More and more companies are relying on effective performance management in order to promote the personal development of their employees as well as developing the full potential of their business. That’s why today we’ve invited a very special guest to our Berlin office today.
Bea Pönisch is Senior Learning & Development Manager at finleap connect GmbH, where she deals with all strategic issues related to learning and development. She also works as a lecturer for HR management at the Euro FH and has a long career among various companies in the HR sector such as Volkswagen Coaching GmbH.
➡️➡️ We are always happy to hear interesting insights from HR experts and professionals in the relevant fields. Simply write an email to our marketing director Rubén Medina via email@example.com. ⬅️⬅️️️
When did you implement the Performance appraisal program in your company? Why and which departments affected this new initiative?
Regular and high quality feedback is one of the main instruments to increase performance within an organization. Creating a culture in which everyone provides constructive feedback and appreciation to everyone at all times is important in order to continuously develop the entire organisation and to get the most potential. To achieve this, standards and processes must be defined and the right organisation and structures established to ensure that the goal of performance improvement is achieved. Of course there are companies that manage without predefined processes, but in my experience this becomes more and more difficult as the number of employees increases.
Why is the implementation of a performance management system important?
Setting up an appropriate system is perfect to define any performance expectations that are placed on each individual. This ensures transparency, equal treatment, employee motivation and retention and forms a basis for further HR relevant decisions. The company can thus regulate performance in a targeted manner, identify development opportunities and obtain an overall view of the available potential of the entire organisation. In addition, a high quality PMS offers the possibility to efficiently achieve various performance goals and gives employees the basis to actively shape their own development.
How should you plan and organise the process and how did you approach this?
The responsibility for setting up and implementing a performance management system is usually done by HR managers. HR departments have the necessary experience and skills to develop appropriate systems in regards to the individual organisation. To ensure successful implementation, company representatives should be convinced of the benefits and act as drivers of the project. It is then the main function of a human resources department to define the objectives of the performance management system together with the management.
Based on target definition, HR departments create a project plan that contains individual steps amongst the necessary resources and responsibilities. This has to be done in coordination with the management, so that the HR managers are able to design the implementation largely independently. During the implementation phase, a so-called Sounding Board can be used (participants consists of representatives of management, executives and employees) to provide regular information on the course of the project and receive appropriate feedback so that changes can be made if necessary.
How do you define a successful introduction of a performance management system?
Various key figures or sources of information can be used to determine the success of a PMS. These can be for example
- Results from company-wide surveys (e.g. Engagement Survey)
- Results from offboarding discussions
- Analysis and comparison of the results of performance interviews
- Staff turnover rate
- Succession planning
- Business relevant HR KPI key figures
What are the biggest challenges while implementing the system? And how can you overcome it?
One of the biggest challenges for HR when developing and implementing a PMS is management. If the management is not convinced of the benefits, it will not support the successful rollout during implementation and communicate the relevant statements to managers and employees. A high-quality system can only really work and develop its full effect if it’s applied accordingly, lived and is part of the corporate culture. This requires role models that are convincing and repeatedly transport the benefits into the organisation and, in the sense of a role model, actively drive and successfully implement the topic.
In addition, opinions often differ widely on the design of the content, the question of what performance is and how it should be defined within a company can vary a lot. While some work with qualitative and quantitative targets, performance can also be based on skills. Defining these success-critical behavioral criteria and their scope can take a lot of time and requires a high degree of coordination. Of course, this is also influenced by the approach taken in the development of the system. If a company decides on a top-down approach, this can take less time compared to a bottom-up approach.
How many people should be involved in the creation of a performance review program? Why?
The number of people that should be considered in the development of a performance management system depends largely on the organisation and the corporate culture.
- If a company follows a top-down approach, the management and the employees of the HR department are important participants.
- If a company chooses the bottom-up approach, employees and managers are also involved during the development.
Workshop formats are used to determine the needs, components and content of the PMS. Depending on the size of the company, the number of individual workshops must be determined as well as the consolidation of the results and their processing (e.g. additional workshops).
Both approaches have their own pros and cons and depend, as mentioned, on the respective corporate culture. If participation plays an important role, I would always tend to follow a bottom-up approach. I have already mentioned a combination of both approaches before, such as sounding boards to involve other people within the company in the development process and at the same time gain ambassadors for the implementation.
In my humble opinion, no matter which approach a company chooses, it’s definitely important to define responsibilities and tasks at the beginning.
What 5 Dos and Don'ts would you suggest to our readers when creating a performance review program?
- A clear definition of objectives, presentation of benefits and he processing the results
- Objective processing (e.g. work with clear definitions of competences)
- Implement further instruments in addition to the standardised performance reviews to enable regular and constructive feedback
- Provide stakeholders with all relevant information about the application of the system and transparent presentation of the process (e.g. how linked HR relevant decisions are made)
- Regular evaluation of your own system and questioning the instruments in a meaningful way
- Not involving management at an early stage, possibly involving other employee groups
- No clear objectives in advance based on the review of success
- Drive the project purely from an HR perspective, without assessing the needs of the organisation
- Evaluate the results on the basis of the normal distribution and make all further decisions
- Linking performance reviews (as a basis for e.g. promotions) with development discussions
Which resources would you suggest HR managers to study in order to gain knowledge to create a performance management system in their companies?
Basically I can’t personally recommend any corresponding book that absolutely has to be read. I am convinced that people who do not have the appropriate training and experience should involve other people. The quality and the alignment with the company's development requirements is an important part of the success of a performance management system. If a system is introduced that doesn’t meet the described aspects, not only does the quality suffer, but there also will be less acceptance. As a result, the outcome will probably not meet the desired objective and the employees will see the process as a necessary evil rather than an opportunity.
I advise experienced HR managers to exchange ideas - with colleagues and within the relevant networks. There are specific HR networks that are organized e.g. via Slack such as Purple Squirrel Society or Secret HR Society. Alternatively, there are specific network events in respective cities that are often organised via meetup groups. In addition, there are countless webinars, blog articles and podcasts on the net.
The Harvard Business Review. is another helpful source of information about the latest trends and scientific findings.
Thank you Bea for this interesting conversation!
You can find more exciting interviews with leading HR experts, such as building an HR department from scratch, on our blog.