Question

There are 128 credit unions in Saskatchewan, with assets ranging from less than $1 million to more than $1 billion. All of these are affiliated with Credit Union Central of Saskatchewan, which facilitates cooperation among credit unions and provides consulting services, trade association functions, and liquidity management.

Credit Union Central, together with the four largest Saskatchewan credit unions, developed a plan to implement a comprehensive HRM system to produce, first, a better alignment of employee performance to organizational objectives and, second, more focused training to produce desired business results and an enhanced ability to retain employees through opportunities for professional development. Working with Hay Management Consultants, the first step was to develop a competency glossary, followed by performance management processes and tools, selection and staffing tools, and then succession planning.

Competencies can be defined as attitudes, skills, knowledge, or behaviours that are essential to perform at work and that differentiate superior performers. The competency glossary defines core competencies, which apply to all roles within the organization, and role-specific competencies. Competency target levels indicating superior performance are set for each role.

An example of a core competency, based on the key values and strategies of the organization, is “results orientation”:

When your employee tried to improve his or her own performance, he or she

1. Identified areas of waste or inefficiency but did not take any action

2. Made some changes to work methods to reach particular goals that had been set for him or her

3. Made specific changes in the system and his or her work methods to improve performance beyond goals set

4. Set challenging goals that were accomplished
   with a significant amount of planning, analysis, and effort

5. Set individual goals by thinking through the costs and benefits and explicitly considered potential profits, risks, and ROI to make decisions that ended up having a positive organizational impact

6. Took a calculated entrepreneurial risk and committed significant organizational resources to act on an idea that ended up significantly improving performance

A role-specific competency might be “concern for order, quality, and compliance,” defined as follows:

When your employee demonstrated attention to detail in his or her work, he or she

1. Checked on the work to ensure that it was accurate, complied with all relevant regulations, and followed all standard practices and procedures

2. Monitored the accuracy and quality of his or her work and others’ work consistently and systematically and kept a detailed record of work when it was necessary

3. During the project, monitored the progress
   of the project against milestones and deliverables, took action to ensure that the procedures put in place were effective, and quickly corrected any weaknesses or deficiencies

4. Established and utilized a procedure and/or system to facilitate work efficiency and ensure high-quality output and modified and improved the procedure and/or system when a weakness was identified to ensure that high-quality work was being produced

   Managers work with employees to assess

competency levels. The competency glossary and a competency assessment questionnaire enable managers and employees to discuss skills, abilities, and behaviours using a common framework. Training and development plans are based on gaps between target performance and actual performance. A developmental resource kit, which includes training courses, seminars, books, and work opportunities, all classified by competency, assists with building development plans.

This approach has resulted in clear direction on performance and development plans to move employees toward optimum performance levels.

Questions

1- Describe the advantages of the approach used to identify performance gaps.

2- Why would managers resist or support this approach?

3 - Describe methods that you would use to evaluate the effectiveness of this approach by levels of learning, behaviour, and results.

Answer 1

QUESTION 1

Following are the approaches that are used to identify perfomance gap and their advantages:-

(1.) Key Performance Indicators: In any business, key performance indicators (KPIs) determine how a person contributes to the business as an employee. Not only that, it also determines career progression, compensation, rewards, benefits, and even retention. KPIs are also very accurate indicators of competency gaps in the workplace. KPIs are the best sources to use in order to identify skill gaps. Individual employees may have some issues with their KPIs and performance. These isolated instances can be immediately remediated with appropriate interventions. The most important indicators to watch out for though are overall performance trends. Trends are usually signs that there is something wrong with a process and would require more work as compared to one-off interventions. Following are the advantages of KPIs:-

• Improved Tracking and Monitoring:- Setting key performance indicators lets you track the results of your efforts in ways that help you make real-time adjustments and change your strategies, if necessary. When setting KPI, include dates or sales volumes that trigger reviews. For example, your KPI might not be helpful until you’ve tried something for 30 days or multiple quarters or sold a certain number of units.

• Improved Marketing Flexibility:-Knowing as early as possible what marketing efforts are working better than expected and which are not allow you to shift your advertising and promotion dollars to media and promotions that maximize your return on these investments.

• Earlier Problem Spotting:- Setting key performance indicators lets you spot problems earlier than if you simply rely on sales data to gauge your performance.

(2.) 360-Degree Reviews : Another good approach to identify skill gaps is through feedback. There is an appraisal method called the 360-Degree Review. Feedback on an employee’s performance is solicited from peers, managers, and direct reports of an employee. Sometimes it also includes customers, clients, and vendors as well. This appraisal approach can be adapted as a data gathering method too. Instead of getting feedback on a particular employee, you can get responses regarding certain performance issues of employees as a whole. And don’t forget to get feedback from the employees themselves too. They would be the best persons to ask about what skills they think they need more work on. Following are the advantages of 360-Degree reviews:-

• It Increases Self-Awareness:- This approach helps people become more aware. When others provide feedback, a person gets a full view of themselves that’s less prone to being one-sided and biased.  

• It Creates a Culture of Openness:- The process will boost transparency if leaders get proper training before beginning. This openness can lead to more productive people, teams, and a more cohesive environment.

• It Builds Confidence and Boosts Morale:- This process can effectively increase the confidence of your leaders. By receiving positive feedback, a leader’s confidence about their skills often grows. Leaders may begin to feel better about the company as well. This boosts morale within the workplace. The key here is that the feedback is given in a constructive manner.

• It Increases Accountability:- One notable benefit with 360 degree feedback is that it increases accountability. This process is a means for leaders to hold others accountable in a positive, effective manner.

(3.) Benchmarking Performance: Another approach to identify skill gaps in the workplace is by bench-marking the performance of the organization’s top performers. This sets a point of reference on what the needed skills for success in the workplace are. Observation is usually the main activity used when benchmarking top performers. Following are the advantages of benchmarking:-

• Drill down into performance gaps to identify areas for improvement
• Develop a standardized set of processes and metrics
• Enable a mindset and culture of continuous improvement
• Set performance expectations
• Monitor company performance and manage change

(4.) Observations: There is a management concept that posits that in order to understand the most common issues in the workplace, you would need to spend time on the front lines. This practice is definitely is quite useful because it gives someone – the data gatherer, for example – a firsthand experience of what’s going in an employee’s work environment. Observing employees at work is the perfect opportunity to find out how different factors come into play when there are apparent skill gaps. It was mentioned that numbers don’t really tell the story in all its entirety. Following are the advantages of observations:-

• Useful for Framing Hypothesis:- Observation is one of the main bases of formulating hypothesis. By observing a phenomenon continuously, the researcher may get well acquainted with the observed. He came to know about their habits, likes, dislikes, problems, perception, different activities and so many other things. All these help him a lot to form a hypothesis on them. Any researcher, therefore, has to be a good observer.

• Universal Method:- Observation is a common method used in all sciences, whether physical or social. So it has greater universality of practice. As a common method, it is very easily followed and accepted.

• Greater Accuracy:- In other methods like interview, questionnaire etc., the researcher has to depend on information provided by the respondents. So these are indirect methods and here the investigator does not have any means to examine the accuracy of the data supplied by them. But in observation the observer can directly check the accuracy from the observed. He can apply various devices to test the reliability of their behaviour. So very often the data collected through observation is more reliable than these collected through interview or questionnaire.

QUESTION 2

Managers would always support KPI Approach but the employees are nort ready to take the evolution made by the company. There are some metrics that can be monitored on a regular basis to measure the success of the change management strategy within a company.

• Reduction in the number of unauthorized changes - One of the most important requirements for change management is the establishment of a change management culture throughout the organization. Such an environment should have little tolerance for unauthorized changes of any type. An effective way to measure the success of your change management strategy is to track the number of unauthorized changes and working towards getting the number close to zero.

• Reduction in the change requests backlog - A great situation to be in, is where change requests are handled as soon as they are received. Proposals from clients for alterations to the system or product would not queue up awaiting action and ultimately disappointing the client. Such effectiveness doesn't always exist but any organization can work towards reducing the pile-up of backlogged change requests. This measure gives an idea of how change management is performed within the company.

• Increase in the number of changes introduced to services meeting customer requirements - Measuring the total number of successful changes with a customer service viewpoint in relation to the overall number of changes can be an effective way to predict how well a change management strategy has worked.

• Increase in overall change success rate - Another considerable KPI to measure for the success of change management in a company is tracking the percentage of changes implemented successfully, either through the mechanism of an RFC or a review. An increase in the overall success rate of changes is great and indicates that the organization is progressing in the right direction.

• Reduction in the number of incidents attributing to changes - An overall decrease in the number of incidents which can be traced back to changes is an essential KPI. Incidents are typically unavoidable but the number of incidents that attribute to changes indicates how well the organization manages changes.

QUESTION 3

1. Management by Objectives (MBO)

   Management by objectives (MBO) is the appraisal method where managers and employees together identify, plan, organize, and communicate objectives to focus on during a specific appraisal period. After setting clear goals, managers and subordinates periodically discuss the progress made to control and debate on the feasibility of achieving those set objectives. This performance appraisal method is used to match the overarching organizational goals with objectives of employees effectively while validating objectives using the SMART method to see if the set objective is specific, measurable, achievable, realistic, and time-sensitive. At the end of the review period (quarterly, half-yearly, or annual), employees are judged by their results. Success is rewarded with promotion and a salary hike whereas failure is dealt with transfer or further training. This process usually lays more stress on tangible goals and intangible aspects like interpersonal skills, commitment, etc. are often brushed under the rug.

2. Assessment Centre Method

   The concept of assessment centre was introduced way back in 1930 by the German Army but it has been polished and tailored to fit today’s environment. The assessment centre method enables employees to get a clear picture of how others observe them and the impact it has on their performance. The main advantage of this method is that it will not only assess the existing performance of an individual but also predict future job performance. During the assessment, employees are asked to take part in social-simulation exercises like in-basket exercises, informal discussions, fact-finding exercises, decision-making problems, role-play, and other exercises that ensure success in a role. The major drawback of this approach is that it is a time and cost intensive process that is difficult to manage.

3. Behaviorally Anchored Rating Scale (BARS)

   Behaviorally anchored rating scales (BARS) bring out both the qualitative and quantitative benefits in a performance appraisal process. BARS compares employee performance with specific behavioral examples that are anchored to numerical ratings. Each performance level on a BAR scale is anchored by multiple BARS statements which describe common behaviors that an employee routinely exhibits. These statements act as a yardstick to measure an individual’s performance against predetermined standards that are applicable to their role and job level. The first step in BARS creation is generation of critical incidents that depict typical workplace behavior. The next step is editing these critical incidents into a common format and removing any redundancy. After normalization, the critical instances are randomized and assessed for effectiveness. Remaining critical incidents are used to create BARS and evaluate employee performance.

4. Human-Resource (Cost) Accounting Method

   Human resource (cost) accounting method analyses an employee’s performance through the monetary benefits he/she yields to the company. It is obtained by comparing the cost of retaining an employee (cost to company) and the monetary benefits (contributions) an organization has ascertained from that specific employee. When an employee’s performance is evaluated based on cost accounting methods, factors like unit-wise average service value, quality, overhead cost, interpersonal relationships, and more are taken into account. Its high-dependency on the cost and benefit analysis and the memory power of the reviewer is the drawback of human resources accounting method.

5. Psychological Appraisals

   Psychological appraisals come in handy to determine the hidden potential of employees. This method focuses on analyzing an employee’s future performance rather than their past work. These appraisals are used to analyze seven major components of an employee’s performance such as interpersonal skills, cognitive abilities, intellectual traits, leadership skills, personality traits, emotional quotient, and other related skills. Qualified psychologists conduct a variety of tests (in-depth interviews, psychological tests, discussions, and more) to assess an employee effectively. However, it is a rather slow and complex process and the quality of results is highly dependent on the psychologist who administers the procedure.