For this milestone, you will submit a draft of the first part of your final submission, the cover letter. 

OL 751 Module Three:
Performance Management

This module focuses on the crucial employee competencies for success and the importance of alignment with the organization’s business goals and needs. The key HR role is to develop, implement, and evaluate strategic human resources programs that support both employee and organizational success.
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Definitions
Performance Management:
Process of creating a work environment in which employees can perform to the best of their abilities and contribute the most to the organization
Performance Standards:
Define acceptable and unacceptable performance levels based on job-related requirements from job analysis and reflected in job description
Performance Reviews:
Process, typically delivered annually, designed to help employees understand their roles, objectives, and expectations with respect to organizational success

All organizations need performance management practices for the benefit of both the organization and its employees. Everyone benefits from clear standards and expectations of performance and timely, constructive feedback. The key is to invest the time and effort in developing, evaluating, and making improvements as necessary, so that the entire process has value and managers are committed.
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Purposes of Performance Reviews
Developmental
Allow employee to discuss concerns
Ensure clear expectations and alignment with organization
Evaluate goal achievement
Help identify goals
Identify organizational training needs
Identify employee training needs
Identify strengths and weaknesses
Improve communication
Provide employee feedback
Recognize performance
Reinforce authority structure
Administrative
Assist with HR planning
Basis for promoting employees
Determine transfers and assignments
Document personnel decisions
Evaluate training programs
Identify performance problems and improvement plan
Make merit and compensation decisions
Make retention, termination, and layoff decisions
Meet legal requirements
Validate selection criteria

There are many benefits to a comprehensive performance review program, particularly to ensure that employees’ efforts are aligned with the organization’s goals and needs. Alignment includes identifying areas of improvement from the employee, as well as identifying areas of development and opportunity for the employee, position, team, department, and organization.
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Employee Performance Factors
Motivation
Career ambition
Goals and expectations
Job satisfaction
Perceptions
Relationship with manager
Relationship with coworkers
Ability
Analytical skill
Communication
Interpersonal
Physical limits
Problem-solving
Right fit for job (emotionally, physically)
Technical skills

Environment
External, such as economic conditions
Job design
Job resources, such as equipment and/or materials
Laws and regulations
Manager support
Rules and policies
Unions

Employee performance is affected by three particular areas: the employee’s own motivation in his or her career, the environment in which the employee works, and the employee’s knowledge, skills, and ability to meet the needs of the position and the organization.
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Performance Review Problems
Inadequate preparation by employee’s manager
Employee was not given clear objectives or expectations
Unclear alignment with organizational goals
Rating errors and resulting inconsistency among managers:
Central tendency
Leniency or strictness
Personality, not performance
Similar-to-me bias
Recency error (considering only recent performance)
Contrast and halo errors (comparing employees unfairly)
Inappropriate time span: too long or too short
Subjective or vague language and assessment
Organizational politics or underlying motive
Lack of improvement plan and/or lack of follow-up
Lack of manager training and accountability

Unfortunately, there are challenges along the way in the performance review process that can create problems with the good intentions of the process. Managers are often very busy and may not devote the time and effort necessary to provide a quality performance review. Managers may also not be well educated on their role and the requirements of an effective program. Job descriptions may also not be accurate or may not even exist for all positions in the organization (often due to the lack-of-time factor). Additionally, managers are only human and may not always apply objectivity in completing reviews. Many of these issues arise because there may not be the support and/or accountability from senior management and human resources for managers to properly carry out their responsibilities.
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Importance of Leadership
Effective leadership drives employee and organizational performance by:
Creating a stronger, cohesive culture
Providing direction, challenges, and goals
Setting an example and positively influencing others (or negatively, if used wrong)
Engaging and encouraging employees’ potential
Making expectations very clear and holding employees accountable
Providing regular feedback and addressing performance issues immediately
Coaching employees on development areas
Providing counseling on areas of concern
Creating performance improvement plans with specific goals and available resources
Knowing when and how to terminate non-performers

As noted in the previous slide, many of the issues with performance reviews can arise due to the lack of support and/or accountability from senior management and/or from human resources for managers to properly carry out their responsibilities. This is exactly where the importance of effective leadership is key. Employees are the most valuable asset of any organization, and making the most of any asset requires active, effective leaders to set the example, lead others down the right path, promote a positive work environment, emphasize the coaching role of managers (and not just with negative feedback), and finally, ensuring fair, legally compliant decisions related to employee discipline and terminations.
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