Analyst Update-Performance Management and Skills/Competencies Management

I´d like to start off today´s analyst update by talking about some quotes that have recently been in the news addressing the topic of performance management:

This first quote by Jason Corsello, senior analyst at Yankee Group, appeared in the article, Workforce Lifecycle Management -The New Frontier for Human Capital Management, March 2005.

 "An integrated WLM (workforce lifecycle management) approach is fast becoming a strategic initiative at thought-leading organizations."  I think the keyword here is integrated.

Debbie McGrath, HR.com´s CEO, recently commented that, "performance management hits its stride."  As evidenced by the volume of announcements of new EPM software purchases, more organizations seem to be automating their PM processes. 

Eric Kline and John Hagerty from AMR Research Market Analytics Report predict that, "EPM Spending Will Top $22B This Year." They are referring to enterprise performance management spending, which is to be differentiated from employee performance management. However, it reinforces the focus on improving performance.

Josh Bersin recently submitted an article to Workplace Performance Solutions magazine and he was quoted as saying, "Performance management is one of the most important focus areas for HR and learning and development organizations over the next five years."  I receive many requests for information around how to more closely link these two processes. 

A recent study completed by People IQ

 entitled, The Culture Scorecard. asked 85 structured and open-ended questions on a series of workforce issues, including performance appraisals. Over 48,000 employees, managers and CEO´s from 126 organizations were surveyed. Results indicated that only 13% of employees and managers and only 6% of CEOs think that their organizations´ performance appraisal is useful. The main reasons identified included: undifferentiated scores, cumbersome programs and the belief that current performance appraisals did not provide relevant and meaningful feedback.

Today, we will address the topic areas identified by HR.com members. These areas of interest include:  linking performance with learning and development planning, performance measures and performance appraisals.  I have identified a few articles and helpful resources on these topics which I would like to expand on.

In a recent article in Workforce Performance Solutions entitled, Workforce Productivity: Driving Business Operations Performance, Paul Sparta suggests that, "Individual performance must be continually assessed and linked to development to drive higher performance in current and future job responsibilities." He recommends the use of job competency requirements, linking development paths to suggested learning plans and tracking improvements. In order to align people processes with business strategy, Sparta recommends the following practices:  assess skills, develop competencies, manage performance and match skills to business requirements.

The identification of key performance measures  within your organization promotes a focus on key outcomes and indicators and provides a measure against which progress can be assessed.  A recent article entitled, Developing KPIs at Southern Company was made available at www.melcrum.com.  This Strategic HR Review article discusses five questions presented by HR strategy director Howard Winkler of Southern Company.  Southern Company  recently developed a set of KPIs to monitor its workforce strategy and focus HR and management on high-priority issues. These five questions can be used to help determine whether or not the most appropriate measures have been selected. 

"Do your measures look forward and back?"

"Are they comparable with existing metrics?"

Winkler also suggests that HR should use the same data as finance or marketing.

"Can you really impact these measures?"

"Do your measures provoke discussion and invite additional analysis?"

"And, have you set targets for improvement?"  

As I mentioned earlier, how to link performance management to training and development is something that is attracting a fair bit of attention. A recent article from the Center for Effective Performance entitled,

Seven Keys to Unlocking the Power of Performance-Based Training suggested questions to ask to ensure that your training is performance-based.

-Does the training provide clearly stated performance objectives?

-Does it derive training directly from the job?

-Does it meet the needs and characteristics of the learner?

-Does it provide immediate feedback on every skill?

-Does it mirror actual job conditions?

-Does every learner demonstrate competence in every skill before training ends?

And does the training include only what is needed to perform expectations - no more, no less?

When we look at the role of competencies we begin with the outcome of what we want to achieve. Competencies come into play when you look at how that outcome can be achieved. Competencies can provide a way to measure how effectively things are being done, providing a common language.  Regular assessment of progress allows readjustment of growth and development goals. Dick Grote, in his book The Performance Appraisal Question and Answer Book, A Survival Guide for Managers says that, "one of the hallmarks of an up-to-date best practice performance management system is that it includes specific competencies that the organization expects all of its members to display." Competencies can describe capabilities, behaviors, skills, and technical expertise.  If descriptions are developed for proficiency, expert  and learner levels of each competency, areas for development and learning can more easily be pinpointed. 

Bersin and Associates´ recent Performance Management Survey, March 2005 is discussed in Workplace Performance Solutions  Magazine and provides some interesting numbers. Josh Bersin discusses the report and says that the results indicated, "91 per cent of respondents thought this was ´critical´ or ´important´ to performance management, 44 per cent of participants characterized their companies´ skills and competency definition as being spotty, undeveloped or not done at all.  Only 15 per cent of respondents said their companies have a well-defined enterprise model." 

If anyone is looking at re-working their performance appraisal form I would recommend looking at Dick Grote´s thoughts on the ideal form. In his book The Performance Appraisal Question and Answer Book, A Survival Guide for Managers, he comments on ways to ensure that the performance appraisal serves all the functions that we require it to. Among many other practical recommendations, Grote suggests the following: communicate the importance of the performance appraisal, review the form to make sure it captures all the necessary information to support all desired processes and consider different processes and meetings to deal with each area. If this means a lengthy form, or different meetings for performance and compensation discussions, so be it.

A fairly new resource available

addresses manager/employee conversations. Julie Freeman presents an interesting discussion in the book Working in Theory But Failing in Practice. She identifies the root cause of the problem behind why managers do not have honest conversations with their employees: it´s due to the fact that ".... they cannot translate what they know about a given employee´s performance and potential into useful information, and then communicate it to him or her in an effective and practical way." She believes this often results in important conversations never taking place.    Julie Freeman argues that subjectivity is a valid component of performance assessment due to the following points: objectivity is an illusion and that subjectivity is considered appropriate in some areas but not in others. Regardless of your opinion on this, I think the key "takeaways" from the book are the steps she suggests to follow (called the PAF Technique) to help managers articulate their performance feedback in a way that addresses the key issues in a non-threatening way. These steps include getting the underlying behavior clear in your own head, translating what you know into effective words and telling the employee.

She points out that it is important not to make assumptions about the reasons for poor performance and that this technique works because positive tone and honest information validates and justifies information. 

Over the course of our analyst updates we will continue to address the issues that are important to our members. Please watch for an upcoming survey evaluating the format of our analyst updates.  As always, we appreciate your feedback.  If you have any recommendations regarding HR.com´s Performance Management and Skills/Competencies analyst updates, please email me at amacmillan@hr.com.