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HR’s roles and responsibilities in Performance Management

Many years ago, I read a book named “Improving Performance: How to Manage the White Space on the Organization Chart” by Geary A. Rummler and Alan P. Brache. The book was published in 1990. I just recently encountered the same book’s third edition (published in 2012) in one of my literature surveys, which is 22 years after the first publish date. This illustrates that while technology has changed rapidly during those years, some arguments about management are still current. The book is mainly based on the perspective that, “If you want to improve your organizational performance, you have to manage the white space between the boxes in your organization chart.” The white space between the boxes is described as the ways of communication, relationships among the boxes and the whole collection of business process flows in the organization including authority levels and control points.

This book is a must read by every manager or management candidate. I read it during my PhD Thesis work and really learned a lot from it. I want to discuss the roles and responsibilities of HR departments that would improve the Performance Management Process throughout the organization, by following a similar approach to this book.

There are mainly three different focus areas covered under the word “Performance.”

Corporate Performance
Business Unit/Process Performance
Individual Performance

For performance measurement to be meaningful:

1. There should first be a clear definition of what is to be measured and how it is measured:

What is to be measured is closely related to what our organization is aiming to achieve.
To determine the level of achievement, all of the different measurement methods related to the organization’s area of operational and strategic focus should be documented with all the necessary formulations and descriptions.

2. Then, the targeted values for each of these measurements should be determined (preferably in numbers) as a result of detailed strategic management meetings.

I will not go into details of what “SMART” objectives are and what their benefits would be. However, I should place a strong emphasis on the importance of setting SMART objectives at every level of the organization, because it is the most critical factor for a successful performance management system.

Most of us have started to use the phrase “Performance Management System” instead of “Performance Appraisal System” for some time now. So, everybody seems to know the difference, but I just wanted to reiterate the fact that “performance appraisal is just one of the processes comprising the performance management system.” Therefore, trying to design a “Performance Appraisal System” without considering the whole “Performance Management System” is similar to driving a car without having a specific destination in mind. You drive around, waste gasoline and pollute the environment; but you will not have arrived anywhere and achieved anything at the end of the day other than – maybe – having a nice ride outside.

So, considering the three performance levels I mentioned above, although they might have their own disparate processes, they should converge to a single performance management system in the following approach:

The key performance indicators (KPI), their relationship to strategic objectives and their targeted levels according to the current corporate strategy should be defined and documented clearly so that business units’/processes’ targeted success levels can be set in alignment with corporate strategies. This in turn will facilitate alignment of the individual goals with the business unit’s and organization’s strategic objectives respectively.
Therefore, possible inconsistencies between the business unit’s goals and the goals of the individuals working in that business unit will have been avoided automatically.
Otherwise, individual goals will always prevail among corporate goals which will result in failure of the organization to achieve corporate goals even though the employees will seem successful in their performance appraisals based on individual goals.

The desired bottom-up chain-reaction of successful performance will not be achieved unless the goals and the targets are determined in a top-down approach aligning every individual in the organization with the strategic objectives.

Even though I mainly talked about goal-based performance above, the same principles apply to competency-based performance management:

After top management defines where the organization should aim in short, medium and long term; the organizational impacts of these decisions should be analyzed and the changes should be planned accordingly.
This may cause some changes in the processes, control points and the boundaries of departmental roles and responsibilities.
Consequently, existing job definitions should be reviewed in terms of responsibilities, competency profiles, supporting behavior patterns and competency measurement criteria. Any of these changes about competency requirements and measurement criteria may, of course, require reassessment of the current and potential incumbents of these positions.

You probably heard most of the following statements which have validity by themselves:

“Every manager is also an HR manager of his/her department.”
“HR can do nothing unless the department managers are in good control of their departments’ organization structure, role and responsibility distribution, competency requirements, workforce requirements and goals.”
“HR Management should have a place at the corporate strategy table.”

To expand on these statements, I would like to share the following paragraphs from an article published by the same authors of the book I mentioned in the beginning of my article:

“The trouble is; when managers see their organizations as a collection of vertical functions (marketing here, production there, accounting down the hall), they manage accordingly. More often than not, a senior manager who oversees several functions will manage them on an individual basis. Goals are set for each unit separately. Meetings between units are limited to activity reports: Unit A learns only that Unit B processed 603 invoices last month, which was eight more than during the same month of the last year, and so on.

In this environment, managers of individual departments tend to perceive other functions as enemies, rather than as partners in the battle against the competition. “Silos” are built around departments: tall, thick, windowless structures that keep each department’s affairs inside and everyone else’s affairs out.

These siloes prevent interdepartmental issues from being resolved between peers at low and middle levels. Cross-functional concerns (matters of scheduling or accuracy for instance that involve two or more departments) are pushed to the highest level. … The silo culture thus forces managers to resolve every mundane issue that arises, taking their time away from higher-priority concerns involving customers or competitors. Lower level people, who could be handling these issues, take less responsibility for results. They come to think themselves as mere drones”

While I know this is very familiar to you, these are the things that emphasize the importance and strategic responsibility of HR departments to establish a sound “Integrated Performance Management.” Some organizations may prefer to have a separate “Corporate Strategy” department, but the existence of such a unit does not decrease the importance of the role of HR, except changing some process flows and role boundaries. Assuming there is a separate strategy department in the organization, a typical performance management system process flow for one period can be summarized as follows:

1. Coordinated by the Corporate Strategy Development team, the top management of the organization determines the three to five-year (or longer term) strategies of the corporation alongside financial calendar periods.

These strategies are reviewed and updated every year for the next year and the longer term.
Corporate Strategy Unit contributes in determining the KPIs, data collection methods and measurement approaches based on these strategies.
Related managers collaborate in forming and/or revising a “corporate objectives and KPI library” based on the existing and/or planned organization structure.
The period target levels are determined and or revised by top management for every period.
Objectives and target values are finalized, published and distributed.

2. HR staff get together with related managers to update the performance management system according to the revised objectives and target values.

3. HR staff get together with related managers to review the competency library based on targeted organization structure and do the necessary revisions on the definitions to be used by the performance management system.

4. HR staff finalize the updates on performance management system and do the necessary annual appraisal program scheduling and appraisal forms setup processes to make the system ready to be used by the managers and the employees.

5. Starting with the performance management system planning period coordinated by the HR department, department managers follow the organizational hierarchy to assign goals and targeted values to themselves and their subordinates using the organization’s integrated performance management platform managed by the HR department.

HR staff coordinate and support the whole process making sure that all the work is accomplished correctly within established organizational rules and specified calendar.

6. Designated appraisers, reviewers and appraisees use the same system to review goal assignments and revise as necessary, preferably in a continuous manner throughout the performance management period.

HR staff coordinate and support the whole process making sure that all the work is accomplished correctly within established organizational rules and specified calendar, using the same performance management platform.

7. When the end of period arrives:

Designated appraisers, reviewers and appraisees use the same system to update and finalize results of their work.
HR staff coordinate and support the whole process making sure that all the work is accomplished correctly within established organizational rules and specified calendar.
HR staff complete the appraisal period by making sure every review/appraisal is completed correctly and then makes the system ready to report results to every employee/manager by making any calibration/finalization work required by the organization’s performance management process.

8. After the appraisal/review process is completed:

Corporate Strategy Unit identifies any update/modification requirements to the corporate strategies by analyzing the results retrieved from the performance management system.
HR Management and consulting team involves the related department managers in the process of:
Discussing the implications of the performance system results on compensation systems, bonus payments, salary increases (preferably based on a sound compensation management system) and finalize decisions to update the HR system.
Analyzing training, career development and succession needs, considering the existing situation and the results of the new period.
Preparing strategy and policy suggestions to the top management for the coming period.
Updating all the related HR systems and employee data according to the results.

As you can see above, identifying the organization structure with just job definitions will not suffice to carry out the whole process. Even in the summary that I made above, there are many interactions among different departments and HR processes. HR departments are responsible for coordinating these interactions thinking of every little detail in the leanest but most comprehensive way possible. Timing of these interactions fitted into a single calendar is another challenge.

I can hear you asking “If this is the summary, how detailed would it be with the full details?” All I can say is, take care of yourself and have fun :)