CIPD Human Resources : Supporting Good Practice in Performance and Reward Management 2000 words

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The Managing director of your organisation has requested the HR department to provide a report for the Board which outlines the links between organisational performance, reward and motivation. You have been asked to write the report, and include the following: please find attached

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Template for 3PRM report Introduction Introduce the assignment using the assignment brief and summarise what you will present in your findings. Findings 1. A description of the purpose of performance management and its relationship to business objectives. 2. An explanation of the key components of performance management. 3. An explanation of how performance management processes can affect staff motivation. (refer to motivation theories) 4 Clarify the purpose of reward within a Performance management system 5 Explore the components of an effective total reward system and how it links to performance management (include a definition of total reward and how this links to performance management) financial (extrinsic rewards and non-financial rewards (intrinsic rewards) a total reward system can be made up of both these components 6 Identify and explain 5 factors that need to be considered when managing performance 7 8  Think about managing bad performance and good performance  Identify the problem by collecting factual evidence and data on past performance  How long has the employee been in employment as this can help determine reasons for poor performance  If new further training may be required  Assess and analyse the problem, how severe is it  The employer will then want to prepare for a meeting with all the relevant information to hand  The meeting will then take place and allow the employee an opportunity to explain poor performance Describe items of data needed within a performance and reward management system  In this question you should describe the data that is needed by those involved in performance and reward management processes. This should include those who are, for example, taking a performance review meeting, as well as others such as a senior manager or those in HR.  Internal quantitative data relating to performance such as statistical reports depending on the job role  External data in the form of customer reviews Explain the frequency, purpose and process of performance reviews Conclusion and Recommendations Summarise the findings and put forward some recommendations regarding PRM. 1 Performance Management 3PRM SOURCE: CIPD 2 Introduction  Performance management is the activity and set of processes that aim to maintain and improve employee performance in line with an organisation's objectives.  It’s strategic as well as operational, as its aim is to ensure that employees contribute positively to business objectives.  Ideally, performance should be managed holistically, throughout the range of HR activities and processes. 3 Key Components of PM  Performance management requires a multifaceted approach linked to organisational strategy.  ‘SMART’ objectives work well in many contexts, but there are better alternatives for complex jobs.  Regular performance feedback is crucial for monitoring progress.  Employees’ voice and perceived fairness are critical elements in performance feedback.  There are many biases to watch out for in performance ratings. 4 CIPD viewpoint  If people are the greatest creators of value in organisations, then good performance management is critical for organisational success.  Employees must understand what’s expected of them, and to achieve those goals they need to be managed so that they’re motivated, have the necessary skills, resources and support, and are accountable.  Broadly, good performance management revolves around regular, effective feedback on progress towards objectives.  It’s multifaceted, not a technique in itself, and there’s no single best approach.  It should align with organisational strategy and suit the type of jobs in question. 5 CIPD viewpoint  People managers are instrumental in performance management. Ideally, they reinforce the links between organisational and individual objectives and give feedback that motivates employees, helps them improve, and holds them to account.  Managers need to be suitably skilled and supported by processes that are fit for purpose.  How performance is discussed is shaped by cultural norms: senior leaders will set the precedent and line management relationships will in turn shape how colleagues discuss performance more widely.  At the core of effective performance management are frank, yet supportive performance conversations that include ongoing feedback. The other processes, such as annual performance reviews and pay setting are definitely useful but shouldn’t be the main focus. 6 Changing trends in PM  Source CIPD  The link below is a good source on performance management for additional reading  7 What is Performance Management Performance management is an activity that:  establishes objectives through which individuals and teams can see their part in the organisation’s mission and strategy  improves performance among employees, teams and, ultimately, organisations  holds people to account for their performance by linking it to reward, career progression and termination of contracts. Performance management should be: strategically aligned with broad issues and long-term goals  integrated with various aspects of the business and how people are managed.  Effective performance management relies on both formal and informal processes. It’s about planning; for example, defining and reviewing objectives, linking ways of achieving those objectives to business plans, and setting measures of success.  These are often discussed in meetings between the line manager and employees, known as performance reviews or appraisals.  Performance management is also about establishing a culture in which individuals and groups take responsibility for the continuous improvement of business processes and their own skills, behaviours and contributions.  As part of this, employees will need to talk to their managers about the support and resources they need to do their jobs well. 8 How does Performance Management work?  Performance management is a continuous cycle, not an isolated event. Because performance management integrates various HR activities, an overarching structure or framework is needed for the different parts to be complementary.  The elements of performance management may be similar across different organisations, but there’s no single best approach. Each organisation should develop practices that are relevant to their specific business context and their actual (or desired) organisational culture. There should also be flexibility within the system itself to account for the different ways teams or functions operate within a single organisation.  Corporate strategic goals should provide the starting point for business and departmental goals, followed by agreement on individual performance and development priorities. Individuals and managers can then draw up plans and monitor performance continuously.  Feedback should be given regularly, and could be supported by formal performance reviews at agreed points over the course of the year. The plans can also highlight organisation-wide processes that are required to support performance; for example, leadership, internal communications, and others. 9 Objectives in Performance Management  Setting performance objectives for individuals, departments and the organisation is an important aspect of managing performance.  These objectives can be expressed as targets to be met (such as sales levels), ad hoc tasks to be completed by specified dates, or ongoing standards to be met.  They may be directly related to team or organisational key performance indicators or personal; for example, taking the form of developmental objectives for individuals. 10 11  Whatever their nature, objectives should be clearly relevant to the overall purpose of the job, team and organisation.  Targets tend to be more powerful when they are set by one’s manager.  Employers can also opt for objectives on team-level performance rather than individual level. Both types can work well; the important thing is to match objectives to the nature of the work.  In one job, good performance may purely be a factor of individual application; in another job it may rely much more on teamwork. If striking a balance between individual and team objectives, employers should be careful that they do not undermine each other. 12 Links in the PM chain 13 Factors affecting the PM chain 14 Learning and Development  Performance management often focuses almost purely on assessing employees’ past performance and linking it to administrative decisions (for example, on pay).  This is a mistake.  If the ultimate aim is to improve performance, there should also be a strong focus on how employees need to develop. Performance conversations should thus help employees to learn from their experiences and identify other relevant learning and development opportunities.  A number of organisations use personal development plans (PDPs) to set out actions they propose to take in this regard. Sometimes, a review of employees’ potential and development needs is grouped with the performance appraisal and called a performance development review (PDR). 15 Performance Appraisal  This is a process by which managers assess workers’ performance. It’s often seen as an annual process, but this need not – and indeed should not – be the case.  Assessing and feeding back on performance is a critical factor in making targets effective, as monitoring our progress towards objectives is strongly motivational.  Performance appraisal should thus be a regular occurrence; for example, happening at the end of a piece of work or every few months, depending on the nature of the work.  They can involve face-to-face conversations between managers and their staff, 360-degree feedback, and assessments against performance targets. 16 Performance related pay  Linking levels of pay to individual, team and organisational performance is a traditional, and still common, approach.  In organisations that have performance-related pay (PRP), performance management is an inseparable aspect of pay reviews.  However, the relationship between pay and performance is a widely debated aspect of performance management. 17 Case Study  Scenario  It is January. You are the regional manager of a chain of stores selling computer equipment and accessories, mainly based on out-of-town retail parks. Following promotion, a new manager has just been appointed to the Enniskillen store which employs 20 staff. The store is currently experiencing a number of challenges which you wish the new manager to address. Among the store’s problems are the following: 18 1. A growing absence problem among the store’s staff. 2. Deterioration in staff morale, largely due to the unpopularity of the previous manager who left suddenly about a month ago. 3. Sales have been falling since a rival opened up a store on the same site. It is well known that the rival chain’s products are not only cheaper, but much more unreliable. 4. The lease on the current property expires in July. The company has an option on a store of similar size on the far side of town. The rent on the alternative store would be cheaper, but it is unlikely that all the current employees would be prepared to transfer to the new store. You need to get your manager to investigate this issue. 5. The newly-appointed manager, although highly competent as a team manager has admitted that financial management is not his strong point. 6. The company has a formal appraisal process for all staff, but the previous manager is known to have neglected this area. As regional manager you wish to address this issue. 7. Although many of the in-store employees have long service, there is still a problem in retaining newly-appointed staff. Labour turnover currently stands at 15% although the norm for the retail sector is 10%. 8. The company operates an annual employee opinion survey. In the last survey, employees in the Enniskillen store collectively raised concerns over lack of training. You have allocated £10,000 for employee development for the store. 9. The telephone bill for the store is twice that of other stores in the chain. Occasional personal calls from the employee rest area are allowed, providing that permission has been given by the store manager. 10. The manager of the smaller Omagh store is currently on sick leave and you, the regional manager, have agreed that a suitable temporary replacement will be provided from the Enniskillen branch. 19 Activity  Based on the issues in the previous slide, select which you think are the six most appropriate to be included in an annual performance management plan.  Compile a suitable set of performance objectives for your newly appointed manager, complete with measures and timescales. CIPD L3 3PRM Motivating to Perform Motivation What motivates me? The Motivation Process Unsatisfied need Tension Drives Search behaviour Satisfied need Reduction of tension THEORIES OF MOTIVATION ➢ Maslow’s hierarcy of needs ➢ Herzberg’s “satisfiers” and “dissatisfiers” ➢ The Three Needs Theory ➢ Reinforcement Theory ➢ “Job Design” Theory Maslow’s hierarchy of needs Self-Actualization Esteem Social Safety Physiological • Herzberg’s Theory Herzberg’s Theory Motivators •Achievement •Recognition •Work itself •Responsibility •Advancement •Growth Extremely satisfied Hygiene Factors •Supervision •Company policy •Relationship with supervisor •Working conditions •Salary •Relationship with peers •Personal life •Relationship with subordinates •Status •Security Neutral Extremely dissatisfied David McClelland The Three Needs Theory Achievement Affiliation Power e/human-motivation-theory.htm Reinforcement Theory Rewards Behaviour No Rewards Punishment Behaviour ACTIVITY? • Which theory do you think best fits within organisations and HR in this century? • Group discussion Motivation survey Managers and employees were asked to rank Manager’s “What motivates the employees?” ranking Employee’s ranking Full appreciation for work done 8 1 Good wages 1 5 Good working conditions 4 9 Interesting work 5 6 Job security 2 4 Promotion / growth opportunities 3 7 Personal loyalty to workers 6 8 Feeling “IN “on things 10 2 Sympathetic help on personal problems 9 3 Tactful disciplining 7 10 L01-L03 How would you describe Performance Management Appraisal? “A process for linking individual objectives and development needs to the overall targets/goals of the organisation and measuring performance against these”.   Performance appraisal is an important issue for staff. Appraisal systems will vary within organisations, but it is important to give consistent messages and show consistency of practice in relation to the way that performance is managed. What a person has to do to be effective either in a task or in a complete job “A Competence Framework is a generic but purpose built, structured outline of knowledge, skills and behaviours required of officers to be competent in their job”. Not an end in themselves but a means to achieving a better understanding of jobs and ultimately improved performance.    Individuals and teams should be consulted over what is to be expected and agree with the work allocated and expected standard Agreement on measures used to check that standards are achieved So when there are deviations – standards are clear (What they are and why)    Supervision is the process of reflecting on the practice issues that arise in the course of everyday work. It can help staff do their job more effectively by developing their capacity to use their experiences to rethink their practice and take action. A good supervisor will enable staff to reflect on their practice, to support and challenge it as appropriate, to discuss skills needs and to help work through situations where there is resistance. Benefits for staff:         More self-aware in terms of their approach and evidence base understand their role in assessing and identifying need know how to respond to concerns stakeholders recognise their limitations and when to call on the expertise of others be familiar with current guidance on working together know how to manage issues of confidentiality and information sharing know who to contact when they have concerns about work understand procedures  Job Holder  Report Officer  Countersigning Office (Not for all organisations)  Head of Organisation Branch/Dept/Personnel/HRM Performance Management Process Overview (start of year) JH & RO agree PA/PDP Sep/Oct (in-year review) JH & RO review progress On PA/PDP Mar/Apr (end of year review) JH & RO review and discuss Performance for the reporting period Completed report Sent to Personnel/HRM RO gives JH copy of PA & carries out PAI RO completes PA & CO countersigns         Agreed standards Current Knowledge and skills (TNQ) Records of activities undertaken (Induction etc) Achievements throughout the year Comments, feedback from relevant others Appraisal documentation, job holders account Managers appraisal Agreed outcomes – Personal development plan It is important to deal with poor performance because if it is not then poor standards of performance is likely to continue Serious consequences if not dealt with can be:  Complaints from customers  Effects on sales  Impact on profit  Reputation of the organisation (poor work, low standards)  Informal discussion  Opportunity to improve with support  Formal Interview  Disciplinary Action    The major reason for managing poor performance, is that it can reflect badly on the manager. It may very well also affect the organisation in terms of both its reputation and customers, not to mention shareholders. It is therefore very important for managers to quickly identify poor performance, discover the causes and then rectify the problem.       Carried out formally at the end of the year – End of Year review must be carried out before the PAI Should be an open/honest discussion between Jobholder and Reporting Officer Will be informed by completed PAR and PDP Discuss end of year assessment, PDP and future potential Includes an indicative assessment of promotion Draft PPA and PDP for forthcoming year should be agreed  Praise  Encourage participation and input  Invite self appraisal  Performance not personality  Positive language  Focus on facts  Gain commitment to future action  No surprise  It may also be a good idea to do a swot analysis of yourself listing your strengths, weaknesses, opportunities for and threats to your career goals. This requires an honest self assessment and also taking candid opinion of others whom you consider to be your well wishers. Strengths Weaknesses Opportunities Threats  Staff are entitled to appeal  Each organisation will have their own appeals procedure for your own benefit please seek out more information on this with your own organisation.   What are the benefits of an effective performance appraisal system for the individual, the manager, and the organisation Complete the following slides 21-23 Appraisals BENEFITS Manager ...
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