A study of line manager implementation of a Performance Management System

Abstract
Performance Management Systems (PMS) are complex, comprising diverse processes which seek to encourage the discretionary effort that enhances both individual and organisational performance. The research project reported in this paper investigates PMS processes in a case study organisation, Tool Co. Tool Co. has, for the most part, sophisticated PMS processes, the focus of the paper being on their implementation by line managers, a group who are increasingly recognised as being key to the success of human resource (HR) policies and practices. Thirteen semi-structured interviews were conducted with a cross section of line managers to explore their perceptions of the functioning of PMS processes. On the whole, the line managers espoused positive views of the PMS processes. They suggested that they understood the importance of the processes to the business, not only in delivering their targets but in developing their teams. This rhetoric is, however, called into question by the findings reported in this paper. A significant finding is the differing perceptions of the meaning of performance management and the negative connotations that some associated with the term. Some line managers viewed performance management as an exit plan for managing poor performance whilst others viewed it as a development tool. The findings further reveal some significant differences in the way the PMS processes are implemented. Whilst goal setting and the continuous review of objectives is evident, the holding of an annual developmental discussion and the setting of developmental goals is less apparent. The lack of value that this suggests is attached to the developmental aspects of PMS is supported by the perception that the Senior Management Development programme is a paper exercise. It was also noted that the required number of performance reviews are not conducted each year, although all managers suggest that they have valid business reasons for this. The findings suggest a focus on target setting rather than development, which calls into question the managers rhetoric of valuing the developmental aspects of PMS. This may arise from lack of formal training in PMS processes, all managers reporting that the majority of their performance management skills were learnt on the job. It may also, however, arise from lack of ownership or understanding of the processes. The paper considers the vital role of line managers in achieving the aims of PMS and makes recommendations as to how Tool Co. could more successfully implement its processes.

Introduction
Performance Management has become increasingly important due to a variety of economic and social pressures. Williams (2002) identifies globalisation, increased competition and the increasingly individualistic rather than collective employee relationship as some of the major drivers contributing to the increased visibility of performance management systems (PMS). Faced with fast moving and competitive environments, companies are constantly searching for unique ways in which to differentiate themselves from their competition and are increasingly looking to their human resources to provide this differentiation. This has led to much interest in the performance of employees, or more importantly, how to get the most out of employees in order to sustain competitive success.

Line managers play a crucial role in managing the performance of their teams, and therefore are critical to the successful implementation of a PMS. This paper considers the vital role of line managers in achieving the aims of the PMS at Tool Co. This will be achieved, firstly, by considering the theoretical concepts, including the PMS model to be investigated. The way in which the PMS processes were actually implemented by the line managers at Tool Co. will then be discussed and recommendations made as to how Tool Co. could more successfully implement its PMS.

Conceptual Overview
A performance management system is a useful framework for companies to use to communicate important messages to their employees. It can be used to achieve a number of different functions; as a method of communicating organisational goals; identifying development requirements, improving individual and team performance, planning for the future and the measurement of results and outcomes (Armstrong and Baron, 1998a). Performance management is therefore difficult to define as: it is no single thing (Williams, 2002). Hartog (2004) states that:

Performance management deals with the challenge organisations face in defining, measuring, and stimulating employee performance with the ultimate goal of improving organisational performance. Concerned with organisational performance only, this says little about the benefits to employees and what they get out of performance management systems. Armstrong and Baron (1998a) define performance management as: a process for establishing shared understanding about what is to be achieved, and an approach to managing and developing people in a way which increases the probability that it will be achieved in the short and longer term. There is, therefore, no universally agreed definition of what performance management is or does. There are, however, several models which have attempted to explain how HR policies have an impact on firm performance, one such model adopted as a conceptual framework in this paper is the People Process Framework (Gratton 1996). This framework focuses on individual performance linked to organisational performance and is designed to deliver short term business objectives as well as long term sustainable success. The model clearly identifies a set of HR practices which have been designed to link individual effort to the overall objectives of the business and also strikes a balance between achieving short term goals and preparing the company for its future long term success.

The major focus of the research will be on the processes which contribute to short term business success, given their direct relevance to PMS and the crucial role of line managers in their implementation. These short term processes are critical to the overall success of the business as they provide the foundations to encourage sustained performance through clear identification of objectives, continuous assessment of performance against those objectives, reward strategies that emphasise the required behaviours and the provision of training and skills which will improve performance. Implemented correctly, these processes should enhance the individuals confidence in themselves and their company creating an environment where employees want to perform rather than feeling like they have to perform. Long term success is only possible therefore when the short term processes generate this type of response.

The People Process Framework The People Process Framework (Gratton, 1996) was designed to identify which HR practices, mainly those associated with performance management processes, are crucial in linking organisational goals with performance.

The Leading Edge Consortium model

Transforming Individuals Processes 9 & 10 Transforming the Organisations Process 11

Delivering Short Term Business Goals Processes 1 to 4

Preparing for Long Term Business Success Processes 5 to 7

Aligning Capabilities Process 8

Performance management 06

Figure 1: The People Process Framework (Gratton 1996)

The key concept (Process 1) is the cascading of goals down the organisation from board level, thus translating organisational objectives into team and individual objectives (Williams 2002). This provides a strong relationship between the business and its most prized asset, its people. By taking this approach every individual within an organisation can clearly see how their contribution is impacting on company success. Beardwell et al (2004) also suggest that individuals who know exactly what is expected of them will perform better than those who are unsure of their goals and objectives. The cascading and agreeing of goals should be a participative process. London et al (2004) argue that: goal setting is likely to be more effective when people participate in setting goals than when goals are assigned to them. Although the use of goal setting is primarily used to improve performance, there are other benefits such as: to clarify expectations, to improve job satisfaction, to enhance

self-esteem through attainment of goals and to improve quality of work (Locke and Latham 1984). London et al (2004) evaluate the importance of goal-setting and conclude that line managers and employees need more explicit training on how to set goals ensuring they are specifically aligned to the overall company objectives.

Process 2 of the framework is concerned with the measurement and appraisal of goals. Once objectives have been agreed it is of vital importance to continually monitor and review performance against those objectives (Armstrong and Baron 2005). This is a major role of the line manager who has the responsibility to review the performance of their staff. The recent performance management survey indicates that the most popular method to achieve this is the performance appraisal (CIPD 2005a). Performance appraisal ..a variety of activities through which organisations seek to assess employees and develop their competence, enhance performance and distribute rewards (Fletcher 2001). Appraisal provides the mechanism to provide effective feedback on achievement of which is an important factor in improving performance (Williams 2002). The CIPD (2006b) see feedback as: one of the quickest and easiest ways of improving performance, relationships and motivation. Despite this, appraisal has often been viewed as a mechanism to control employees action at work (Newton and Findlay 1996) and is widely criticised in literature. Hendry et al (2000) suggest that appraisal is a misused process, designed to control employees activities. Coates (1994, cited in Torrington et al (2005) suggests that the appraisal is used as a device to establish: the extent to which the individual conforms to the organisation Fletcher (2004) describes it as a high risk activity for managers, given the many pitfalls associated with it and Newton and Findlay (1996) highlight the fallibility of appraisals as they are open to manager manipulation. Despite the criticisms, the use of performance appraisal is widespread and perceived to be an effective part of a performance management system (CIPD 2005a).

Appraisal has changed in recent years from a purely paper-based exercise to being an aspect of a continuous performance management process with formal review performance once or twice a year (Armstrong and Baron 2005). There has been an increase in popularity of self-appraisal, team and peer appraisal as well as 360 degree feedback (CIPD 2005a).

Process three of our framework argues the case for: linking reward strategies to business goals (Gratton 1996) which will encourage the performance necessary to meet short and long term business objectives. Brown (2001) supports this concept but suggests that many reward strategies actually impede organisations in the operation of their business while Hendry et al (2000) questions whether employees are actually being motivated to do the right things in order to meet business goals.

Many organisations have looked to improve performance by linking it to pay; performance related pay (PRP) can take many different forms (Williams 2002) and the type of reward and how it is linked to performance management varies by organisation (IDS 2003). There are many differing views on the effectiveness of PRP (Williams 2002) and whether or not it contributes to improved performance. It has been argued that PRP is a process of control, rather than contributing to real development (Hendry et al 2000). Reward is not just about pay, many organisations are recognising that non-financial rewards are as powerful and motivating as money (Armstrong 2002). Non-financial rewards can include awards (employee of the month for instance), advanced career opportunities, autonomy, flexibility of working hours and training and development opportunities (Williams 2002). Total reward systems incorporate both financial and non-financial rewards and can be instrumental in encouraging job satisfaction and commitment to the business (Armstrong and Baron 2005).

It is important however, to establish what type of reward will be valued by the employees, not to implement a system based on senior management experiences of what they themselves value (Hendry et al 2000), as well as recognising that: different people are motivated by different things (Torrington et al (2005). Brown (2001) discusses the: era of the talent war and how important it is to implement the most appropriate reward strategies, and make them flexible, which will retain the best people within the business.

The framework has so far identified the need to reflect the business goals at an individual and team level, has established the necessity to measure and review continuously and suggested that reward strategies reflect what the organisation is trying to achieve. In order to support this process, both in the short term attainment of goals and the long term development of employees there is a requirement to identify training needs, which is Process four of the framework.

There has been a change in scope of the appraisal process in recent years, with an increasing focus on employee development, as more and more businesses focus on how targets are achieved rather than just the achievement itself (Gratton 1996). This has led to a combination of both objectives (outputs) and competencies (inputs, Taylor, 2005) and the recognition that personal development planning (PDPs) are a fundamental part of a PMS. By offering employees the opportunity of enhancing their skills through training, levels of self-confidence will improve and performance will be enhanced (White 1999). Beardwell et al (2004) develop this further by suggesting that: staff management and development will become the primary weapon available to managers to generate success. This view is shared by Harrison (2005) who reports on studies which have identified the HR practices most likely to result in improved performance as being career development and training. Armstrong and Baron (2002) see training as a key process

for gaining commitment to the organisation which in turn should encourage discretionary behaviour. IDS (2005) support this view when reporting that investment in training and development can not only improve financial performance but also have a positive effect on employee satisfaction and commitment.

The success of training and development initiatives again lies with the line manager and their approach to their role as people managers (CIPD 2005b) as well as their ability to provide meaningful on the job training, potentially in the form of coaching. Gibb (2003) concludes that line managers have a significant role to play in constructing the right environment for learning, development and subsequently improved performance to occur. Renwick and MacNeil (2002) develop this further with the inclusion of career development and the associated benefits and pitfalls of proactively developing employees careers. Harrison (2005) suggests that more companies are offering career development programmes which involve lateral as well as upward movement within a business.

Becoming a learning organisation is the focus of Processes five to eight which concentrate on creating the right culture and structure, ensuring that HR is seen as a strategic role and that long term views and a focus on the future is paramount (Gratton 1996). We focus less attention on the remaining processes as they are less line manager influenced than the short term processes in which line management have a fundamental role.

Pedler cited in Armstrong and Baron (2002) describes a learning organisation as: an organisation which facilitates the learning of its members and continually transforms itself. The concept of performance management therefore underpins the philosophy of the learning organisation, promoting continuous improvement, focusing on the accumulation of skills and competencies in the short term to meet the organisations long term requirements.

Harrison (2005) argues, however, that: learning and individual performance will never make a positive contribution to performance management where organisational context is unfavourable. Understanding the structure and culture of an organisation is of vital importance, as it could contribute to constraining performance (Hartog et al 2004) as well as encouraging it. Williams (2002) sees performance management as: a mechanism for inculcating a particular culture, that is, a `performance culture. The values or mission statement of an organisation often reflect the way in which employees are expected to behave, or as organisational culture is often described: the way we do things here (Buchanan and Huczynski 2004). Hailey cited in Armstrong and Baron 2002) believes that organisations should focus on identifying the most appropriate behaviour which will meet their organisational objectives and use tools and processes such as performance management to develop those behaviours in the workforce. In this way, the desired culture will grow. achieve human capital advantage (Armstrong and Baron 2005). In turn this should provide competitive advantage and long term sustainable success which is the purpose of Processes nine to eleven transformation to a highly skilled, highly developed and highly motivated workforce.

Processes nine to eleven are described as: transformational (Gratton 1996) and are concerned with the growth and development of the individual, the workforce and the organisation as a whole in the long term. Gratton (1996) identified some of the key processes required to achieve this transformation in the form of succession planning, management development and career development.

Literature has identified a number of key themes central to the performance management discussion. At the top level, it is the organisation that sets the tone for the performance management system by means of clearly identifying what is expected of their staff and more importantly how they are expected to deliver those requirements. It is these messages which drive the business in the desired direction and helps it to achieve its ultimate aim sustained competitive success. The People Process Framework (Gratton 1996) is a complex, prescriptive model designed to deliver short term business objectives whilst preparing for future success. This model clearly identifies which processes are required in order to guarantee success in the long and short term and identifies the clear link between people processes and the overall business strategy. Literature also highlights the growing importance of the line manager with more and more companies devolving HR responsibility to the line. The success or failure of a PMS is increasingly in the hands of the line manager and the way in which they interpret or implement the processes involved in people management. Line managers are therefore pivotal in modern PMS and crucial in encouraging discretionary behaviour from their staff and we turn now to consider this in more detail.

Line manager implementation of PMS The implementation of a performance management system within an organisation invariably falls to the line manager (Currie and Procter 2001, Whittaker and Marchington, 2003, Harrison, 2005). Armstrong and Baron (2002) describe performance management as a: natural and core process of management while London et al (2004) also identify the importance of the line manager in the overall performance management system, arguing that it is the style and skill of the line manager that has a profound effect on the commitment and motivation of their staff.

This is a view held by several authors (see, for example, Newton and Findlay, 1996, Hendry et al., 2000) who suggest that the way in which performance management

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processes are implemented by the line manager is vital to the success of the system. Kinnie et al (2005) go as far as to suggest that the success of a performance management system is: wholly reliant on the way in which it is handled by the line manager. Purcell et al (2003) further report that line managers who carry out appraisals positively and enthusiastically are more likely to encourage their staff to have the same approach to their role.

However, Whittaker and Marchington (2003) found evidence in their study that line managers spent very little time on people management issues, preferring instead to concentrate on financial or business objectives. Hope Hailey et al (2005) report that line managers are only measured on their technical role and not their people management responsibilities. The appraisal process is therefore of secondary importance to them and the appraisal is generally approached with little preparation, training or enthusiasm (Cook and Crossman 2004, Holt-Larsen and Brewster 2003). To address this, Hendry et al (2000) argue that not only should line managers own the performance management process but that they should be involved in its design, and only by involving them at this stage will they buy-in to the process. Lack of management buy-in can potentially frustrate the whole purpose of a performance management system, leading to an inability to meet short-term goals as well as failure to address longer term developmental opportunities (Weeks, 2005). In fact Harris (2001) describes the line manager as: the weak link in the application of performance management systems. Hope Hailey et al. (2005) describe an organisation where best practice HR policies were designed to support business performance, but which failed due to the way in which they were implemented by the line management function. Hutchinson (2005) also found evidence of a gap between espoused and enacted HR policies as a result of line managers difficulty with implementation.

It is important then, to evaluate the role of the line manager in the implementation of Tool Co.s performance management processes. A major aspect of this research will 11

be identifying the way in which the Tool Co. performance management system is put into practice by the line managers in the business.

Methodology
Performance Management, as identified in the literature, has no mutually agreed definition and therefore has a different meaning to different people. It is important then, during the course of the study to allow those different meanings to emerge. A qualitative methodology was chosen to conduct the research which was particularly important when interviewing the line managers as it was their experience of performance management and how they carried it out which was of primary importance. The primary data collection method used in this study is qualitative interviewing, in the form of semi-structured interviews whilst secondary data was made available in the form of a global employee opinion survey and a recent business process audit.

Thirteen semi-structured interviews were conducted with a cross section of line managers. The same list of questions or: interview guide (Bryman and Bell 2003) was used in each interview although they were not asked in any specific order, nor, indeed, were all of them asked due to some of the extensive answers received from the participants.

The same opening question was used on every occasion to establish the participants perception of performance management and from there the interview took on a more natural, almost conversational tone. Further probing questions were asked in order that the participants could provide further detail on the subject matter. The themes explored during these interviews were drawn from literature especially the People Process Framework (Gratton 1996). Details from the interviews were analysed by identifying the different concepts and grouped together to form a number of categories and further analysed to determine the usage of each identified process.

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Findings
On the whole the Tool Co. PMS compares favourably with the People Process Framework as can be seen below (the Tool Co. processes shown in red).

Figure 2: Adapted from People Process Framework (Gratton 1996)

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Implementation of PMS Processes by Line Managers

Table 1: Implementation of PMS processes by the line management function Features of Performance Management at Tool Co. (GB) Ltd Individual annual appraisal Quarterly sales and management appraisal Self-appraisal Continuous assessment Competence assessment (against core values) Objective setting and review Performance related pay Team pay Coaching Mentoring (No formal scheme) Career management Personal development plans (PDP) Performance Rating Line Manager Ownership Employee Acceptance Developmental Meeting Formal management training on Performance Management Processes Regular Meetings (at least monthly) Situational Leadership Process Identification of talent pool (SMD process) Non financial reward and recognition scheme Team Building Activities Field Accompaniment Succession Planning 100% 61% 92% 100% Not examined 31% 46% Managers (%) using this Process 100% 23% 38% 92% 69% 100% 100% 100% 77% 30% 85% 100% 100% 100% Not examined 23% 15%

Source: Adapted from CIPD (2005a)

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Table 2: Key to Findings 100% implemented and 100% of managers positive 100% implemented and majority positive 100% implemented and majority with mixed or negative views

100% implemented and 100% with mixed or negative views

The researchers felt it important from the outset to establish what performance management meant to the line managers and the findings show the differing perceptions of what the term meant. For some, it had negative connotations; Line Manager 2 described it as: an exit plan, and that performance management is: not seen as a tool to improve performance. Several other managers took the same view; Line Manager 7 said: When the team hear the term, they are naturally unnerved by it; they associate it with a performance management plan. They assume rightly or wrongly that it is a path out of the business. Line Manager 3 added: Some people view it as performance managing someone out of the business. These managers were talking about performance management in terms of the Tool Co. poor performance policy which is the formal recognition within the business that an individual is performing below the required standard. There is a written policy which all managers must follow should this situation arise in their team. The HR Director admitted that he believed that the term performance management had negative conations within the business, especially when people heard the term performance plan. He said:

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I think the problem is when people see the improvement plan then their natural instinct is to think that there is an exit plan. And of course thats not the case as the last time we looked at it, there were more people who improved on it than exited on performance plans. There were a number of other views of what the term performance management meant; they include: appraisal, all about making sure you do the targets, performance management, in our department means improving the performance of our staff, for the team it means for them to come in and have a chat. The findings show the different ways in which the term performance management is interpreted by different people within the same organisation. One of the key concepts in performance management is the cascading of goals and goal setting in general and is the focus of Process 1 in the People Process Framework. This process seems to be well implemented within Tool Co. as every manager interviewed described the cascading goal process and what it meant to them and their team. Line Manager 4 reports: they are cascaded down from the company to the team to the individual. Everyone knows what they have to do and why they have to do it, Line Manager 3 says: here are my team goals and objectives (shows PDP goals), I know them off the top of my head. These are the team goals and then everyone has individual goals, Line Manager 2 answered: all team members would be able to recite all 5 PMP goals while Line Manager 8 says: cascaded down from company to department to team to individual.

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Line manager 6 adds: The targets and objectives are clear and transparent. We already know what the company strategy is up to 2008 which echoes the HR Directors views on long term vision and strategy for the business.

All of the managers believed that this process was highly effective in encouraging performance because their staff knew what they were trying to achieve and why. One of the best examples came from Line Manager 3 who said: Our goals are common sense as they link quite easily into the business, the mission statement of Tool Co. is creating enthusiastic customers and thats what Customer Services is all about. From the interviews it became clear that although the majority of targets and goals were non-negotiable such as the sales target for the year or the service level on despatching a product to a customer, the line managers have a certain degree of flexibility on how that target is achieved. For instance, one sales manager described how he was given a sales number to achieve and he split it between his two team leaders who then negotiated with their teams how the number should be split, based on history, potential etc. Line Manager 12 explained: There are some goals where it is you are going to do it because the company has got to do it but then with some others, youve got an element of flexibility between the different individuals and also there might be a stand alone goals just for that person so youve got some flexibility. Line manager 13 re-iterated how important it is to involve the team in the goal setting process: we sit down at the beginning of the year to do the goal setting but it comes more from them. This is our one year plan, these are our objectives for the year, and what do we need to do to achieve them? The team come up with stuff thats in line and we tweak it a bit, being able to do that makes it so much more effective because then if their not performing, this is something that theyve set themselves.

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This view was held by several other managers who believed that because the teams were involved in the setting of those goals, they would be much more likely to achieve them. Line manager 8 said: They probably dont have much input in setting the goals but in achieving it, yes they do. As far as the team is concerned they have the majority of the input. Were looking for feedback from them as to how things can get achieved; Line Manager 3 shared the same view: we threw the objectives back out to the teams and said these are the boundaries and these are the kind of things that we need to achieve and we got them to think about the best targets for themselves. As well as the five PDP goals, the line managers were asked about the two developmental goals which should also be set during the formal appraisal. Only four of the managers talked about setting developmental type goals based on the competency matrix. The remaining nine managers tended to focus specifically on the five PDP goals which tend to be more functional than developmental. Some managers talked about developmental goals in terms of the core values while others talked about developing better product knowledge. It is apparent, however, that line managers focus within PMS is on results/outputs rather than behaviours and development.

Process 2 of the framework concentrates on the measurement and review of goals. In terms of feedback on progress against the set goals all managers agreed that all their staff had an annual appraisal, but views differed on how often the sales and management appraisal or PMP discussion took place. The PMS process states that the PMP be reviewed four times per year; this was case with only 23% of line managers. The frequency of the PMP discussion varied from monthly formal meetings (which were to go through functional issues) to once a year, twice a year and three times per year. With regard to the developmental discussion, only 23% of managers said that they carried out a formal developmental discussion although 92% said it was a continuous assessment. Other types of appraisal process to emerge from the study included a self appraisal process of which 38% of managers used and other multi-source feedback from other managers, peers and customers. 100% of the

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managers reported that they had at least monthly team meetings with their staff (either individually or in teams) to discuss progress against goals.

All of the managers evaluated their teams against achievement of the core values in order to determine their rating for the year. Some of the managers encourage their staff to gather evidence of changing behaviours or demonstration of a core value in order to boost their chances of achieving a higher rating. Some of this evidence is discussed by Line Manager 2 who says: behaviours are measured through observation, discussion with colleagues, feedback from customers and feedback from the individual. Process 3 of the framework focuses on reward, both financial and non-financial and how it is linked to business strategy. The findings show that 100% of the managers interviewed implemented the performance related pay schemes and all of their teams were paid using the team pay plan based on their performance rating. 100% of the managers were also aware of the Tool Co. recognition scheme but views were mixed as to the effectiveness of these awards in relation to performance. The managers whose staff were based at Head Office were the most enthusiastic, especially about the Tool Co. tickets/vouchers. Line Manager 1 said: The biggest thing is that someone has gone to the trouble to acknowledge what youve done in writing you can see people beam when you say thank you, thats important in this environment. Line manager 12 said: That kind of stuff is appreciated by the staff but I dont think it makes them do what they do while managers of field based teams had mixed or negative views on how they affected performance. Line Manager 2 said: in the field, its difficult to see how it is of benefit to them (if any) while Line Manager 6 said: its not a big thing with my team if you do your job well you get paid, you shouldnt need anything else. If you think someone has done a great job you

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should just pick up the phone and say thanks, rather than send tickets around. The overriding view was summarised perfectly by Line Manager 8 who said: I dont think its a motivator, its more of a nice to have.

The final short term process discussed with the line managers and Process 4 of the framework covered training and in particular the types of training they had had as a line manager dealing with performance management and HR issues in general. It was interesting that only 15% of the managers interviewed had received any formal training on performance management issues, all 100% acknowledged that the vast majority of their skill came from experience on the job. The interviewees talked positively about their approach to training and development and 100% reported having on-going discussions about training needs with their staff and all of them were confident that their staff would approach them directly if they felt that needed any training assistance.

All managers praised the basic training offered to new employees but after the initial training the future training needs of staff are in the hands of the line managers. The training manager highlighted this as a potential issue: We invest so much time and effort into the new starters and not the existing staff. The project for next year is continuing this with existing staff. The training manager also went on to say that it was the line managers responsibility to highlight any of their teams training requirements but: we have some Regional Managers who encourage their people to develop and want to help them and then you have some Regional Managers who enjoy the stability and dont want to rock the boat. So, Im sure that there are people out there who are not getting the attention that they need because its not been flagged up to us. Coaching seems to be particularly popular training method with 77% of line managers adopting coaching as part of their performance management process. 30% of the

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managers also reported that they had informal mentoring schemes in place in their department, particularly to aid new starters and promotion candidates.

Processes 5 to 11 of the framework are concerned with the preparation of the business for longer term success. One of the major long term processes featured in the Tool Co. PMS is their SMD process or Strategic Manpower Development. The career management process is called SMD within Tool Co.; it is described here by the HR Director as: the development piece which is the SMD, which relates to you as an individual and your development and growth and becoming a potential person for the future. This involves been able to operate in a different role or in the same role but at a higher level. 92% of the managers interviewed participate in the SMD process although views were mixed as to its effectiveness. The process involves grading individuals in terms of their potential for the future (and timescales) their mobility (within and outside the UK) and identifying any development activities which have been agreed with the candidate. This is then keyed into a central database where it is viewed by the Board of Directors for them to discuss their talent pool. The process is designed to accommodate all members of staff but the perception among the managers interviewed was that it is targeted at the more senior people within the organisation. Line Manager 5 explains: I think the SMD process for individuals, the level of a CSR {customer service representative} isnt as effective as at a higher level. The higher you get the more value youll get out of it. This view is shared by Line Manager 10: We sit down twice a year and go through that with our boss in terms of where people are now, where we think they could potentially be in twelve months or in two years or not at the moment full stop. I view that more for more senior positions, more senior people. The data suggests also that there are elements of confusion between the SMD and PMP processes. For instance, Line Manager 3 says:

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Once a year I have to fill in the competencies of my people; let them know what their mobility is and flag them up if I think they are capable of doing something. That obviously depends on how they are doing in their current role. Its a bit of a paper task; if someone wants progressing then well talk about it in the PMP. I think its probably a bit of duplication with the PMP process. I feel like Im duplicating information because I know who my guys are and where they are possible moving to, a similar view is held by Line Manager 4 who was sceptical about the process: its a paper filling in exercise and the worse thing is you get no feedback. I was due to be discussed at the SMD meeting in Feb 2004 but I still dont know what happened, whether I was discussed, well I cant have been as I didnt hear anything. It seems like a tool for the more senior people, those who want international moves or sales and marketing. Line Manager 1 however had a different view: We have successfully identified some people who want to move into other areas, for instance weve moved two people into customer services in the last year and thats been successful. Outside of the official SMD process Tool Co. line managers identified career management as an important part of their role, with 85% actively taking part in career management activities. Line Manager 3 comments: Were one of the few companies that proactively encourage people to go for internal vacancies. Its encouraged for people to move on and develop in this company, so different to other places Ive worked. Line Manager 9 agrees: Im happy for my team to move on, I wouldnt stand in any of their way and Im trying to recruit them or replace them with people who are even better and can possible challenge me and thats not easy to do. Line Manager 11 adds: If people are moving on and progressing and developing themselves then Im quite happy with that because I want the guys to earn more money and progress. 22

As the HR Director pointed out earlier however, career development is really in the hands of the individual and this is supported by views from the line. Line Manager 3 comments: In terms of career development I can guide them in the right way but I dont take it too much responsibility as its their responsibility. Were big on self responsibility, I wouldnt expect anyone to give me complete guidance and tell me the next role I want. I want to be the one who says this is what I want, give me this, can I do this etc. It has to come from them. An important career management activity identified by the line managers was succession planning with 46% of them proactively looking for successors for the future. Line Manager 1 says: If were in a recruitment process that doesnt keep looking for potential people for next year, well have a flat team and where are the next controllers or supervisors going to come from? Also the supervisors are looking at their teams to identify the next people, theres good succession planning in both teams.

Discussion There are a number of issues that have emerged from this study. First, is that the term performance management is met with some scepticism and negativity and there is a lack of understanding in parts as to its purpose. It seems unlikely that those viewing it as an exit plan use the system to enhance the performance of the majority of employees. This may arise as a result of a lack of training, most skills being acquired on the job, and points to a need to communication and training of managers by Tool Co. While objective setting, as reported by the managers in any case, seems to work well, the frequency of review is less favourable and it appears that again the opportunity to feedback and motivate is often missed. Even where reviews take place, the focus is mostly on outputs rather than inputs, a major weakness being the lack of setting developmental goals and conducting a developmental discussion. Reward processes are also mixed, PRP working only in certain areas and there being missed opportunities to provide non- financial reward through, for example, feedback in performance appraisal. The long term processes are in-built to a managers day to day

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role but there are mixed perceptions over the relevance of the SMD process to all employees.

In summary, Tool Co. appears to have a well designed system but one which is only partially implemented by managers. This appears to arise from a lack of understanding of what the system is designed to achieve, lack of training and a focus on results rather than development. While these findings are not unusual, they do point to a need for Tool Co. to review the systems, training and communication if enhanced performance is to be successfully achieved.

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