The company leaders should however provide the training and development opportunities for their teams and make good on that commitment. The aspect of keeping commitments to employees, even when it is costly and hard to do in circumstances including the development of new performance management systems, is a necessary cost of consistency and leadership for higher performance (Castellano, Roehm, 2001). Once Angus and his team have been able to complete these initial tasks, the company can move to the next stage of redesigning their employee performance management system by concentrating on integrating the existing knowledge of performance benchmarks and guidelines into the existing system (Ko, Dennis, 2011). During the initial phase of the original performance management system, this phase of knowledge management and transfer had been completely skipped.
Studies indicate that for a performance management system to work there needs to be metrics and key performance indicators (KPIs) in place for both the individual contributions of employees and the extent to which they also share information as well (Ko, Dennis, 2011). This was also completely left out of the initial design. Incenting and rewarding employees for managing their time and resources well in collaborating with other toward shared objectives is an emerging best practice in performance management systems (Coate, Hill, 2011). It is also an area where the trust derived through these many interactions between staff also have a reciprocal and strengthening effect on overall company performance as well, where trust becomes an accelerator of greater information flow (Farndale, Hope-Hailey, Kelliher, 2011).
The performance management system needs to then be completely re-initialized with entirely new rating metrics that force rater bias out of the rankings. As could be seen from the case analysis, the level of rating halo effect bias was rampant and the expectations as a result were unrealistic on the part of employees. Worse, the bias that took place in the initial ratings just underscored how the company had a confused view of just what the performance management system would be used for in the first place. Staying focused with a balanced scorecard approach and regularly monitoring performance against objectives will help to alleviate the significant disconnects the firm had with the initial performance management system created. Creating a balance scorecard and using metrics that show progress towards MBOs and other objectives in real-time, by having employees report on them weekly, will also do much to reduce the bias associated with Division X for example. It is common for rater bias to create inflated expectations and create commitments that are not capable of being fulfilled (Tapinos, Dyson, Meadows, 2011). For Angus and his team the use of a balanced scorecard will serve to quantify performance over time, making it clear the progress of each person to their individualized goal and also how they company overall is performing. Without this level of measurement and performance analysis, single criterion, leniency error and low differentiation will be integrated into the performance management system with no checks and balances in place to catch them. There will also be the potential to capture recency effect, Halo Effects or Halo Error and Similarity Error in the rating bias as well...
The use of metrics and KPIs and the continual evaluating of goals and objectives will do much to get the performance management program back into a realistic context.
Finally Angus and the managers of the company must continually focus on how to create more effective objectives that capitalize on the inherent strengths of the employees and the talent recruited to work for the company, while also looking towards the strategic goals and objectives for the future. This balancing of inherent company strengths and strategic vision is what the leaders of the IT consultancy must re-assess before implement a new performance management system. A transformational leader can create a highly effective culture that can unify these aspects of a company's operations, ensuring a highly effective performance management system takes shape and propels the comp[any to its goals for the future (Wang, Howell, 2010). Finally Angus and his team need to continually re-assess how the performance management system is either contributing to management's role as leaders and coaches of higher performance, or detracting for it and making them less effective (Coate, Hill, 2011). The use of change management techniques and the continual measurement of employee performance relative to goals, taking into account an organizations inherent strengths and strategic direction are essential for any performance management system to succeed (Raineri, 2011).
The lack of focus and the multiplicity of roles that the first performance management system Angus and his team introduced into their IT consultancy were doomed to fail. First, it was focused on two potentially conflicting objectives of personal development on the one hand, and company performance on the other (Schweiger, Sumners, 1994). Second, the lack of change management included in the planning made it extremely difficult for those involved with the program to succeed (Raineri, 2011). Third was the lack of integration between the performance management system and the strategic plans for the company (Chan, 2006). All of these factors in addition to rater bias led to the recommendation of completely redesigning the performance management system and creating one that could be more effectively and equitably run to measure only performance and quantifying that attribute over time.
Joseph F. Castellano, and Harper A Roehm. 2001. The problems with managing by objectives and results. Quality Progress 34, no. 3, (March 1): 39-46.
Sow Hup Chan. 2006. Organizational identification and commitment of members of a human development organization. The Journal of Management Development 25, no. 3/4, (March 15): 249-268.
Coate, P., and K. Hill. 2011. Why Smart Companies Hire Performance Coaches to Turn Managers into Leaders. Employment Relations Today 38, no. 1, (April 1): 35.
Elaine Farndale, Veronica Hope-Hailey, and Clare Kelliher. 2011. High commitment performance management: the roles of justice and trust. Personnel Review 40, no. 1, (January 1): 5-23.
Hofstede, Geert. 1978. The Poverty of Management Control Philosophy. Academy of Management. The Academy of Management Review 3, no. 3, (July 1): 450.
Ingham, Terry. 1995. Management by objectives - A lesson in commitment and co-operation. Managing Service Quality 5, no. 6, (January 1): 35.
Ko, D., and A. Dennis. 2011. Profiting from Knowledge Management: The Impact of Time and Experience. Information Systems Research 22, no. 1, (March 1): 134-152,208-209.
Poister, Theodore H, and Streib, Gregory. 1995. MBO in municipal government: Variations on a traditional management tool. Public Administration Review 55, no. 1, (January 1): 48.
Raineri, A.. 2011. Change management practices: Impact on perceived change results. Journal of Business Research 64, no. 3, (March 1): 266.
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