Management appraisal not a cause for insomnia

Johnny Giles, Alan Hansen and Eamonn Dunphy make a tidy living from it most weekends

Johnny Giles, Alan Hansen and Eamonn Dunphy make a tidy living from it most weekends. Sky Sports also love to dissect the performance of key players. Goals scored, shots on target, shots saved, successful passes completed and so on are all part of the evaluation.

It is tough stuff to be subjected to - especially if you are a teacher. The teachers' unions are alarmed at the prospect of this practice, which could involve linking pay rises to the individual assessment of their members' work. It has resulted in the teachers' threat to take "whatever industrial action is necessary" to prevent performance-related pay becoming any part of the new programme to succeed Partnership 2000.

The reality is that the management of performance is a crucial determinant of the effectiveness and growth of all organisations. A formal system of performance appraisal is central to the process, involving the regular sharing of information between management and other employees about their work performance and potential.

The widescale application of formal appraisal systems throughout the world serves to underline its central role in the attainment of both organisational and staff objectives.

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In Britain it is estimated that nearly 90 per cent of the top organisations avail of such systems. In a recent Irish survey it was discovered that a sizeable majority of employers gave the "thumbs-up" to their performance appraisal systems. This verdict is interesting, given that it is considered to be among the most unpopular of all management practices.

From the manager's perspective, it is time consuming. It is also hard to tell someone they are not getting the bonus they are convinced they deserve. From the employee's perspective, the fear of being told you are not up to speed can keep you awake at night.

It is for reasons like this that - unlike their private sector counterparts - the overwhelming majority of public sector organisations do not do it. Nevertheless, it is an accepted part of management orthodoxy that there should be some means by which performance can be measured, encouraged and rewarded.

Appraisal systems are not just about pay rises. The British evidence reveals that they only begin to have real effects on organisational effectiveness when allowed to become more than a narrow vehicle for the delivery of reward.

Beyond their scope for giving and receiving feedback, they allow past performance to be reviewed, future performance targets to be agreed and appropriate training and development plans to be identified.

Their value was reflected in a recent survey reported by the Institute for Personnel and Development. It found that sizeable majorities of managers find appraisal good for staff motivation, training and development, reviewing and improving performance, setting objectives and determining bonuses.

A large body of evidence confirms that joint target-setting appraisals are a powerful way of increasing motivation and productivity. The process can also be highly participative, giving staff a much greater say in what they do and how they do it, thus facilitating a more positive attitude on their part.

So valuable is the practice adjudged to be that three quarters of the Fortune Top 500 companies in the United States use 360 degree feedback. That is, the appraisal of staff performance incorporates the views of peers, subordinates and even customers - in addition to those of their managers.

Recently trade unions have simply had to deal with such issues as performance management, appraisal and performance-elated pay. They frequently object to what is viewed as a legacy of Thatcherism. But with the pay of an ever-increasing proportion of the State's workforce influenced by their performance, such indifference is a luxury that the unions can no longer afford. Even Partnership 2000's successor promises to link lumps of money to performance, whilst backing "gain-sharing, profit sharing and other financial employee incentives".

This route is another attempt to block the blunt power and pressure strategies adopted by such high profile groups as the nurses and the garda. The social partners now plan to link pay rises to productivity, in an effort to eliminate the traditional pattern whereby pay rises were too often the product of threats and strike action.

Large tracts of the draft agreement specifically detail the social partners' expectations in respect of performance management practices in such sectors as the civil service, education, health and local government. This changing tide has been reflected in a few instances of union pressure for the introduction of appraisal.

The ideal scenario is to have the trade union actively involved in the design of such systems, giving them a higher degree of transparency and staff buy-in, thus increasing their overall effectiveness.

Most Irish organisations train their appraisers. The conduct of a professional training programme is recognised as central to the attainment of successful appraisals. By providing managers with skills in giving both the good and the bad news their value has been enhanced.

According to a recent Dublin Institute of Technology survey, one of the chief shortcomings of appraisal systems is "lack of follow-up". This is not surprising. Given that a system will be judged on the extent to which agreed actions are implemented, any "lack of follow-up" calls the whole logic of appraisal into question.

It is also interesting that more than half of the organisations surveyed agreed that the "failure to review or monitor the system" was a problem. This neglect contrasts starkly with the care and attention devoted by many organisations to their financial, information technology or marketing strategies.

Neglect of the main system deployed for the motivation and reward of our labour force - our "most competitive advantage" - should be a real source of concern. The preparedness of top management to support performance management is likely to prove the ultimate determinant of its success.

Performance management, appraisal - and its frequent bedfellow performance-related pay - are not trouble-free. The teachers are right about that. Biased appraisals and an emphasis on quantity at the expense of quality - larger classes - would be to no one's advantage. But when properly applied we can all reap huge benefits from techniques designed to recognise and reward success. Ask Roy Keane.

Dr Gerard McMahon is a lecturer Human Resource Management with the Dublin Institute of Technology and author of Performance Appraisal: Best Practice for Managers, Oak Tree Press, 1999.