Performance management is more than merely skimming off the 10% of poor performers in any organisation. Sally Whittle explains what HR needs to do to motivate staff.
Up to 10,000 jobs are expected to be lost in the UK financial services sector alone in the next six months as the global financial downturn takes its toll. It's not an environment that makes life easy for HR practitioners, says Daniel Kasmir, HR director at accounting group BDO Stoy Hayward.
"There is no question whatsoever that the credit crunch is affecting our staff," says Kasmir. "Although the media hype is fuelling the situation, people are certainly concerned about the slowdown, and the difficulty businesses are facing in getting credit is certainly a problem."
To help survive the downturn, employers are turning to performance management to ensure staff are maintaining motivation levels and working efficiently.
Performance management is often seen as a euphemism for firing the bottom 10% of the workforce but the truth is much more complex, says Duncan Brown, a director in the HR services group at consultancy PricewaterhouseCoopers. In reality, performance management should be a way to align business strategy and HR strategy to show a clear relationship between salary costs (the biggest single expense for many businesses) and business performance.
"What HR directors should be doing now is meeting with business leaders and finding out their strategic goals, then working on metrics for performance management to ensure the business can monitor performance where it matters. There's no point tying people's bonuses to customer service metrics if all the business really cares about is whether you've hit the office budget," says Brown.
Managing performance isn't about individuals, it's about the organisation, agrees Kasmir. "If the focus of the business is on driving sales, there's no sense in rewarding people for developing great admin systems or building customer relationships," he says. "You need performance management in a tough market to ensure that you are driving business success through HR practice."
The key to success is in the detail, adds Gary Browning, chief executive of consulting group <