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Re-Thinking Performance Management

You may have seen headlines like ‘Performance Management is Broken’. Don’t believe them – Performance Management is alive and well and remains a critically important capability for human resources professionals.

We’re blowing up performance management,” says Deloitte Australia’s head of people and performance, as reported in the Australian Financial Review recently. Other articles have said something similar. You may think they mean that the days of Performance Management are over, or at least coming to an end.

Think again.

Digging deeper than the headlines and the dramatic quotes, you’ll find that they are not throwing out Performance Management at all. Rather, they are taking pause to assess evidence regarding how effective their current process is, and then refining.

Reports to date have focused on large organisations whose approach has been the traditional yearly or bi-yearly performance review, most likely with a rating system linked to remuneration outcomes. While the accepted practice in large corporations, (shout out to my IBM colleagues of the 90s and the infamous bell curve discussions!) this approach may not reflect your approach and so to that extent, the current debate may be less relevant to your circumstances.

These articles questioning the validity of Performance Management are a sign of the times. With any significant organisational process, the contextual environment is central. In refining their approaches, they are moving to providing more ongoing, forward-looking feedback – weekly, monthly quarterly. It’s essentially a response to emerging research on the psychology of performance and to changes in workplace environments.

The emerging research includes increasing diversity, the different needs of millennials and generation Ys, and changing work practices such as working from home etc. Also, and very importantly, with cost effective and accessible collaborative HR systems now available, organisational goals can be efficiently cascaded and multiple quality interactions can be recorded in an effective and engaging manner – without hours spent filling in the dreaded forms.

As an HR professional working in both large corporates and SMEs, I have reviewed a range of different Performance Management processes and systems and “rethought” the approach for a number of clients.

So if you are on the starting line reviewing your Performance Management process, here are four things to keep in mind:

  1. Performance Management is a key – if not the key – driver of organisational culture. If you undertake a Performance Management exercise. it will impact your culture. If you don’t do it, that will also impact your culture. Whether you do it well or do it poorly, it will have an effect. So understanding how crucial Performance Management is to the effectiveness, health and harmony of your organisation is a very good starting point for any review of the process.
  2. Research suggests that people respond best to regular feedback where specific details can be used to recognise and encourage, coach and guide. So a Performance Management process that supports regular well-conducted conversations, such that work is aligned to organisational goals and people know where they stand, is gaining traction and will over time, be an expectation of current employees and prospective employees. In the absence of quality regular conversations (and we’ve all experienced this), is a vacuum that quickly fills with misunderstandings, accusations, and very possibly dysfunctional behaviours.
  3. To rate or not rate, to link or not link … that is the question! Whether or not to include rating systems and direct links to rewards in the way of bonuses, recognition programs or salary review decisions is a design consideration. When asked, my answer is a definitive ”it depends”. I’ll loop back here to my first point on culture – what you choose to do here will drive culture. So a commercial finance organisation may have a different view on this to a not for profit primary health care organisation, or they may have the same view but with a different recognition/reward framework. Assess your current culture, identify your desired culture and progress your performance management rethink accordingly.
  4. Paperwork is not appreciated. Indeed, it is a hindrance. In my experience, any business initiative is at risk of being challenged, ignored or undermined if it relies on time-consuming paperwork to implement. It could be the best solution in the world, but will not be embraced because it takes too much time to address the governance. Fortunately, these days we have a large range of productivity tools that can help. The larger corporates are early adopters but even the smallest of my current clients (30 employees) can access very cost effective cloud-based productivity tools. There is even a new model emerging where access to sophisticated cloud-based systems are free. They are funded by advertising and potentially provide sophisticated infrastructure to very small organisations that were previously not cost effective for them.

So Performance Management is not dead. In fact, it is very much alive. But, like most things in business, it is evolving and will remain a crucial practice driving culture and organisational outcomes.

Vanessa Rowland is an independent HR consultant who works with a large range of Australian SMEs and corporates (www.emergenthr.com.au).

au.linkedin.com/in/vanessarowland/

First published September 2016

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Should Penalty Rates Go?

We know that submissions to change the current practices of Saturday, Sunday and public holiday penalty rates are currently under consideration by the Fair Work Commission.

At a dinner party I attended last Sunday night, a discussion arose on the topic with some support for a complete removal of penalty rates. “After all times have changed and we are a 24/7 society,” was the summary of the argument to remove penalty rates.

I believe penalty rates remain relevant in today’s society.

Penalty rates apply under many Awards and invariably apply to our lowest paid workers. The ‘offset clause’ is now standard, which means that more generously paid individuals rarely get paid penalty rates. In the vast majority of circumstances, penalty rates are applied to safety net Award rates only.

With the gap between low-income earners and high-income earners already widening (ACOSS Report 2015), removing penalty rates reduces the earnings of our lowest paid workers. This is the crux of my opposition to their removal.

However, let’s look at the argument that we are moving towards a 24/7 society and that therefore penalty rates are no longer relevant.

Nurses, firefighters, community care, hospitality and retail staff are the workers who usually get penalty rates. It is true that our society is changing; we expect to be able to have a dinner out on a Sunday night, safe in the knowledge that the wait staff will be professional and should the restaurant go up in flames, emergency services will attend.

But the fact remains that our social life is still largely conducted on a weekend. This is the reason that my cousin’s 50th birthday was not held on Tuesday at 12 noon. So the workers who take on the Saturday, Sunday and public holiday shifts are doing so giving up a degree of society’s leisure time – kids’ Saturday sport, attendance at footy grand finals or Jenny and Tom’s wedding.

I do not accept the argument that a Saturday has the same value as a Tuesday. And in reality, the Fair Work Commission doesn’t either, as I understand they are considering loading the penalty into a slightly higher flat hourly rate.

While I appreciate the administrative attractiveness of making a flat rate Monday to Sunday, I don’t believe it will work to secure weekend workers as, for most people, the weekend is still play time. The café worker will say “if you are not going to offer me a little more for working on weekends, then I’ll stick to Monday to Friday. Thank you.”

This is even more important for people such as students or those that have carer responsibilities. Many of these people are only able to work on weekends. That means the removal of penalty rates is in effect a straight decrease in earnings for them.

And what about nurses, firefighters and other essential service providers who are excluded from the current review? I would suggest that their exclusion is because:

  • It is recognised that they are paid modestly for the important work they do.
  • It is recognised that they should be compensated for working unsocial hours.
  • And it is feared that reducing penalty rates may impact on the availability of skilled essential service workers; less will be prepared to work these unsocial hours.

Even appreciating the very unique and critical value of the essential services professions, the implication that these facts don’t apply more broadly seems strange to me.

I’m not saying penalty rates will always make sense. Many professionals and business owners work seven days a week. In that respect we are 24/7 – but the consultant who chooses to prepare the client’s workshop on a Sunday has more control over when she chooses to do her work and will no doubt charge her client at a rate which is far removed from award minimum rates.

In summary; in light of the current inequality of the spread of income in our society, I do not believe it makes sense to reduce the wages of our lowest paid workers.

October 2016 (First published 4 October 2016)

Vanessa Rowland is an independent HR consultant who works with a large range of Australian SMEs and corporates (www.emergenthr.com.au).

au.linkedin.com/in/vanessarowland/

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The environment; an emerging HR consideration…

As HR professionals we are often cast as umpires in our workplaces. Rightly or wrongly we are seen as arbitrators and the keepers of fair play. This is not surprising really when you look at the nature of our responsibilities:

  • Values and behaviours frameworks
  • Performance management practices
  • Restructuring and change management support
  • Capability development frameworks
  • Award interpretations and EBA negotiations
  • Reward and recognition policies, etc., etc.

Unlike sales, or finance or marketing, manufacturing or many other functions, our purpose is to create an environment that will bring out the best in our people. We need to build structures and systems, design policies and processes and facilitate a workplace culture that empowers people to successfully drive our business operations and deliver value to our customers and business partners.

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