Businesses are finally realising that people are their biggest asset and in today’s highly competitive market, it is crucial to attract, nurture, engage and retain talent to keep ahead of the game. Article by Chris Kerridge, Business Analyst, focusing on the development of strategic talent management and HRM within the iTrent product. 

‘Talent Management’ is the umbrella term used for various employee lifecycle disciplines. Generally it encompasses recruitment, people development, learning management, performance management, reward, succession planning, and people analytics.

The ‘Performance Management’ element is often the most contentious within an organisation. Hailed as the most despised by both employees and managers alike (Effron and Ort 2010) with the setting of objectives and monitoring of the employees’ progression. Redman and Wilkinson (2006) further supports this view and highlights that the process of reviewing the performance of staff is the most disliked activity for line managers. This is due to validity of the process and questions on whether or not performance management and performance appraisals are effective; not to mention the potentially tense environment that could arise if views on performance differ between employee and manager.  

However, theorists argue that across all HR practices, no other practice and process is more directly linked to individual and corporate results. The business reasons behind performance management are simple; align the employee objectives and behaviours with business needs, and evaluate the achievement of those objectives and overall employee performance fairly. However academics further highlight that these two simple processes have become over complicated by managers wanting to formulate systems, and the desire for HR to add value to the process.

The view can debated as being too simple and that performance management is much more than simply setting objectives and monitoring the achievement of those objectives. There is a wider culture of employees and managers not liking the practice of monitoring and talking about performance, which can impact on the value of the process itself.

The perceived value of a performance management process and system within an organisation is the acceptance of the appraisal system by employees and managers. If employees do not accept the appraisal system, the performance management process and the culture of it, then they are less likely to be motivated to improve their behaviour when they are given lower ratings and feedback.

This could in itself negatively influence the manager’s assessment of the employee. However it could be argued that if all employees support and accept the culture and value of performance management then managers would be giving positive ratings and feedback to all employees so the legitimacy and effectiveness of performance management would again be in question.

Aligning talent with business objectives

Performance Management is one of the key practices of talent management, and in order for it to be successful within an organisation; it must be strategic and integrated consistency across the organisation, and with other HR practices.

A key element of performance management is to ensure that the practice is horizontally aligned to other HRM practices and vertically aligned to the corporate strategy. Equally, performance management must be a holistic process bringing together many activities, in particular, objective (goal) management and learning and development. It should encourage a more joined up approach, driving business performance and giving the organisation a competitive edge.

A system for setting goals, monitoring and tracking performance is a crucial tool for both managers and the organisation to achieve optimal performance; however, a poorly implemented system can lead to a lack of buy in from employees and managers which do not produce the results expected.

Corporate objectives provide the starting point of the performance management approach, followed by the agreement of the employee’s performance and development. Next comes the drawing up of development plans between individuals and managers, with continuous monitoring, feedback and supported by formal reviews. It is about establishing a culture in which individuals take responsibility for their own performance, development and continuous improvement of their skills, behaviour, and contribution. It is a process, not an event, which should operate as a continuous cycle.

Performance management systems are widely used across many industries, sectors and countries. Over the last 20 years there have been an increasing number of organisations implement a performance management approach. This has led to employees being more aware of the organisational goals and strategy.

As a result, the importance of performance management cannot be disputed, and done well; these systems can have a significant impact on the workforce and achieving organisational objectives. But to achieve this, the system must be a good fit, have buy in from the employees and be able to add real value to the workplace. The success of a performance management system should not just focus on the design and implementation of those systems but, more so, a consistent ‘business as usual’ approach for managers and employees.

Performance management functionality can be purchased as part of an integrated talent management, HR and payroll system. If you are considering selecting a Talent Management solution, our guide, ‘Optimising talent management through technology’ should help your organisation make the right decision.  To request your free copy please visit www.midlandhr.com/tmguide.