PERFORMANCE & COMPENSATION MANAGEMENT

ASSIGNMENT NO. 2

INSTRUCTOR: SHAH M SAAD HUSAIN

SUBMITTED BY: ADNAN AHMED KIDWAI

ERP – 15274
MBA EXECUTIVE PROGRAM
 Performance Management system

Company name: The Indus Hospital

Below would be critical review of The Indus Hospital’s Performance and Compensation
Management system. Its purpose, steps, evaluation policies, succession planning and their
corporate strategy goals.

(A) Purpose of performance management system

The Indus hospital’s PM system is primarily to evaluate the individuals/Employees performance
and give them equal platform for their career growth.

Performance Management is often make people think of the concept as: Performance
appraisal, Performance-related pay, Targets and objectives, Motivation and discipline.
But, performance management is much more than this. Performance management is about
getting results. It is concerned with getting the best from people and helping them to achieve
their potential. It is an approach to achieving a shared vision of the purpose and aims of the
organization. It is concerned with helping individuals and teams achieve their potential and
recognize their role in contributing to the goals of the organization.

A performance management system consists of the processes used to identify, encourage,

measure, evaluate, improve, and reward employee performance at work. Employees’ job
performance is an important issue for all employers. However, satisfactory performance does
not happen automatically; therefore, it is more likely with a good performance management
system.

A performance management system serves a two fold purpose:

1. To improve employees work performance by helping them realize and use their full
potential in carrying out their firms missions

2. To provide information to employees and managers for use in making work related
decisions. More specifically, performance management system serve the following
purposes:

1. Feedback Mechanism:

In the Indus hospital there are evaluations twice a year.

A. Midyear Evaluation
B. Annual Evaluation
Appraisals provide feedback to employees therefore serve as vehicles for personal and career
development. Performance appraisals must convey to employees how well they have
performed on established goals. It’s also desirable to have these goals and performance
measures mutually set between the employees and the supervisor. Without proper two-way
feedback about an employee’s effort and its effect on performance, we run the risk of
decreasing his or her motivation.

2. Development Concern:

Once the development needs of employees are identified, appraisals can help establish
objectives for training programs. It refers to those areas in which an employee has a deficiency
or weakness, or an area simply could be better through effort to enhance performance.
Although this individual’s performance may be satisfactory, his or her peers may indicate that
some improvements could be made. In this case, then, development may include exposure to
different teaching methods, such as bringing into the classroom more experimental exercises,
real world applications, internet applications, case analysis, and so forth.

3. Documentation Concern:

A performance evaluation system would be remiss if it did not concern itself with the legal
aspects of employee performance. The job related measure must be performance supported
when a Human Resource Management (HRM) decision affects current employees. For instance,
suppose a supervisor has decided to terminate an employee. Although the supervisor cites
performance matters as the reason for the discharge, a review of this employee’s recent
performance appraisals indicates that performance was evaluated as satisfactory for the past
two review periods. Accordingly, unless this employee’s performance significantly decreased
(and assuming that proper methods to correct the performance deficiency were performed),
personnel records do not support the supervisor’s decision. This critique by HRM is absolutely
critical to ensure that employees are fairly treated and that the organization is “protected”.
 4. Diagnoses of Organizational Problems

As a result of proper specifications of performance levels, appraisals can help diagnose

organizational problems. They do so by identifying training needs and the knowledge, abilities,
skills, and other characteristics to consider in hiring, and they also provide a basis for
distinguishing between effective and ineffective performers. Appraisal therefore represents the
beginning of a process, rather than an end product

5. Employment Decisions

The Indus hospital policy is to disclose all ratings given to employee. Appraisals provide legal
and formal organizational justification for employment decisions to promote outstanding
performers, to weed out marginal or low performers, to train, transfer to other departments,
and as one basis for reducing the size of the workforce. In short, appraisals serve as a key input
for administering a formal organizational reward and punishment system.

Measuring Targets
Performance measurement and target-setting are important to the growth process. While
many small businesses can run themselves quite comfortably without much formal
measurement or target-setting, for growing businesses the control these processes offer can be
indispensable.

Knowing how the different areas of your business are performing is valuable information in its
own right, but a good measurement system will also let you examine the triggers for any
changes in performance. This puts you in a better position to manage your performance
proactively.

One of the key challenges with performance management is selecting what to measure. The
priority here is to focus on quantifiable factors that are clearly linked to the drivers of success in
your business and your sector. These are known as key performance indicators (KPIs).

Bear in mind that quantifiable isn't the same as financial. While financial measures of
performance are among the most widely used by businesses, nonfinancial measures can be just
as important.

For example, if your business succeeds or fails on the quality of its customer service, then that's
what you need to measure - through, for example, the number of complaints received.

The benefits of target-setting

The key areas that drive business performance and a way to measure them, then a natural next
step is to start setting performance targets to give each employee in business a clear sense of
what they should be aiming for.
 Strategic visions can be difficult to communicate, but by breaking your top level objectives
down into smaller concrete targets you'll make it easier to manage the process of delivering
them. In this way, targets form a crucial link between strategy and day-to-day operations

Method of Assignments
Getting your performance measurement right involves identifying the areas of your business it
makes most sense to focus on and then deciding how best to measure your performance in
those areas.

Focusing on key business drivers

The performance measurement will be a more powerful management tool if one focus on
those areas that determine your overall business success.

This will vary from sector to sector and from business to business. So put some time into
developing a strategic awareness of what it is that drives success for businesses like yours.

It's crucial to tailor ones measurement to your specific circumstances and objectives.

Finding your specific measures

Once key business drivers are identified, one needs to find the best way of measuring them.
Again, your priority here should be to look for as close a link as possible with those elements of
your performance that determine your success.

One might consider measuring (below is as per Department wise):

 the proportion of sales accounted for by returning customers

 the number of customer complaints received
 the number of items returned to you
 the time it takes to fulfil an order
 the percentage of incoming calls answered within 30 seconds
None of these is necessarily better than any other. The challenge is to find which specific
measure (or measures) will enable you to improve your business.

This type of measurement unit is often referred to as a key performance indicator (KPI). The
two key attributes of a KPI are quantifiability (i.e. you must be able to reduce it to a number)
and that it directly captures a key business driver. See the page in this guide on choosing and
using key performance indicators.

Using standardized measures

There are standardized performance measures that have been created which almost any
business can use. Examples include balanced scorecards, ISO standards and industry
dashboards.
 Choosing and using key performance indicators

Key performance indicators (KPIs) are at the heart of any system of performance measurement
and target-setting. When properly used, they are one of the most powerful management tools
available to growing businesses.

Selecting KPIs

There are a number of key criteria that your KPIs should meet:

 First, they should be as closely linked as possible to the top-level goals for your business.
 Second, your KPIs need to be quantifiable. If you can't easily reduce your measurement to a
number, there will be too much scope for variation and inconsistency if different people carry
out the measurements at different times.
 Third, your KPIs should relate to aspects of the business environment over which you have
some control. For example, interest rates may be a crucial determinant of performance for a
given business, but you can't use the Bank of Canada base rate as a KPI because it's not
something that businesses have any power to change. By contrast, a business' exposure to
fluctuations in interest rates can be controlled and so this might make a useful KPI.

Getting the most from your KPIs

The purpose of performance measurement is ultimately to drive future improvements in

performance. There are two main ways you can use KPIs to achieve this kind of management
power.

The first is to use your KPIs to spot potential problems or opportunities. Remember, your KPIs
tell you what's going on in the areas that determine your business performance. If the trends
are moving in the wrong direction, you know you have problems to solve. Similarly, if the trends
move consistently in your favor, you may have greater scope for growth than you had
previously forecast.

The second is to use your KPIs to set targets for departments and employees throughout your
business that will deliver your strategic goals. For more information about using target-setting
to implement your strategic plans, see the page in this guide on how to set useful targets for
your business.

Managing your information

As with most areas of your business operations, the more detailed and well structured the
information you keep about your KPIs is, the easier it will be to use as a management tool.
Computer-based management information systems are available for this purpose.
Categories of ranking and assignments of marks and weightage
In The Indus Hospital employee evaluations are a critical component and having an effective
measurement system in place helps you get the most from your staff. Besides this, evaluations
help you recognize worker achievements, objectively compare multiple employees and identify
areas where improvement is needed. The question is, “How do you select an effective system
that fits your company’s specific needs?” To answer this question, let’s go over four popular
types of employee performance evaluations and the advantages each offers.

1) Numerical Rating Scale

Due to its simplicity, this is one of the most widely used systems and tends to be highly
effective. It’s also popular because it allows employers to measure employee performance on a
plethora of areas such as teamwork, communication skills and reliability. A numerical rating
scale is beneficial because a business can customize the system to rate whatever employee
traits or characteristics it deems as important. This commonly involves rating individuals on a
(R1 to R5) scale with R1 and R2 ratings being unsatisfactory and higher numbers being
satisfactory. In turn, employers can use tangible data to determine if an employee’s
performance is poor, average, good or great.

2) Objective-Based

This is another simplistic evaluation system and is a clear cut way to track progress. In an
objective-based evaluation, an employer and employee will agree upon a specific goal for the
employee to meet coupled with a deadline. If the employee meets the objective, then it speaks
highly of them and vice versa. This is perhaps the most black and white of all systems and is a
practical way to monitor the overall success of employees.

3) Critical Incidents

This system is defined as “A method of performance appraisal involving identifying and

describing specific events (or incidents) where the employee did something really well or
something requiring improvement.” For example, you might record an instance of a stressful
situation where an employee out-shined and exceeded expectations. On the other hand, you
might record a serious mistake an employee made that was detrimental to productivity and
created a lot of lingering problems. For a critical incidents evaluation system to be effective, it’s
important to keep detailed records — and you may want to implement a rating system for
increased objectivity.

Understanding the concept behind different types of employee performance evaluations allows
you to choose which one, or combination, is best for your business. In turn, you’ll be equipped
to objectively measure the progress of your employees and ultimately fine-tune your
operations.
 (B) Performance Management system – A source that decide compensation
and Development procedures

What are the goals of for performance?

In The Indus Hospital, the decision-making process, agencies should establish clear, realistic
goals for pay for performance before taking any action to change their pay systems. Although
recruitment, retention, and motivation (and resulting individual and organization performance)
represent broad areas that agencies often wish to improve through pay for performance,
agencies should also consider other goals and priorities. For example, another goal that agency
leader may have in mind when implementing pay for performance is to improve the equity of
pay practices by providing more compensation to the highest performers. It is also useful to
keep in mind the impact that pay system changes will have on the organizational culture and
the importance of maintaining alignment between agency values and pay strategies. For
example, if the nature of the work requires collaboration, an agency may choose a team-based
reward structure or at least incorporate teamwork into the reward structure to avoid pitting
employees against one another in competition for individual rewards. Many of these issues are
discussed in more detail later in this report.

Who should be paid for performance?

Pay for performance systems can be inclusive or exclusive. To choose the appropriate range of
coverage, an organization needs to decide the message it wants the pay system to send to the
workforce, including what is to be measured and how. Some organizations cover all employees
with a single pay for performance plan to unify the workforce in pursuit of common goals.
Other organizations limit performance-based pay to those employees with direct responsibility
for the organization’s core functions and results. For example, a pay for performance plan
might be limited to front-line employees whose work is directly linked to mission
accomplishment because their 8 Designing an Effective Pay for Performance Compensation
System Pay for Performance Decision Points work is more readily measured (and of more
immediate importance to the public) than work performed by employees whose activities
indirectly support organizational goals. In other cases, performance-based incentives may be
reserved for those employees at the top levels of the organization. The logic behind this
strategy is that accountability should be limited to those with the most control over results. In
other words, since executives exert substantial influence over organizational success, they are
entitled to significant recognition or blame for what they do or do not accomplish. In the
private sector, Limiting pay for performance plans to select groups may enable the organization
to highlight clearer links between employee behavior and outcomes, but doing so may create
divisiveness. Depending upon the circumstances, such as whether the dual pay systems offer
markedly different earning potential, coverage may be viewed as distinguishing between the
“haves” and the “have nots,” creating some dissension between the two groups. This is
particularly relevant if the benefits provided to one group are viewed as coming at a cost to the
other group.

How should employees be rewarded?

The procedure/rules of The Indus Hospital management is as per below:

A. Market adjustment
B. Reclassification
C. Promote to some vacant position as per skill set

Other ways are described as pay for performance can encompass a variety of rewards for
average performance. The most common is performance-based pay, which provides a
permanent increase to base pay. Each of these has advantages and disadvantages, which are
explored further below.

Performance-based pay increases.

Performance based pay increases are incorporated into the employee’s base pay and are
usually only adjusted upward. Organizations differ in how they move employees through the
performance-based pay scales. Some pay systems include pre-determined levels, which
employees step through in an orderly manner, while others allow the supervisors to determine
salary amounts anywhere within a broad range.

Who provides input to the performance ratings? Given that various perspectives often offer a
more complete view of an employee’s performance, it may be worthwhile to consider input
from a variety of sources, including the first-level supervisor, the second-level manager, and the
employee’s colleagues and customers, as well as directly from the employee. A 360 degree
feedback instrument that includes input from higher levels, peers, and subordinates, and/or a
balanced scorecard that includes business results and customer feedback can help to ensure
that important input is not overlooked. See Figure 7 for a summary of potential sources of input
on employee performance ratings.

Who provides input to the performance ratings?

Given that various perspectives often offer a more complete view of an employee’s
performance, it may be worthwhile to consider input from a variety of sources, including the
first-level supervisor, the second-level manager, and the employee’s colleagues and customers,
as well as directly from the employee. A 360 degree feedback instrument that includes input
from higher levels, peers, and subordinates, and/or a balanced scorecard that includes business
results and customer feedback can help to ensure that important input is not overlooked. See
Figure 7 for a summary of potential sources of input on employee performance ratings.

Supervisor

In The Indus Hospital most pay for performance systems, supervisors have the greatest
influence on employees’ pay increases because they make the assignments and evaluate
performance. However, relying exclusively on supervisors may increase a pay for performance
system’s vulnerability to errors and abuse, as discussed previously. The risks are increased
when some employees are experts at “impression management” and can convince a supervisor
that they are performing above their actual level, while other employees achieve more but do
not tout their accomplishments as well. Some supervisors may also be more effective at
identifying and presenting their employees’ accomplishments. In other cases, supervisors may
skew their ratings to unfairly reward favored employees at the expense of those who may be
more deserving of pay increases.

Manager

Further to The Indus Hospital policy Involvement of higher level managers in rating and pay
decisions may introduce a “reality check” whereby their perspective may be used to calibrate
ratings and pay increases. For example, supervisors may accurately or inaccurately believe that
their employees are above average. However, the next-level manager has the advantage of
being able to compare accomplishments across work teams and may be able to provide
feedback to bring a supervisor’s ratings in line with those for the rest of the organization.
Another advantage may be that any intentional or unintentional biases that a supervisor has
may be noticed if a second-line manager reviews the recommendations. Involving someone
outside of the employee’s management chain may further increase perceptions of fairness,
though it also probably reduces firsthand knowledge of performance that such a reviewer will
have

(C) Recommendations for improvement

Seeing and facing all the HR policy of Employee development. Below are my few
recommendations for improvement

1. Turn Managers into Coaches

All managers should be focused on improving their employee’s strengths through coaching.
Unfortunately, almost half of managers spend less than 10% of their time coaching their team.
It’s no surprise, then, that very few %age of employees feel that their managers hold effective
discussions about performance.

To be good coaches, managers should keep performance feedback focused on the future as
much as possible. Punishing for past mistakes or underperformance doesn’t facilitate future
development. Effective coaches give frequent, specific feedback about what employees can do
to start improving right now. To ensure that managers are coaching their teams, encourage
them to ask: “What are you going to get done this week?” And, “What do you need from me?”

2. Set Goals Effectively

Goals are the basis of an effective process. There are two key elements to consider when
developing goals. First, are goals written clearly and objectively? Second, are they directly
contributing to the achievement of business strategy?

Clearly communicating strategic business objectives is the first step to creating alignment.
Providing visibility to goals set by departments across the organization furthers alignment.
Typically the process begins with departmental managers setting goals for their departments,
based upon organization-wide goals, which support the general business strategy. Making
departmental goals accessible to all managers ensures there is no overlap, reduces conflict, and
allows members of different departments to see where they support each other and ensure
they are not working at cross purposes. Each manager in turn shares the overall goals with
his/her department and meets with employees to identify individual performance goals and
plans.

When setting goals, key job expectations and responsibilities should act as the main guide and
reference. Goals should be set that not only address what is expected, but also how it will be
achieved. For example, the "what" covers quality or quantity expected, deadlines to be met,
cost to deliver, etc. The "how" refers to the behavior demonstrated to achieve outcomes, for
example, focus on customer service.

An accepted framework to use to help write effective goals is the "SMART" goal:

S - Specific
M - Measurable
A - Achievable/Attainable
R - Results oriented/Realistic/Relevant
T - Time bound

The inclusion of the above criteria results in a goal that is understandable and easily visualized
and evaluated. Making a goal specific, measurable, and time bound contributes to the ability to
make progress on the goal and track that progress. Some managers choose to further define
goals with a start and finish date with milestones in between. Goals must be achievable and
realistic. An unachievable goal is just that. An employee knows when he/she does not stand a
chance of reaching it, and their effort to achieve the goal will be affected. In addition, goals
must reflect conditions that are under the employee's control and the R's (results oriented,
realistic and relevant) should definitely consider these conditions. Sometimes the focus on the
outcome of the goals can overshadow the necessary steps to achieve them. Action plans to
support each goal can include documentation of the steps necessary to achieve a goal. By
keeping goals relevant, a manager reinforces the importance of linking to strategic objectives
and communicating why the goal is important. Some organizations have suggested the use of
SMARTA, or SMARTR with the additional A standing for aligned and the R standing for reward.

A focus on objective, behavioral-based, and observable outcomes that are job-related helps
ensure fairness of the process and reduces discrepancy. Although sometimes difficult to hear,
objective feedback supported with regular documentation is difficult to dispute. This is also
where an understanding of the organization's overall objectives and goals and how individual
efforts contribute becomes essential. If for example, an individual understands that their
actions support an area of the business then it is easier to understand the impact when
deadlines are not met. Using the SMART framework provides clarity up front to employees who
will be evaluated against these goals.

3. Begin with Performance Planning

Using established goals as a basis, performance planning sets the stage for the year by
communicating objectives, and setting an actionable plan to guide the employee to successfully
achieve goals.

Performance planning, as with all other steps, is a collaborative process between the manager
and employee, although there will always be some elements that are non-negotiable. Begin
with the job description and identify major job expectations; expectations then can be clarified
for each major area.

Under each key contribution area, it is important to identify long-term and short-term goals,
along with an action plan around how they will be achieved. Goals can be weighted to identify
priorities. Discuss specific details related to how progress against goals will be evaluated. Next
steps include determining any obstacles that would stand in the way of these goals being
achieved. If an obstacle is knowledge, skills or behavior–a plan should be developed to
overcome, i.e.; training, mentoring, etc.

Using the performance planning document as a reference document, the employee and
manager then should regularly monitor progress against goals, problem solve road blocks, re-
assess goals, change goals as business direction changes, and re-evaluate training and resource
needs. This is where the conversation is critical and often where the follow through sometimes
falls down. Performance planning and ongoing performance feedback are critical because they
facilitate continuous improvement and aid open communication.

4. Ensure an Ongoing Process

As the following diagram illustrates, goal setting, performance planning, performance

monitoring, feedback and coaching is ongoing and supports the creation of the performance
appraisal, which in turn supports processes related to rewards, learning and development.
Performance monitoring, feedback and coaching creates a separate feedback loop within the
larger loop which should take place more often, allowing for necessary adjustments to
performance planning as conditions dictate.

5. Improve Productivity through Better Goal Management

Regular goal tracking allows for the opportunity to provide feedback as needed, make
adjustments to performance plans, tackle obstacles and prepare contingencies for missed
deadlines. Without a mechanism to regularly track progress against goals, the ongoing, cyclical
nature of the process falls apart.

Goal progress discussions, along with all performance feedback, should be delivered with
respect and should be objective and supportive. Specific examples provide clarity and help the
employee focus on future improvements. It is crucial that the manager listens to the
employee's perspective and incorporates the employee's observations into future plans– the
employee often experiences roadblocks the manager may not see.

6. Gather Information from a number of sources

Gathering performance information from a variety of sources increases objectivity and ensures
all factors impacting performance are considered. This information should include objective
data like sales reports, call records or deadline reports. Other valuable information includes:
feedback from others, results of personal observation, documentation of ongoing dialogue,
records of any external or environmental factors impacting performance. Many reviews also
include an employee self-evaluation. Other documents that help define performance objectives
include: past performance appraisals, current departmental and organizational objectives and
documented standards related to career goals.

In order to gather feedback from other employees, organizations will often use a 360° feedback
process. Along with the completion of a self-assessment, selected peers, subordinates, and
manager(s) are asked to contribute feedback around pre-identified areas. The feedback is
based upon specifically identified skills or competencies and the final results are compared
against the employee's self-assessment. This type of feedback increases self-awareness and in
some cases is used to support the performance evaluation process.

Objectivity is essential when evaluating performance and it begins with clarity about job
expectations and evaluation methods. Certain checks and balances can be built in to ensure
objectivity. Managers commonly make mistakes when they conduct evaluations and the first
step to minimizing those errors is to acknowledge they exist. Consistent processes organization-
wide contribute to fairness and objectivity. Access to information allows others to check the
validity of the process. Obviously, not all employees need access to other employees'
performance appraisal results, but processes like calibration meetings will help ensure
consistency. In the calibration process, managers with employees in similar positions meet and
discuss the appraisals before they are finalized and shared with the employees. A calibration
meeting helps establish the reasons individuals are awarded various performance rankings,
educates managers about the process across the organization and promotes consistency. It also
provides validation for manager's decisions, if appropriate.

Reporting is very valuable to assess the fairness/consistency of the process–for example, to

compare ratings in one division to the next or for one manager to the next.
 7. Adequately Prepare and Train Your Managers

Managing the performance of another individual is not an easy task and requires many skills.
Training may be required to ensure managers feel adequately prepared to effectively complete
all the tasks related to performance management. This is especially the case for newly
promoted supervisors. Managers need to understand human behavior, how to motivate, how
to develop, provide coaching and deal with conflict. To a great extent, managers must be
observers and able to assess a situation, provide motivation and identify problems that
interfere with performance. In addition, managers must understand that individuals at different
levels of comfort, ability and experience with their jobs will require different levels of input,
support and supervision. A manager who feels adequately prepared to provide and receive
feedback, deliver a performance evaluation and conduct a performance evaluation meeting will
be a major contributor to a successfully functioning process.

8. The Review

The employee performance appraisal or review should be a summary of all that has been
discussed. Based upon job expectations and key areas of contribution, and previously discussed
goals and evaluation methods, the appraisal should be a written confirmation of what has
already been discussed with the employee.

The form should include key job responsibilities, current project work, relevant competencies,
goals and achievements. Previously completed performance appraisals should be used as
reference documents. It should also contain an area to allow employees to record their
comment and input. All comments included on the appraisal form need to be job-related and
based upon observable behaviors.

For the appraisal meeting, it is imperative to prepare ahead of time. Schedule an appropriate
place and time with no interruptions. Ensure the employee has the information necessary to
allow them to prepare adequately. Begin the discussion with job requirements and strengths/
accomplishments. The focus, as pointed out previously, should be forward looking. The way the
manager approaches this meeting conveys a message related to its importance and should be
approached with the appropriate level of seriousness and an open mind. The manager must be
prepared in regard to what he/she wants to discuss, but just as importantly must be prepared
to listen.

9. Link Performance Management with Rewards and Recognition

More and more, organizations are linking performance to compensation. This link, however,
cannot effectively be established without the existence of sound performance management
processes that are seen as fair and equitable.

Clear documentation of progress against performance expectations also allows proper

recognition for a job well done. This can be provided a number of ways, i.e.: formal recognition
events, informal public recognition or privately delivered feedback.

It is important also to note the benefits of a consistent process across the organization. A
consistent process creates a sense of fairness and significantly increases job satisfaction. This is
even more critical if compensation is linked to performance. Employees need to know that if an
individual in one department is identified as a top performer and compensated accordingly,
then an employee performing at the same level in another department will receive similar
rewards.

10. Evaluate and Encourage Full Participation and Success

There is widespread recognition that an annual meeting to evaluate progress does not have the
same benefits as ongoing dialogue and feedback. Feedback that is delivered when it is most
relevant enhances learning and provides the opportunity to make necessary accommodations
in order to meet objectives. Some organizations are moving towards conducting performance
reviews twice a year, while a small portion is trying to conduct them more frequently.
Regardless of frequency, the attitude towards ongoing feedback is crucial. If there is
organizational recognition and support for the need to build constructive feedback into the
fabric of day-to-day interactions combined with increased visibility into goals, then the
environment will encourage development and drive goal-directed performance improvement.

Design the process right. The performance management process must add value, otherwise
problems with resistance and non-participation will surface. In addition, the process itself must
be efficient and as simple as possible, while still providing the necessary value. Automated
reminders and scheduling tools can help keep the process on track.

Another element to consider that contributes to success is upper level management support.
This support needs to take not only the form of verbal support, but also through participation in
the same performance management process for evaluations. In addition, consider the current
culture of your organization when it comes to performance appraisals and performance
management. Is the "atmosphere" supportive of an effective process? Is there a culture of open
honest communication or are employees fearful when they make a mistake? Employees must
be able to honestly discuss performance and consider how to make improvements in order to
move forward.

Another thing to consider is the provision of a mechanism to evaluate the process itself,
whether it consists of an annual survey, focus groups, manager feedback, reporting, or a
combination of these and other methods.