Price and prize of performance

The status of performance management in Sri Lankan organisations appears far from satisfactory. From the current state of being a routine custom with less impact on organisational success, it should rapidly evolve to be a critical contributor for organisational progress.

Performance has always been a buzz word in business circles. It is the execution or accomplishment of work. It can also be regarded as achieving a set of objectives using the resources in an efficient and effective manner.

Performance can happen at three levels in a typical organisation. I call them triple Is.

Individual level: This is the core where a person should deliver what he or she is expected to.

Interactive team level: This is the spillover from the core. When performing people cooperate, the interactive team becomes a performing team.

Institutional level: When such cooperative teams perform, it impacts the organisation. Hence, the institution becomes a performing one.

There is one solid 'I' needed to link the three Is. That is integration. I have seen people being rewarded for performance, while the institution was not performing well. Likewise, institution may do extremely well, but not reward individual performance. Both cases highlight the lack of integration. The solution is to have a properly designed performance management system, with inputs from all involved.

Performance management can be regarded as a systematic process of doing a few things such as, Planning work and setting expectations, Continually monitoring performance, Developing the capacity to perform, Periodically rating performance in a summary fashion and Rewarding good performance.

Let's go into the details of the key aspects.

Planning. This is the starting point. In an effective organisation, work is planned out in advance. Planning means setting performance expectations for groups and individuals to channel their efforts to achieve organisational objectives. Getting employees involved in the planning process will help them understand the goals of the organisation, what needs to be done, why and how well it should be done.

Informal feedback

A lot can be improved in Sri Lankan organisations in this respect. In some cases, the organisations wait till October and November and convert what they have done to objectives. It is simply for the sake of having a set of objectives to link with their annual appraisals. Ideally, there is a need to set performance measurements and standards at the outset.

Monitoring. Monitoring means consistently measuring performance and providing ongoing feedback to employees and work groups on their progress to reach goals. This should be a vital component of performance management.

Managers complain about the lack of time in conducting periodic reviews. What they fail to understand is the importance of keeping their team members on track. Being proactive pays off rather than waiting till the end of the period to react in giving negative feedback resulting in undesirable results. A simple mechanism should be devised for managers to give informal feedback efficiently. It can be a case of a chat over a meal.

Development. Employee developmental needs should be evaluated and addressed, to manage their performance. A positive trend of people development can be seen in local organisations. The concern, however, is the integration. Training and development can go at a tangent without proper links with performance improvement. What is needed is a holistic view and a well-integrated approach.

Carrying out the processes of performance management provides an excellent opportunity for supervisors and employees to identify developmental needs.

While planning and monitoring work, deficiencies in performance become evident and should be addressed. Areas for improving good performance also stand out, and action can be taken to help successful employees improve even further.

Rating. This is the critical juncture. From time to time, organisations find it useful to summarise employee performance. Such a course of action helps by comparing performance over time or across a set of employees.

Sri Lankan organisations are increasingly getting used to objectively rate their employees. Sound performance management systems have been set up at least in multinationals and high-performing local organisations. The constant challenge is to manage expectations of employees.

Rewards. This is the thorny issue. Employee satisfaction or dissatisfaction largely depends on how rewards are linked to performance. Rewarding means recognising employees, individually and as teams, for their performance.

Rewards need not always be monetary. Good managers don't wait for their organisation to solicit nominations for formal awards before recognising good performance. Recognition is an ongoing, natural part of day-to-day experience. A lot of the actions that reward good performance - like saying "Thank you" - don't need specific regulations.

Enhancing further

The status of performance management in Sri Lankan organisations appears far from satisfactory. From the current state of being a routine custom with less impact on organisational success, it should rapidly evolve to be a critical contributor for organisational progress.

Time demands us to act. Knowing clearly should lead us to doing cleverly. It is up to individuals, interactive teams and institutions to make a difference for themselves and for others. That is the essence with regard to the price and prize of performance.

Dr. Ajantha S. Dharmasiri is the Director of the Postgraduate Institute of Management. He also serves as an Adjunct Professor in the Division of Management and Entrepreneurship, Price College of Business, University of Oklahoma, USA.