How to Evaluate Your Performance Management System - dummies

How to Evaluate Your Performance Management System

By Herman Aguinis

Before a performance management system is rolled out, it is a good idea to test a version of the entire system so that adjustments and revisions can be made as needed. You don’t want to roll out a performance management system that has a major flaw, right?

Also, after the system is in place, you will find it useful to collect data to see what is working and what is not. You can use this information to make fixes where needed.

Pilot testing the performance management system

In the pilot test of the system, you implement the system in its entirety from beginning to end, including all the steps that would be included if the system is fully implemented. In other words, meetings take place between supervisor and employee, performance data are gathered, developmental plans are designed, and feedback is provided.

The most important aspect of the pilot test is that all participants maintain records, noting any difficulties they encounter, ranging from problems with the appraisal form to how performance is measured to the quality and usefulness of feedback received.

The pilot test allows for the identification and early correction of any flaws before the system is implemented throughout the organization.

Reasons for doing a pilot test

The pilot test allows you to gain information from the perspective of the system’s users on how well the system works, to learn about any difficulties and unforeseen obstacles, to collect recommendations on how to improve all aspects of the system, and to understand personal reactions to it.

Also, conducting a pilot test is yet another way to achieve early acceptance from a group of people, those involved in the pilot test, who can then act as champions for the performance management system.

Participants in the pilot test can help you “sell” the performance management system to the rest of the organization. In this way, the system is not seen as owned by the HR function, but by the entire organization.

A final reason for conducting a pilot test is that end users are likely to have a higher system acceptance rate, knowing that stakeholders in the company had a say in its design, rather than feeling that the system was created by the HR department alone.

Don’t assume that the performance management system will necessarily be executed as planned or that it will produce the anticipated results.

Select the pilot test group

In larger organizations, it’s important to select the right group of employees for the pilot test. In choosing this group, you need to understand that the managers who will be participating should be willing to invest the resources, including time, needed to do the pilot test.

The pilot test group should be made up of managers who are flexible and willing to try new things. Also, make sure managers receive a realistic preview about what the system looks like and before they decide whether to participate in the pilot test.

In selecting the group, make sure the group is sufficiently large and representative of the entire organization so that reactions from the group will be generalizable to the rest of the organization. So in selecting the group, select jobs that are similar to those throughout the company, and the group selected is not an exception in either a positive or a negative way. In other words, the group should not be regarded as particularly unique in terms of its productivity or anything else.

At The Gap, Inc., they chose to pilot test their revamped performance management system in a representative store because it is a self-contained business unit.

Pilot tests provide crucial information to be used in improving the system before it is actually put in place. Pilot testing the system provides huge savings and identify potential problems before they become irreversible and the credibility of the system is ruined permanently.

Ongoing monitoring and evaluation of the performance management system

When the testing period is over and the performance management system has been implemented organization-wide, it is important to use clear measurements to monitor and evaluate that things are working as expected.

How do we evaluate the system’s effectiveness? How do you evaluate the extent to which the system is being implemented as planned, and how do you evaluate the extent to which it is producing the intended results?

What to measure in your performance management system

Evaluation data should include reactions to the system and assessments of the system’s operational and technical requirements.

For example, you can administer a confidential survey to all employees, asking about perceptions and attitudes regarding the system. This survey can be administered during the initial stages of implementation and then at the end of the first review cycle to find out if there have been any changes.

Also, regarding the system’s results, you can measure performance ratings over time to see what positive effects the implementation of the system is having.

Finally, you can also interview key stakeholders, including managers and employees who have been involved in developing and implementing the performance management system.

How to measure your performance management system

These are good measures you can use on a regular basis to monitor and evaluate the system:

  • Number of people evaluated: One of the most basic measures is the number of employees who are actually participating in the system. If performance evaluations have not been completed for some employees, you need to find out who they are and why a performance review has not been completed.
  • Quality of qualitative performance data: An indicator of quality of the performance data refers to the information provided in the open-ended sections of the appraisal forms. For example, how much did the rater write? What is the relevance of the examples provided?
  • Quality of follow-up actions: A good indicator of the quality of the system is whether it leads to important follow-up actions about development activities and improved processes. For example, to what extent follow-up actions involve exclusively the supervisor as opposed to the employee? If this is the case, then the system is not working as intended because employees are not sufficiently involved. Also, to what extent have employees learned from their successes and failures and applied those lessons to the future?
  • Quality of performance discussion meeting: You can distribute a confidential survey to all employees on a regular basis to gather information about how the supervisor is managing the performance discussion meetings. For example, is the feedback useful? Has the supervisor made resources available so the employee can accomplish the developmental plan objectives? How relevant was the performance review discussion to one’s job? To what degree have developmental objectives and plans been discussed? To what extent does the supervisor’s way of providing feedback encourage direct reports to receive more feedback in the future?
  • System satisfaction: You can also distribute a confidential survey to measure the perceptions of the system’s users, both raters and ratees. This survey can include questions about satisfaction with equity, usefulness, and accuracy.
  • Overall cost/benefit ratio: A fairly simple way to address the overall impact of the system is to ask participants to rate the overall cost/benefit ratio for the performance management system. This is a type of bottom-line question that can provide convincing evidence for the overall worth of the system. The cost/benefit ratio question can be asked in reference to an individual (employee or manager), the job, and the organizational unit.
  • Unit-level and organization-level performance: Another indicator that the system is working well is provided by the measurement of unit- and organization-level performance. Such performance indicators might be customer satisfaction with specific units and indicators of the financial performance of the various units or the organization as a whole. It may take some time for changes in individual and group performance level to be translated into unit- and organization-level results.

Don’t expect results as soon as the system is implemented; however, you will start to see some tangible results at the unit level a few months after the system is in place.