The central theme of performance management is the notion that the employeeâ€™s effort should be goal directed. There are two aspects to this. First, the manager should appraise the employee based on how that person performed with respect to achieving the specific standards by which the employee expected to be measured. Second, the employeeâ€™s goals and performance standards should make sense in terms of the companyâ€™s strategic goals. At the Hotel Paris, for instance, the employeesâ€™ goals should reflect desirable behaviors such as speedier check ins and providing friendlier greetings.
In practice, clarifying what is expected from an employee is trickier than it may appear. For example, employers usually write job descriptions not for specific jobs, but for groups of jobs, and the description rarely include specific goals. All sales mangers on the firm may have the same job description, for instance. Sales mangerâ€™s job description may list duties such as supervise sales force and be responsible for all phases of marketing the division products. But for strategic purposes, it is expected of a sales manager to personally sell at least Rs.60 million worth of products per year by handling the divisionâ€™s two largest accounts; and to keep the sales force happy. Unfortunately, some supervisors still tend to be lax when it comes to setting specific strategy-oriented goals for their employees.
An employee must know to quantify employerâ€™s expectations in his functional area. The most straightforward way to do this for the sales managerâ€™s job above, for instance, is to set measurable standards for each objective. Employer might measure the â€œpersonal sellingâ€ activity in terms of how many rupees of sales the manager has to generate personally; perhaps measure â€œkeeping the sales force happyâ€ in terms of turnover on the assumption that less than 10% of the sales force will quit in any given year if morale is high. The point is that employees should always know ahead of time how and on what basis they are going to be appraised and their goals should always stem from and support the departmentâ€™s and the companyâ€™s broader goals. Guidelines for effective goal setting include the following.
Assign Specific Goals: Employees who are given specific goals usually perform better than those who are not.
Assign measurable Goals: Express in quantitative terms and include target dates or deadlines. Goals set in absolute terms such as â€œan average daily output of 300 unitsâ€ are less confusing than goals set in relative terms such as â€œimprove production by 20%. If measurable results will not be available then satisfactory completion such as â€œsatisfactory attended workshopâ€ or â€œsatisfactory completed his or her degreeâ€ is the next best thing. In any case, target dates or deadlines should always be set.
Assign Challenging but doable Goals: Goals should be challenging, but not so difficult that they appear impossible or unrealistic. When is a goal â€œtoo difficultâ€ or â€œtoo hardâ€?
A goal is probably too easy if it calls for little or no improvement in performance when conditions are becoming more favorable, or if the targeted level of performance is well below that of most employees in comparable positions. A goal is probably too difficult if it calls for a large improvement in performance when conditions are worsening, or if the targeted level of performance is well above that of people in comparable positions.
Encourage Participation: Throughout the management career and often several times a day a manager may be faced with this question: what to tell his employees what their goals are? or let them participate with the manager in setting their goals? The evidence suggests that participative set goals do not consistently result in higher performance than assigned goals, nor do assigned goals consistently result in higher performance than participative set ones. It is only when the participative set goals are more difficult than the assigned ones that the participative set goals produce higher performance. Participative set goals do tend to be set higher. Itâ€™s the fact that the goal is more difficult, not that it was participative set that explains the higher performance.
As a quick shorthand way of remembering how to set goals, many managers remember the acronym, SMART. Goals should be specific, and clearly state the desired results. They are measurable, and answer the question â€œhow much.â€ They are attainable, and not too tough or too easy. They are relevant, and clearly derive from what the manager and company want to achieve. And, they are timely, and reflect deadlines and milestones.