One of the biggest problems with performance management is that it means different things to different people.
HR administrators focus on the appraisal process, ensuring that managers conduct reviews on time and follow through on development needs. Line managers think of meeting specific business goals, such as manufacturing quotas or sales. The finance department looks at factors such as performance-related reward and profitability, and the head of HR might examine performance in the context of development programmes, and assessing how effectively skills, competencies and knowledge are being deployed across the organisation.
Performance management is a combination of all of these disciplines. However, while each approach has merit in its own right, they are most effective when closely aligned to bring together performance management, human capital management and financial disciplines. This includes incentive and compensation management, learning and development, competency management and individual performance appraisals.
Aligning these different components is a huge challenge, particularly when many organisations struggle to impose the discipline required to ensure individual appraisals are carried out on time. However, high-performing organisations are tackling performance issues by focusing on the areas they know will generate the biggest returns.
Here, we look at two organisations:
US-based Air Products, the Fortune 500-listed chemical company, and Manukau City Council in New Zealand - to see how each has harnessed technology to drive process and cultural change and improve performance.
Case study: Air Products sets out goals for all levels
Founded in 1940, Air Products is now a $7.4bn (4.1bn) turnover multinational company based in the US. Specialising in chemicals and industrial gases, it has nearly 20,000 staff in 30 countries, and sells to a variety of sectors, including energy, and healthcare.
Thomas Micklas, manager of employee systems at Air Products, says that by setting corporate goals at the top of the company and cascading them down through the organisational hierarchy, it has been able to assess individuals, manage their development and compensate them in the context of broader corporate objectives.
The company's planning process begins months in advance of each financial year, driven by a specialist corporate team. Once