Rewarding performance system EBook

Publisher: Independent Pubs

Author: Harold Monty Sacher and Merryl Sacher

Format: EBook

Pages: 383

Released: 2007

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A clear system for measuring the creation, dimensions and value of results produced is an essential prerequisite for a reward system that motivates everybody, especially the large majority of workers at the level where the value is created.

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Performance reward systems are contingent on the implementation of the basic components of team performance. The degree to which the components are well engineered into the environment will affect the quality of the reward system.

Many reward systems fail because the basic components of team performance are not strong enough to withstand the pressure created by people unhappy with the way the corporate cake is divided. Even more serious is the absence of measures to determine the size and dimensions of the cake before future arrangements are negotiated. Sometimes we even offer the cooks a larger slice of a cake that is not yet baked, rewarding them for learning skills which may or may not assist them in producing a larger cake. The reward is for learning the skills, not for baking the cake!

A clear system for measuring the creation, dimensions and value of results produced is an essential prerequisite for a reward system that motivates everybody, especially the large majority of workers at the level where the value is created.

Rewarding performance in an organisation can be introduced in two ways: through positive recognition systems and through team-based reward systems. The basic difference between the two is that you recognise behaviour and you reward results.

The focus of the Rewarding Performance System is on building a recognition and reward system that links rewards with performance.

The following components should be implemented, in descending order, for a team-based financial reward system to work:

• unified sense of direction
• outputs and performance measures
• targets
• performance feedback/Information system
• strategic human resources development system
• team-based organisation structure
• team-based reward system

A reward system established on this foundation will have every chance of success and will be a significant contribution to employee satisfaction and organisational performance.

This system will address each of these components, showing how to construct them and how to implement them. The system is in three parts:

• Part One being the introduction and how the performance reward system works,
• Part Two, The Process made up of 11 modules and
• Part Three, implementation with experience-based guidelines for implementing a rewarding performance system and the most common pitfalls.

Each module contains examples, summaries, checklists, glossaries and quality standards.

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Book content

Rewarding performance system

• The total system, inclusive of all the modules below (described above)

Introduction

• This module introduces the Rewarding Performance system and explains how to use the modules in the system. It is necessary if you are going to be using most of the modules in the system, as opposed to just one.

Big picture

• There is a lot more to total and continuous performance improvement than just measuring performance, or developing goals, or putting in a new system. One of the dangers of working in an unsystematic and piecemeal manner is that it is possible to do more harm than good to the complex arrangement of systems that make up an organisation. Nothing short of a purposeful, total and systematic approach will suffice if continuous, and especially sustained, performance improvement is to be achieved.
• The Big Picture provides a summary of our total system approach to performance improvement, which we call the basic components of team performance. These are the basic components necessary to improve performance: individual performance, team performance and organisational performance. The aim is to implement these basics to a level where sustained performance improvement can be achieved.

Unified sense of direction

• This basic component of team performance is best summed up by the phrase, one team, one direction. Achieving this requires a shared vision. The entire company, and all the teams and the individuals which make it up, must be pulling in the same direction. Every member of every team needs to accept responsibility for that part of the company over which they have some control.
• To achieve a unified sense of direction there needs to be agreement at all levels on what the organisation values, what it does, where it is headed and how it plans to get there. The first step requires clarity, focus and agreement about the organisation's values, vision and mission. Values, vision and mission on their own, however, do not equal a unified sense of direction. They are organisational tools used sometimes well, and sometimes not so well, to create a sense of direction. A workbook component is included to help you apply the concepts.

Environmental analysis

The purpose of this section is to help you assess how your organisation is currently operating. This module will help you:

• Identify how your organisation is currently operating in terms of the strengths and weaknesses the organisation possesses in the internal environment, and the opportunities and threats it faces in the external environment;
• To enable you to develop a strategy that will utilise your organisations strengths; manage its weaknesses; take advantage of the opportunities in the environment and minimise the impact of the environmental threats.
• Clarifying where the organisation is going in the future, and analysing where it is now is important. The rest of the business plan will revolve around closing the gap between where the organisation wants to be and where it is now.
• A workbook component is included to help you apply the concepts.

Strategy formulation

• Once you have worked out where the organisation wants to be in terms of a vision, mission and values, and dealt with where the organisation is now in terms of an environmental scan, you then need to deal with how the organisation gets from where it is, to where it wants to be.
• Strategy is the overall game plan or map to help direct the organisation from where it is to where it wants to be. Strategy is usually expressed in medium term (1 to 3 year) statements or goals about where the organisation is going.
• A good strategic plan, which includes a vision, provides the blueprint for coordination, direction and teamwork.
• A workbook component is included to help you apply the concepts.

Total stakeholder satisfaction

• Total stakeholder satisfaction is defined as satisfying the demands and expectations of all the stakeholders of a given organisation or team.
• To optimise the organisation system there needs to be an emphasis on the rigorously measured demands and expectations of all stakeholders. Stakeholders could include owners, external customers, internal customers, the government, employees and suppliers. A firm understanding of the customer's and stakeholder's identity is essential for achieving results. You can't satisfy customer and stakeholder needs unless you know exactly who the customers and stakeholders are.
• Once stakeholders have been identified, their expectations must be clearly defined so that team's can focus around meeting and exceeding expectations.A workbook component is included to help you apply the concepts.
• Suggested modules to complete together with this one: How to develop Outputs and Performance Measures; Target Setting.

How to develop outputs and performance measures

• The process of translating strategy into daily action begins with stakeholder identification, followed by a rigorous process of identifying stakeholder expectations. This module on how to develop outputs and performance measures are the first two steps in a three-step process.
• Outputs are the value-added end results of a process which are produced by an individual or a team for an internal or external customer.
• Performance measures are units of measure used to assess whether outputs are achieved.
• This module shows how to develop outputs and performance measures.
• Step three, Target Setting is dealt with in a module of its own.
• A workbook component is included to help you apply the concepts.
• Suggested modules to complete together with this one: Total Stakeholder Satisfaction, Target Setting.

Target setting

Note: This module should be completed together with How to develop Outputs and Performance Measures for a complete understanding.

• Targets are written aspirations for what the organisation must achieve in the short term to achieve breakthrough performance in its strategic goals. Targets are expectations of short term achievement along the long term strategic path the organisation has chosen. They are short term milestones, identifying where they expect to be weekly, monthly, quarterly or annually, along the road to strategic goal achievement.
• Targets define, in precise terms, particular levels for the delivery of outputs. They tell us what we should achieve in terms of quality and quantity, as well as the time frame for the achievement of the target. Targets drive, measure, control and improve performance. They are a key contributor to organisation success.
• This module shows how to set targets against outputs and performance measures.
• A workbook component is included to help you apply the concepts.

Balanced scorecard

• This module provides an overview to building a Balanced Scorecard System. For a complete how to guide, we refer you to our Balanced Scorecard System.
• The balanced scorecard is a systematic approach to implement strategy. It is a process used to connect the organisation's vision to the daily actions of the people doing the work. By developing the business unit's strategic plan, and translating it into outputs, measures, targets and feedback systems, and then cascading it down the business unit, the link between strategic goals and the outputs, measures, targets and action plans of the people doing the work can be made. In short, the balanced scorecard is a structured way of building a performance measurement system that links outputs, measures and targets directly to strategy. The process enables resource allocations, annual budgets and strategic decisions all to be driven by the strategy. The performance management system becomes a process to implement strategy.
• The module identifies and summarises the steps which must be followed to implement a balanced scorecard system.

Performance-linked communication

• Performance-linked communication is a systematic method of establishing performance feedback in an organisation.
• Performance-linked Communication focuses on communication from a performance point of view. It answers the question 'What communication skills, systems and processes are needed to improve performance, to improve the delivery of outputs to customers and stakeholders?' A successful communication system must have entrenched mechanisms for communicating, analysing and discussing performance feedback on the outputs produced for customers and stakeholders so as to continuously improve productivity, quality and team work.
• A workbook component is included to help you apply the concepts.
• For a complete how to guide to building a performance-linked communication system, we refer you to our Performance-linked Communication System.

Performance-linked learning system

• This module provides an overview to building a Performance-linked Learning System. For a complete how to guide, we refer you to our Performance-linked Learning System.
• Performance-linked Learning shows how to ensure the delivery of the right skills and knowledge, in the right place, at the right time. This is achieved by implementing an ongoing, purposeful performance-linked learning system that is an integral part of the continuous improvement system. The outcome - training focused on identified output and performance requirements.
• This module discusses the components of a performance-linked learning system, obstacles to the creation of a performance-linked learning system, and some quality standards which must be followed to ensure success.
• A workbook component is included to help you understand the concepts.

Team-based organisation structures

• Team-based organisation structures describes current organisational structures, stressing that there is no best structure, rather the best structure will best facilitate the meeting of the following criteria: support the strategy; accommodate the opportunities and threats in the internal and external environment; achieve autonomous outputs, measures and targets; and satisfy the current needs and values of all employees.
• A workbook component is included to help you apply the concepts.

Rewarding performance

• Rewarding Performance shows how to establish reward systems that satisfy the motivational needs of all employees, and result in measurable team and organisational performance improvement. The module addresses positive recognition systems and team-based financial reward systems, showing how to implement a system that rewards performance, not mediocrity.
• A workbook component is included to help you apply the concepts.

Implementation: guidelines and pitfalls

• Implementation: Guidelines and pitfalls provides guidelines for implementation and pitfalls to avoid when implementing any performance improvement/change management system into an organisation. This module is based on the experience gained and the lessons learned from over 20 years of hands-on implementation in the field.