Performance Management Systems And Process For Dolphin Logistics Company

Importance of Performance Management Systems for Business Organisation

Discuss about the Dolphin Logistics Company for Logistic Market.

Dolphin Logistics Company is a logistic company, which is planning to enter the logistic market of Hong-Kong and Singapore by the year 2018. The company is concerned about the performances of the employees and as a result, it has planned to implement a performance management system that would assess their performances and ensure that they contribute their best towards the fulfilment of the Performance management is a systematic approach through which an organisation assesses the performances of the employees and their effectiveness in meeting the goals or objectives of the company. The company has asked the HR consultants to provide them detailed knowledge on the requirements and benefits of performance management for a business organisation and also to provide a comprehensive performance management plan that it could use for its subsidiaries in Hong-Kong and Singapore. Therefore, in this report, we would talk about the performance management systems, their benefits to an organisation and would draft a comprehensive performance management plan for the Hong-Kong and Singapore subsidiaries.

Performance management is considered to be one of the most important and useful tool that the subject of human resource management has provided to the modern day business world. It aims at aligning the resources, systems and the efforts of the employees towards the fulfilment of the pre-defined goals and objectives. It is defined as the process where an organisation sets and clearly communicates expectations and performance standards to the employees, observes their performances, provides feedbacks and conducts appraisals to motivate the employees to achieve the best results for the company (Ucsfhr.ucsf.edu, 2016).

Performance management systems are being implemented by most of the companies these days. Most of the successful companies have carved their path to success by designing efficient and effective performance management systems while some companies have failed drastically in their performance management plans and have lost their competitive advantages to the competitors. It is important that the performance management systems are carefully planned and are designed according to the culture of the organisation. Let us now discuss the advantages of implementing performance management systems for business organisations:

• Increases the focus of the employees towards performance à When a management implements a performance management system in the organisation, it has to continuously assess the performances of every employee. The main focus of the management then shifts from the needs of the employees to their performances and the employees too are required to talk more about their performance and contributions towards the fulfilment of organisational goals and objectives (Whatishumanresource.com, n.d.). As a result, both the management and the employees become more oriented and focused towards the performances and the overall performance of the organisation increases, which ultimately leads to better outcomes.

• Reduced stress levels à the implementation of a performance management system requires a lot of continuous efforts from the managers as they have to assess the performance of the employees on a regular basis. In the process of assessing the performance of employees working at various hierarchical levels in an organisation, the managers have to communicate with them directly or indirectly, which increases the frequency of communication between the employees and the management. When assessing performance, the managers also take into account the feedback of the employees and the overall increase in communication between the management and the employees helps in decreasing the amount of stress that the employees feel during performance meetings when there are no prior performance assessments made.

• High confidence à when there is a well-structured performance management system implemented in an organisation, the managers as well as the employees becomes a part of the performance management system with high confidence levels because everything that is done to measure the performance is done according to the rule book and is transparent. The employees have a clearly defined set of expectations and objectives on the basis of which their performance is assessed. There is no ambiguity in the minds of the employees as the performance management system is clear to them. Therefore, the confidence of the employees increase and they become more performance oriented to achieve rewards and opportunities.

• Targeted staff development à Training and development have been recognized as an important aspect of the human resource management process. Training and developing employees is very important as they need time to time development in their skills so that they can remain competitive in the changing environment. Training and development planning is very important as training and development of employees involves heavy investment of resources and all the investment goes in vain if the training or development program is not properly planned or executed. If a management is able to place a well-designed performance management system in the organisation, it can efficiently identify the training and development needs of the employees by measuring their performances and gaining information about the areas or skillsets which they lack. Ultimately, the management will be able to design better and more efficient training and development programs (Smart Church Management, 2015).

• Encourages and motivates the employees à performance management is always attached with some kind of rewards or opportunities that are given to the employees who outperform others in the assessment period. These rewards or opportunities are intended to help the employees in making a progress in their career paths. The feeling of being rewarded, earning recognition or being praised by the seniors keeps the employees motivated and they try to perform with their best efforts.

• Under-performers are identified and are properly dealt with à performance management systems are not just about rewarding the best performers but are also concerned with dealing with the employees that do not meet the performance expectations set up by the management. A well designed performance management system can help an organisation in identifying the under-performers and taking appropriate actions to either consider them for training or development or to smoothly terminate them without spoiling the relationship with the employee (if their performance continues to be below the expected performance levels).

• Allows for employee growth à a performance management system can provide growth opportunities to the employees. It can help the employees to recognize their maximum potential, which can be beneficial to the employee as well as to the management. It is a pride for the management to watch their employees growing in their careers and earning high professional ranks (Smart Church Management, 2015).

• Fosters a competitive environment à one of the best advantages of a performance management system is that it fosters a competitive environment in the workplace. One of the most important components of a performance management system is that it has certain rewards or opportunities to offer to those who perform well. Rewards and incentives are a motivational factor for the employees and they try to outperform their peers in order to achieve them. Therefore, the employees become more competitive and they ultimately contribute a lot towards the fulfilment of organisational goals and objectives.

• Employee retention and recruitment à recruiting new talent and retaining employees for a management has become a huge concern in the modern day business world. In such a scenario, an important benefit of having a good performance management plan is place is that it helps a company in recruiting the best talent and retaining the existing talent. Fresh employees and even experienced employees tend to work with those companies that have good performance management systems and would help them in developing their careers. Further, the need of performance appraisals keeps the employees motivated and loyal towards their jobs. Therefore, the companies are able to retain their existing talent and recruit new and experienced pool of talent.

It has been found that a performance management system, which is not properly designed, can cause more harm to a company than the advantaged it would have if it was properly designed. Therefore, it is very important that the performance management system is carefully designed and is strictly according to the goals, objectives and work culture of the organisation. Before designing a performance management plan, let us first discuss some important characteristics of a well-designed performance management plan:

• The goals and objectives should be measurable and realistic à to increase the effectiveness of the performance management system, it is important that the goals and objectives formulated by the management are achievable and realistic for the employees. If the goals and objectives are not achievable or measurable, the employees might become dissatisfied with their jobs and the performance management system would fail (Synergita Blogosphere, 2013).

• Key performance indicators à one of the best ways to increase the effectiveness of a performance management system is to incorporate certain key performance indicators, which are related to the goals and objectives of the company. Identifying and incorporating key performance indicators related to the job would allow the management to measure the right things that it actually wants to measure and would also clearly communicate the basis on which the management would assess the performance of its employees (Smallbusiness.chron.com, 2016).

• Unbiased and transparent à another important characteristic of an effective performance management system is that it should be unbiased and transparent. Many a times it has been found that the performance management systems are basically biased and favouritism plays a huge role when the employees are being praised or awarded at the end of an assessment year. If the performance management system is biased, it can have a great impact on the employees as they start to feel uncomfortable and lose their trust in the management. If the situation continues to persist, the system will end up fostering a negative environment in the workplace where the employees would not perform well at all and increased turnover rates might become the worst case scenario (Rollins, 2015).

• Rewards and incentives à the most important component or characteristic of a good performance management system is that it will always have certain rewards, incentives or opportunities to offer to those who contribute towards the fulfilment of organisational goals and objective by performing exceptional well. Rewards, opportunities and incentives are the only things that act as a motivating factor for the employees and make them perform better.

Performance Management Process For Dolphin Logistics

The management should ensure that it gets total support and contributions from all levels of the organisation and by incorporating the above mentioned characteristics in the performance management system, the management would be able to ensure the best results.

The performance management system of Dolphin Logistics Company will be based upon five important steps. These steps are discussed in detail below:

• Designing à this is the first stage in the performance management process where the management involves all the people it requires from within the organisation in the planning of the performance management system. The management identifies performance expectations, organisational goals and objectives and shapes the performance management system on their basis. The designing phase usually lasts for a maximum of two months period before it is implemented in the organisation. The major steps involved in the designing stage of performance management system are:
• Seeking support from all hierarchical levels
• Formation of implementation teams
• Identifying goals and objectives of the organisation
• Identifying key success factors and key performance indicators
• Development of scoreboards and criteria for measurement, etc. (Imanet.org, 2016)

• Execute/implement à the second stage in the performance management process is the execution or the implementation stage where the management executes the performance management system that it had planned in the beginning. This phase requires a lot of effort and patience as the management has to communicate the whole plan clearly to the employees. If the performance management system is not clear in the minds of the employees, they might become uncomfortable with it and would end up offering resistance to the changes being made. To reinforce the plan, the management would also require assistance from front line managers who would help the management in bringing about a change.

• Monitoring/analysing à the third stage in the performance management process is monitoring or analysing where the management starts to assess and analyse the performance of the employees on a regular basis. This is a continuous process as the performance of the employees has to be continuously measured throughout the period of assessment term. There are a number of ways in which a management can assess the performance of its employees. 360 degree feedback is one such approach which helps the management in analysing the performances of the employees. In 360 degree feedback approach, the management gathers performance reviews of each and every employee from their juniors, seniors and peers. The feedback given by the juniors, seniors and peers of an employee are kept anonymous and are not disclosed to anybody. Once the management gathers sufficient feedback from all the related employees, it conducts a performance analysis of all the employees. 360 degree feedback approach is considered to be one of the best approach for performance measurement as it provides very useful results and the system of collecting feedback from multiple employees makes the information more reliable and accurate(Custominsight.com, 2016).

• Adapting/Changing/Rewarding à The last step in the performance management process is to adapt to the situations, making changes in the system if required and rewarding those employees who have contributed towards the fulfilment of organisational goals and objectives by performing well. The organisation can conduct semi-annual or annual meetings where it would discuss the performance shown by various departments and employees and would appraise those who would have shown exceptional performance throughout the period of assessment. For example, the management can reward corporate leaders with employee stock ownership or profit sharing, business unit leaders with result sharing, functional leaders with milestone rewards while the general employees can be awarded with profit sharing, bonus, promotions, etc. The rewards should be realistic and should satisfy the needs of the employees so that they can be motivated. During these meetings, the company can also announce the overall performance results of the organisation and any future training and development programs that it plans to organise for its employees.

There are a number of ways in which an organisation can design its performance measurement system but one of the best system of linking performance and potential of employees has been taken up by Philips India. The system allows the management of the company to assess the performances of the employees in comparison with the potential that they have. The results are very useful and help the company in taking appropriate actions. Let us now discuss the performance measurement matrix, which can also be adopted by Dolphin Logistics Company:

According to this matrix, the employees can be divided into four groups on the basis of their performance and potential. The classifications are employees with low potential and low performance, low potential and high performance, high potential and low performance and high potential and high performance. Let us discuss the details of each classification:

• Low potential – low performance à these employees rank low on both the dimensions and do not perform according to the expectations communicated by the company. These employees are termed as question marks and are considered for planned separation if their performance continues to lag behind (YourArticleLibrary.com: The Next Generation Library, 2014).

• Low potential – high performance à these employees have relatively low potential but show high performance during the assessment period. These employees are classified as solid citizens and as they lack the potential to be promoted to higher jobs, they are rewarded with some incentives and are encouraged to perform their best in their current positions.

• High potential – low performance à these employees are low on performance even though have high potential of performing their jobs. These employees are known as the problem children as they have the potential but are not ready to perform according to the expectations communicated by the company. These employees are considered for counselling where there problems are discussed. The management then tries to eliminate their problems by shifting them to new locations. In case of such employees, if the performance still remains below the expected level even after warnings and shifting, the employees are shifted to the question mark category and are considered for planned separation.

• High potential – high performance à these are the employees who have high potential and show very good performance. These employees are termed as the stars of the organisation as the management can direct the fulfilment of organisational goals and objectives towards their efforts. These employees have very high potential and can take up higher positions in the organisation if they are properly trained and developed. Thus, the management directs its developments efforts towards these employees or the stars of the organisation (YourArticleLibrary.com: The Next Generation Library, 2014).

Conclusion

There are a number of real life examples where the companies have achieved success and competitive advantages through their performance management systems while there are also those companies that have lost their competitive advantages to the rivals due to their inefficient and carelessly designed performance management systems. Most of the high level managers do not realize the actual important of performance management systems and end up designing inefficient performance management systems just for the sake of having one in their organisation. Such systems can hinder the progress of the organisation as they discourage performance more than an efficient system of performance management can encourage performance. Therefore, it is important that the performance management systems are in accordance with the cultural values of the company so that they measure the things that they are intended to measure and are able to foster a work environment where all the employees and the managers are highly performance oriented.

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Performance Management Matrix

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