in their progress and prepared to give them your
support.’
• ‘That may well be so, but isn’t it a good idea to carry out a systematic review of
progress
so that both parties are in a better position to plan for the future?’
• ‘Performance reviews are not just about criticizing people. They are
opportunities to
recognize achievements as well as agreeing any areas where improvement is
required
and planning how this should take place.’
The performance review meeting is the means through which the fi ve primary
performance
management elements of agreement, measurement, feedback, positive
reinforcement and dialogue
can be put to good use.
The review should be rooted in the reality of the employee’s performance. It is
concrete, not
abstract, and it allows managers and individuals to take a positive look together
at how performance
can become better in the future and how any problems in meeting performance
standards
and achieving objectives can be resolved. Individuals should be encouraged to
assess their own
performance and become active agents for change in improving their results.
Managers are there
to carry out their proper enabling role: coaching and providing support and
guidance.
There should be no surprises in a formal review if performance issues have been
dealt with as
they should have been – as they arise during the year. Traditional appraisals are
often no more
68 Approaches to Management
than an analysis of where those involved are now, and where they have come
from. This static
and historical approach is not what performance management is about. The true
role of performance
management is to look forward to what needs to be done by people to achieve
the
purpose of the job, to meet new challenges, to make even better use of their
knowledge, skills
and abilities, to develop their capabilities by establishing a self-managed learning
agenda, and
to reach agreement on any areas where performance needs to be improved and
how that
improvement should take place. This process also helps managers to improve
their ability to
lead, guide and develop the individuals and teams for whom they are
responsible.
Managing team performance
Teams can provide the ‘elusive bridge between the aims of the individual
employee and the
objectives of the organization, [they] provide the medium for linking employee
performance
targets to the factors critical to the success of the business’ (Purcell et al, 2003).
This is an
important aspect of managing performance. How it is applied will be related to
the following
factors that affect team performance:
• the clarity of the team’s goals in terms of expectations and priorities;
• how work is allocated to the team;
• how the team is working (its processes) in terms of cohesion, ability to handle
internal
confl ict and pressure, and relationships with other teams;
• the extent to which the team is capable of managing itself – setting goals and
priorities
and monitoring performance;
• the quality of leadership – even self-managed teams need a sense of direction,
which
they cannot necessarily generate by themselves;
• the level of skill possessed by individual team members (including multi-
skilling);
• the systems and resources support available to the team.
Team performance management processes
Team performance management involves the team in agreeing work and process
activities and
conducting team performance reviews. The aim should be to give teams and
their team leaders
the maximum amount of responsibility to carry out all activities. The focus should
be on selfmanagement
and self-direction.
Managing for Performance 69
Setting work objectives
Work objectives for teams are set in much the same way as individual objectives
(see Chapter
4). They will be based on an analysis of the purpose of the team and its
accountabilities for
achieving results. Targets and standards of performance should be discussed and
agreed by the
team as a whole. These may specify what individual members are expected to
contribute.
Project teams will agree project plans that defi ne what has to be done, who does
it, the standards
expected and the timescale.
Setting process objectives
Process objectives are also best defi ned by the team getting together and
agreeing how they
should conduct themselves as a team, under headings such as:
• interpersonal relationships;
• the quality of participation and collaborative effort and decision-making;
• the team’s relationships with internal and external customers;
• the capacity of the team to plan and control its activities;
• the ability of the team and its members to adapt to new demands and
situations;
• the fl exibility with which the team operates;
• the effectiveness with which individual skills are used;
• the quality of communication within the team and between the team and other
teams
or individuals.
Team performance reviews
Team performance review meetings analyse and assess feedback and control
information on
their joint achievements against objectives and project plans. The agenda for
such meetings
could be as follows:
1. General feedback review:
• progress of the team as a whole;
• problems encountered by the team that have caused diffi culties or hampered
progress;
• helps and hindrances to the operation of the team.
2. Work reviews:
• how well the team has functioned;
• review of the individual contribution made by each team member – ie peer
review;
70 Approaches to Management
• discussion of any new problems encountered by individual team members.
3. Group problem-solving:
• analysis of reasons for any shortfalls or other problems;
• agreement of what needs to be done to solve them and prevent their
reoccurrence.
4. Update objectives:
• review of new requirements, opportunities or threats;
• amendment and updating of objectives and project plans.