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Managing Change ThroughPerformance Management

EMBA 642Management of

Change Thornhill et alChapter 5 - Robin

Snell

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To Cover Today: Managing Change Through Performance Management (Chapt 5 +)

A. The case of Siemens Standard DrivesB. The performance management cycleC. How performance management

contributes to organisational change– [Including the role of line managers in

implementing performance management]

D. (Extra material- not in Thornhill et al textbook) Managing ‘resistance to change’ by helping employees rebuild self-esteem (actually derived from Colin Carnall)

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A1. Case: Siemens Standard Drives (1)

• Employs 430 people in the Electronic Control equipment business (design & manufacturing)

• Its change programme involved process re-engineering over a 9 month period.

• The new management team and HR manager restructured the organisation

• Operations are now based on 9 production teams of 20 people each

• Each of the 9 teams is accountable for its output and operation

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A2. Case: Siemens Standard Drives (2)

• If a team member is under-performing, the team leader is empowered to remedy the situation (counselling…dismissal).

• 10% of employees left voluntarily• The team leader’s role is vital. They are in

charge of:– team building– running quality meetings and morning briefing

meetings– selection, training & appraisal of team members

• Teamworking values: openness, honesty, trust, respect.

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A3. Case: Siemens Standard Drives (3)

• The team leader ‘s job involves performance management– setting individual performance objectives for team

members– two way dialogue– explains to each member how they can make progress

through the performance-related pay structure

• Employees who do not ‘add value’ are held accountable:– disciplinary procedures (including dismissals) are seen

to operate

• Efficiency & customer responsiveness have improved.

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B1. Performance Management

PM is an integrated set of techniques designed to improve employees’ performance through:

1. Setting clear objectives for individual employees that link to strategic goals

2. Formal monitoring and review of progress toward these objectives

3. (a) Reinforcing desired behaviour through rewards(b) Identifying training & development needs

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B2. The Performance Management Cycle

Stage 1. Set objectives

Stage 2. Measure performance

Stage3. Feed back results

Stage 4. Process outputs(e.g. training & development,

rewards)

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B3. Potential Advantages of Performance Management

• Improved individual effectiveness and organisational competitiveness

• empowerment of line managers and supervisors

• linking of rewards to individual and/or group performance

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C. How Performance Management may Contribute to Organisational

ChangePerformance management can do this by:• communicating the organisation’s mission• linking employees’ performance objectives to

company objectives• involving employees in decision making• helping restructuring by devolving decision making• making managers manage• linking rewards to performance• reducing resistance to change• linking individual development to organisational

goals• Helping with change adjustment in a work situation

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C1. Communicating the organisation’s mission

IF there really is• open dialogue, and genuine agreement (sign

up), with the line manager about performance goals linked to the company mission, and also regular reinforcement through reviews

THEN• greater commitment to the mission• better performance(REMEMBER THESE ARE ASSUMPTIONS!)

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C2a. Linking employees’ performance objectives to

company objectives -1• Good performance management

systems apply goal-setting theory, e.g.– ‘SMART’ goals (already explained in the

Managing Behaviour at work course and in the Robbins textbook!)

– Not imposed goals - performance management can make managers accountable to employees

– Feedback regular, accurate and up-to-date

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C2b. Linking employees’ performance objectives to

company objectives - 2• This requires a changed role of line

management– from command and control to coaching,

facilitating, team building– dialogue between line managers and

their staff to ensure that the staff have the necessary resource to meet their performance goals.

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C3. Involving employees in decision making

• Some suggested good practices:– Employees should, at the outset, be involved in

designing the performance management system

– The system should emphasise self-appraisal (usually more critical than appraisal by others), and involvement in identifying one’s own development needs.

– Include 360 degree feedback (upward feedback on how one is being managed)

• This is more likely to lead to more enriched jobs through better job design, and ore satisfaction

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C4. Helping restructuring by devolving decision

making• Performance management, IF DONE WELL,

allows the wider organisation to better identify and understand what the business unit contributes to overall organisational performance– Individuals and teams may accept greater

responsibility for their work if they can see exactly what they must achieve

– Resource allocation becomes more clearly linked to business needs, and to customer demands. This focuses everyone's mind on how best to use limited resources to meet customer needs

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C5. Making managers manage

• Line managers play a vital role– they need interpersonal skills– transformational leadership– facilitation approach, not autocracy

• Line managers become accountable for their actions– They must sometimes take tough decisions

about assessments– They must be able to justify and defend these

decisions to the employees who are affected– They can no longer ‘hide’ by finding excuses

for not providing necessary support or resources.

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C6. Linking rewards to performance

• Performance related pay communicates the message: ‘the organisation is getting TOUGHER’

• It is a symbol, a visible artefact, designed to change deeper basic assumptions, e.g.– more achievement oriented, goal directed– more self reliant– more cost aware

• But performance related pay must– be seen as equitable, i.e. people see that

input/outcome ratios are fair

– reward not punish INNOVATION

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C7. Linking individual development to organisational

goals• Good PM systems pay attention to

TRAINING and DEVELOPMENT, not just focusing on compensation & benefits

• Good performance management systems help the employee and his/her line manager to identify and meet training needs, and identify career development potential.

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C8. Help with Change Adjustment in a Work Situation

Performance Management can ensure1. That people can grasp the new systems that

they are working within, and their key result areas.

2 That people know the performance standards and reporting lines

3. Time to informally play with new systems as a way of learning to familiarise and adjust

4. Someone to talk to if staff need help or have problems

5. Help for staff to regain and rebuild self esteem

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C9. Reducing resistance to change

• Actually, the introduction of a performance management system may initially give rise to resistance to change

• The following slides present a model of resistance to change, (from Colin Carnall, not in the Thornhill et al textbook) and explain the need for careful performance management to help people to adapt to change.

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D1. Coping With Change• Change inevitably gives rise to

anxiety, uncertainty & stress• On top of this, the ‘role strain’ of

not being involved in decisions, and of having inadequate managerial support, may add to the stress of having to cope with technological and other changes.

• If the stress is too high, people get ‘swamped’ and their performance and self-esteem collapses.

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D2. Self esteem, performance, stress and

change

Amount of Stress

Amount of Change

Level ofSelf-esteem

Level ofPerformance Threshold

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D3. Change and Self Esteem

• Significant organisational changes create a decline in self esteem for many of those who are directly affected

• Rebuilding the self esteem of employees may be a key factor in helping them to recover their performance

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I nternalising

Discarding

Defence

Denial

Adapting

D4. The Coping Cycle

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D4a. The Coping Cycle - Stage 1 -

Denial• People tend to prefer the present

circumstances to any proposed changes, even if they had previously complained about them!

• Sudden changes can result in mental paralysis

• There is a feeling of being under threat• People will look for excuses why change

is not necessary and may pretend that the change won’t really happen

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D4b. The Coping Cycle -

Stage 2 - Defence• When people are faced with

the realities of new circumstances they may become depressed and frustrated, not knowing how to deal with the changes

• They may try to defend their job territory

• They may try to reject new practices and approaches

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D4c. The Coping Cycle - Stage 3 - Discarding the

Past• People eventually let go of (discard) the past

• They may need support and the opportunity to get used to the new systems

• They come to see the changes as inevitable and/or necessary

• They are ready and brave enough to try to make the new systems work

• They need time to ‘grow’ into the new situation and recover a sense of self esteem.

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D4d. The Coping Cycle - Stage 4 -

Adaptation• People learn to adapt to the

new situation and try out new behaviours

• Technical and operational problems are identified and modifications made to deal with them

• People continue to try to make things work and need the time and space to be able to do this

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D4e. The Coping Cycle - Stage 5 - Internalisation

• By this stage, people will have created a new system, process and organisation

• The new situation has become ‘normality’

• They have finally come to terms with the change

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Covered Today: Managing Change Through Performance Management (Thornhill Chapt

5 +)

• The case of Siemens Standard Drives• The performance management cycle• The role of line managers in

implementing performance management

• How performance management contributes to organisational change

• Managing Resistance to change by helping employees rebuild self-esteem (from a book by Colin Carnall ‘Managing Change in Organisations’)