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    Performance Management   Part 5      This page intentionally left blank  19   The Basis of Performance Management A CHANGING PERSPECTIVE   Our understanding of performance management and how to implement it effectively has changed radically in the last few years. As recently as the early 1990s, performance management was often just another way of describing a more sophisticated performance appraisal system. This was often implemented more to provide a rating to drive a pay result than as a series of processes which enabled both organizations and individuals to focus effectively and in depth on the creation and sustained develop- ment of a high performance culture. Old ideas and concepts take time to die and appraisal is no exception. It is still part of the common parlance in many organizations and its ‘top - down’, ‘parent–child’ overtones continue to get in the way of the much more holistic approaches now  being developed and used in leading organizations around the world. Performance management acquired a new definition in the early 1990s: a process for establishing a shared understanding about what is to  be achieved and how it is to be achieved; an approach to managing people that increases the probability of achieving success.  Variations on this definition come from a range of sources; from Hay Group work in the early 1990s; and from consultants and practitioners, notably Armstrong and Baron, 1  Weiss and Hartle, 2 Satterfield 3 and most recently Houldsworth and Jirasinghe. 4  What they are all agreed upon are the enduring truths underlying effective performance management. These truths focus on the importance of processes over systems; the crit- ical importance of front-end planning rather than back-end review,  252    Performance management   developing shared understanding; the importance of managing and developing people sensitively as individuals in a way which enhances their contribution, coaching; and of thinking holistically about what is needed to produce success. This is a mindset that is a long way from the preoccupation with bureaucracy, measuring outputs, ratings and forms and the implications of (at worst) ‘search, find and punish’ under - performers that went with the crudest transactional view of 1980s-style performance-related pay. It recognizes the importance of raising the use of discretionary effort and the practical application of the behaviours associated with emotional intelligence (see Chapter 2). It recognizes the importance of measuring outcomes alongside the behaviours used to achieve them. This chapter and the next are devoted to summaries, first of the con- cepts behind performance management as we now understand it, and then of the practical steps that need to be taken to ensure successful implementation. We give the bare bones here, for there are many recent pieces of research and handbooks which give greater depth on the think- ing and learning in this field (see the end of this chapter and Appendix F). FROM ANNUAL APPRAISAL TO CHANGE INTEGRATION   There is a continuum of learning in the area of performance manage- ment. Most organizations start with annual appraisal and learn from  what goes well or badly why an annual review, a well-designed set of forms and a bit of appraisal skills training doesn’ t get them very far. Two fundamental issues are at stake. The first of these is impact on the organization. Annual appraisal designed by personnel specialists and issued with a set of forms and a manual is, however slick the design  work, not typically seen by either leaders or employees as core to the achievement of organizational goals and plans. It is seen as an additional  burden in an increasingly busy working life by the majority of people in an organization and they often try to avoid doing it. Add to that the other fundamental issue –  the extent to which basic appraisals skills training really enhances management capability to get into the under- lying causes of performance improvement –  and you have a system destined to underachieve. And that is exactly what has happened. Both the authors of this book have conducted extensive research and evalua- tions of how well appraisal has worked. We both conclude that organi- zations need to move up the line illustrated in Figure 19.1 if they are to evolve towards a high performance culture and use performance management as the means by which successful organizational perfor- mance is managed and delivered. It can then become core to HR’s  role as a strategic business partner in the creation of a highly engaged work- force.
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