At its very core, Performance Management links each employee's and each manager's responsibilities with that of the team and the overall organisation, providing the organisation a snapshot of progress towards strategic plans.

Alignment to Strategy

In Research conducted by Professor Nankervis of Curtin University of Technology, he found that only 2.5% of Australian Organisations set fixed objectives as part of Performance Management plans. This compares with up to 90% for some of Australia's immediate neighbours. In a recent survey by IXP3, it was found that 72% of employees had only ever had a review conducted in relation to their position description and not tied to organisational goals. Performance Management allows organisational objectives to be set and reviewed from the top to the bottom of the organisational structure.

Employee Retention

Performance Management helps to minimise cost of unwanted employee turnover by addressing the majority of reasons employees give for deciding to resign. In no particular order, the reasons in almost every survey are :

1. I was not appreciated - no management interaction
2. I was not developed - no development plan
3. I could not cope with the work - competencies and/or work load
4. I was not paid enough - money
5. I left to advance my career - no career plan
6. The work was of poor quality - little variation in work
7. There was no work life balance - inflexible
8. Poor management - poor management training/practices/controls
9. Stress - skills mismatch, work life balance
10. Other

EIT Cost

Employee initiated turnover (otherwise called regrettable turnover) represents a huge, unobserved and generally unquantified ongoing expense to most organisations. Our research indicates that staff turnover costs an organisation between $15,000 to $30,000 per person while management turnover ranges between $60,000 and $125,000 per head. The mean costs are nearer to the bottom ends of these ranges. However, this still means that an organisation with turnover of 100 people per year has a generally unmanaged cost item of $2 Million per year.

No Manual Forms or Intranet Forms

Automation is an absolutely critical factor in implementing successful Performance Management systems. Manual systems (including those which are based on intranet "forms") tend to fail within 18 months on average. Failure is generally identified by a compliance level of 90% or less.

Manual systems fail because :

• The Strategic Mission does not cascade beyond the first one or two layers of management.
  
  
• Line Managers find it impossible to manage five or ten annual objectives for every one of their staff members. It is simply too much to remember and too hard to get hold of the forms when they are most needed. The HR department simply cannot track so many thousands of forms.
  
  
• Due to the large number of forms, reporting is nonexistent. Therefore, the level of compliance with the system is not known. Measures of success cannot ever be quantified and there is no opportunity to normalise the performance of line managers across the organisation.
  
  
• As reporting is nonexistent, there is no visibility of which line managers have complied and consequently, line managers stop setting objectives and stop doing reviews. Consequently, both managers and employees opt out of the system, lose faith and never want to be part of a Performance Management system again.

Low Organisational Change

Performance Management consulting and/or software is a set of modules which can be customised to fit each organisations existing processes.

No Rekeying of Employee Data

A direct feed from the existing payroll system is far more cost effective than perpetually rekeying changes to employee details i.e. adds, moves and changes.

Always-on Performance Management

This allows the immediate annotation of employee achievements and required development areas throughout the year and before the next review comes around. This makes the review a high content discussion.

Scalable Solutions

Performance Management solutions should be able to be deployed in organisations which have anywhere from under ten to several hundred thousand staff. This is usually possible by deploying solutions on the internal intranet for organisations with 300 staff or more and by using an application service provider for smaller organisations.

Successful Installations

An established track record in Fortune 500 and Australian Blue Chip organisations.

Competitive Pricing

Pricing should be far below that of enterprise management solutions or ERP products.

National Coverage

Offices in the major Australian cities. A reasonable level of capitalisation (over $0.5M), Professional Indemnity insurance of $5M or more.

Specialisation

The best providers are those which do nothing else but specialise in Performance Management Systems. Many payroll system and ERP providers have performance modules but do not provide a full service including audit, design, implementation, Help Desk and training of the HR administrators and most importantly the line managers.

The PMIA is available to speak at your next conference to demonstrate how you can use Performance Management as a tool to help guide your organisation towards its goals. To discuss your requirements, please send an email with your name and contact details to peter.vlant@pmia.org.au.