Which components of performance-management systems do you think are most important and least important? Why? Explain which components link most closely to risk-management and quality-management systems and provide specific examples to support your answer.
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Performance management systems are comprised of a series of components, beginning with performance planning and including performance appraisal and reviewing, feedback on performance, rewarding good performance, performance improvement plans, and “potential appraisals.” [See “Components of Performance Management Systems,” Management Study Guide, http://www.managementstudyguide.com/components-of-performance-management-system.htm] As an integrated system, it is difficult to select which components are more or less important than the others. By definition, a flaw in or the absence of any one component will result in diminished performance and a lower likelihood of goal attainment. As the student assignment, however, is to select both most and least important, an effort will be made to do so.
As no “system” can succeed absent a clearly articulated mission statement or performance plan – in effect, a “roadmap” of sorts for each employee or member of an organization and for the unit as a whole – it is logical to suggest that this is the most important component of a performance management system. Each individual needs to know his or her place within a broader organizational structure and each individual needs to know precisely what is expected of him or her. Attainment of an objective, depending upon its complexity and the number of individuals and/or teams participating in the exercise, requires such a plan so that all can conceptualize the desired outcome and so that all understand their role in executing the plan. All subsequent components, obviously, follow logically from this initial phase of the exercise or task, so designating it as “most important” makes sense.
The “least important” component of a performance management system could just as logically be considered the final one: potential appraisals. As the most prospective of the components, and the one least directly connected to the attainment of the immediate objective(s) set forth in the plan, this particular component is a good candidate for exclusion. Employee assessments are an important part of a management process, as identifying those individuals most likely to succeed at higher levels within the organization, or most likely to contribute substantially if transferred horizontally within the organization (e.g., from one department to another without a promotion being involved) is essential for future success of the organization over the long term. Designating this component “least important,” consequently, should not be construed as unessential. For purposes of discussion, however, it could be considered least important.
Linking any particular component to risk management, which can logically be considered a subcomponent of a performance management system, is a considerably easier task. Risk management, as the name suggests, involves identifying all potential risks involved in a particular endeavor. Depending upon the type of organization involved, those risks can run the spectrum from inconsequential to catastrophic. On the low-risk end of the spectrum, a manufacturing process that involves little or no risk of injury to customers or users, such as the manufacture of paper bags to be used in grocery stores, can, at worst, cost the manufacturer future business, but the likelihood of personal liability is limited. On the high end of the risk spectrum is the process involved in designing and manufacturing commercial aircraft, the failure of one such aircraft potentially involving the lives of hundreds and the potential for catastrophic consequences with respect to criminal and civil liability. The performance plan and mission statement that precedes all other phases or components of a system, then, remains the most important and the one most directly associated with risk management. The risks have to be identified up-front and mitigating measures designed into the performance management system at the outset. An aircraft manufacturer, for example, has to identify all potential flaws or weaknesses in the design for a new aircraft, and has to address those flaws before any further step in the manufacturing process is taken. Identifying potential problems in the manufacturing process, for example, the possible failure of metal welds to hold under all possible conditions, is the difference between success and failure.
Again, in virtually all organizations or businesses, careful attention to performance indicators are important. Systematically assessing each employee or member, counseling those whose past performance warrants attention while rewarding top performers, and identifying those deemed worthy of promotion to positions with greater responsibility are all essential components of any management system.
Two of the links provided below will illuminate how performance and risk management issues are discussed in two high-risk sectors, aircraft design and construction, and nuclear power plant construction and maintenance.
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