Performance Measurement

Organizational Efficiency and Effectiveness: A pipe dream or a reality?

Have you redefined what organizational effectiveness and efficiency means for your business in times when our resources are not necessarily physically accessible and controllable?

Organizational Efficiency

Organizational efficiency measures the relationship between inputs and outputs.  That is, it means that the better the output (products or services) achieved with the inputs (resources) used, the more efficient the business is.  Efficiency does not mean that an organisation is automatically productive, effective and successful. 

If the efforts of business are not aligned to the goals of the organisation, efficiency is inconsequential.

Organizational Effectiveness

A simplistic description of organizational effectiveness is that it relates to the ability of a business to attain its goals by utilising its resources effectively.  Similarly, it does not necessarily mean that resources were used efficiently. Thus, strategy planning, goal setting and performance measurement is critical to set standards and obtain organizational effectiveness. 

“Efficiency is doing things right; effectiveness is doing the right things.” – Peter Drucker

Due to COVID restrictions we mainly manage our resources remotely.  Managing human resources remotely and keeping them engaged is challenging us to think differently.  Strategic planning, goal setting, key performance indicators and empowerment of resources is critical to organization efficiency and effectiveness.  Now more than ever before, it has become especially important to have daily interaction with your team on a personal level, to remove obstacles to performance and to track progress.

Consider collaborating with your team and others to define what efficiency and effectiveness mean for you.  A collaborative mindset will build a great team culture, develop team cohesiveness and encourage innovation.

Performance Management: Much more than just a once a year …

A collaboration between Karlien Kruger: HR practitioner and Mpumelelo Mthembu: Research practitioner 

The efficacy of performance measurement is often questioned. Organisations often experience major resistance to performance management systems, due to employees harbouring negative sentiments informed by prior experiences. 

The Mundane Tool

Employees view the annual performance review as a mundane tool wielded once a year with the intent to deny them salary adjustment / increases and/or bonuses. The experience becomes a scarring tug of war between management and employees because of the differing perceptions in what individual ratings should be.

Bearing in mind that employees see their performance ratings as the main driver of remuneration-related and other decisions, can performance management be utilised in a manner that is viewed as a positive and true performance driving process?

The Purpose

An understanding of the purpose of managing performance and how it links to business strategy is critical for a positive experience for individuals.  Taking into consideration that making those linkages and understanding the interdependencies is not always easy at the lower levels of an organisation. 

Management’s ability to communicate these linkages and interdependencies is critical to create a positive and well received performance management system.  Often, employees are unsure or do not understand how their individual performance affects the team, the organization and ultimately the business performance. 

Performance management systems are used for a multitude of reasons

  • Pay reviews
  • Bonuses / incentives
  • Poor performance management

For these reasons it is critical that Objectives are specific, measurable, realistic and timebound.  However, the linkages of these objectives to the rest of the organisation is often not scrutinized.  Leaving employees with a poor understanding of the horizontal, diagonal, and vertical linkages and interdependencies. An understanding of the above also allows for the identification of core and, what is deemed as, peripheral tasks.

Frequency of Performance Reviews

Following the ongoing communication at Executive and Senior Management level of strategic outputs to be achieved, frequent reviews of performance create a better understanding about the linkages and interdependencies affecting individual, team, and organization performance. 

Managers all too often see performance reviews as a task needing attention just prior to annual salary reviews and bonus payments, spending all their time on capturing it on the performance management system, rather than focusing on the quality of the discussion with the employee.

Conclusion

Progressing from the once a year performance review to more frequent, regular, and high-quality discussions with employees may lead Managers to better understand the cause and effect of changes in performance.  Employees will be informed, understand how their position links to the achievement of strategy and how it impacts the team, organisation, and business.

Does Performance Management Work?

A collaboration between Karlien Kruger: HR practitioner and Mpumelelo Mthembu: Research practitioner

The efficacy of performance measurement is often questioned. Organisations often experience major resistance to performance management systems, due to employees and top management harbouring negative sentiments informed by prior experiences.

Performance management efficacy

A once annual assessment of performance used as the basis for remuneration and reward decisions are frequently questioned by managers and employees alike.

Executives, Senior and Middle Management, on the other hand, grapple with whether such performance management systems really help organisations to improve business performance? HR Professional are thus often challenged about the relevancy of performance measurement, given the perceived lack of positive outcomes from such systems to the business.  It is often viewed as a time-consuming activity, preventing managers and employees from focusing on core business activities.

Cause and Effect

Given the observations in the previous two paragraphs it thus stands to reason that it is a question of linkage and of cause and effect. A linkage can be described as

  • a change (or hypothesized change) in the performance of one work unit as the result of a change in the performance of another
  • a change (or hypothesized change) in the performance of a team member on the rest of the team
  • a change (or hypothesized change) in the performance of different hierarchical levels of the organisation

Building an Effective Measurement System

In building an effective and positively received performance measurement system there are various considerations to be made. The first of these is a better understanding of the linkages between individual, team, and organizational performance, as well as performance at different levels of the organisation.

Changing a single aspect of an organization almost never results in a substantial change in organizational performance. Organizations are too complex, their performance too multidetermined, and their inertia is great for a single innovation at the individual level to have a substantial impact on organizational performance. Schneider and Klein, Automation of America’s Offices, 1985

Furthermore, a better understanding of the type of interdependence of units at an organisational level is critical to investigating the impact of the change on performance. Depending on the type of change, interdependencies moderate the extent to which changes have the desired effect on organizational performance and ultimately business performance.

Understanding the linkages among roles, as well as how subtasks within roles are linked, further explains how individual performance is impacted by changes in performance. Further examination of the complexity and the degree of the interdependence of these linkages is needed.

Conclusion

Closer inspection of the linkages and cause and effect of changes in performance may provide a better understanding of the interdependencies and provide for more fair and acceptable performance measurement.

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