Under 30s – also referred to as ‘Generation Y’ – see work very differently to their parents’ generation. Adapting to this is no mean feat for any manager, but Paul Davis has the scoop.

Today’s Generation Y (aged under 30) has a view of the workplace that is distinctly different from that of their parents. Few of them believe in a job for life. Materially wealthy, with bedrooms full of electronic gadgets and a world of experiences at the fingertips of their iPods, mobiles and PCs, Generation Y looks on work as a means of gaining different experiences and developing within an organisation at a faster pace.

Adapting to this is no mean feat for any manager, but by focusing less on a top-down approach of managing employees and more on encouraging and developing them in a more informal manner, firms can ensure they benefit from their employees’ success and vice versa.

A good performance management system is key to this and it will ensure your firm doesn’t become one of the forty percent of firms less than five years old fail because of insufficient management capabilities, according to the Small Firms’ Association.

Managing staff by reviewing their performance through quarterly or annual appraisals alone is not sufficient to ensure employees are achieving their potential and contributing to the success of your firm.

According to a survey of 506 organisations by the Chartered Institute of Personnel and Development (CIPD) in 2004, 87% used a formal performance management process. 74% of senior managers described performance management as being very effective or mostly effective, while 59% of employees shared this view.

Most managers don’t have the time to seek guidance from one of the thousands of books written on management techniques. If you implement an effective performance management system that involves the following processes, you won’t have to.

Job Description

A clearly defined job description should highlight competencies or required knowledge, skills, abilities and values for the job. CVs and other information from the selection process will indicate where gaps in these aspects exist between what is ideally required and what a person has. This is a key stage in beginning to manage an employee’s performance.

One of the Irish Independent’s Best Companies to Work For, pharmaceutical giant Glaxo Smithkline recognises the importance of selecting the right person for the job. HR director Paul Creedon says: ‘We’ll select the best person for the job and won’t settle for second best, which means we may have to wait longer to make an appointment.’

The company’s assessment centre then helps new employees to grow by devising a personal development plan, looking at their current situation and what their aspirations are, which then allows for an open conversation about their development needs.

Goal/Objective Setting

Another of the Irish Independent’s Best Companies to Work For, recruitment firm Brightwater Group encourages employees to devise their own strategy to meet targets, allowing them to see clearly their own contribution to the overall success of the company. They sit down with managers and present how they want to plan their month and set their own targets.

The setting of goals or objectives should be based on the expectations, duties and tasks related to the job. Job candidates will expect these to be outlined during the application or interview process, and they should again be outlined in an introductory session, ideally during a formal induction.

If your firm has a documented business plan in place setting out its measurable goals and objectives, this should also feed into department or team plans. By referring to Key Performance Indicators (KPIs) rooted in your firm’s strategic plan, people at all levels of the firm can refer to these and describe what the objectives of the business mean for their job.

Employees will see how their knowledge, skills, abilities and values are relevant, to helping to meet your firm’s KPIs. By identifying where there is room for improvement, they can then discuss with a manager what training and development is needed to help them meet those targets. This should then be noted in a personal development plan.

The key to setting objectives is that they should be SMART: Specific, Measurable, Achievable/Agreed/Accepted, Realistic/Relevant and Timebound/Trackable. They should include a ‘what,’ ‘who,’ ‘how,’ and ‘when’ element: What needs to be achieved? (eg a fee target) Who is ultimately responsible for the delivery? How should the employee go about this? When does it need to be achieved by?

Defining Measurable Performance

Measuring performance is a way of comparing an employee’s work to the overall strategy and goals of the business. It should take into account whether they have met the goals defined in the employee’s personal development plan.

Cathal Divilly, project director at the Great Place to Work Institute Ireland says: “The best companies tend to measure what they do. In a workplace situation, what doesn’t get measured doesn’t get done.”

For a firm providing a service, for example, employees who have a say in how the service is delivered will feel engaged in their work. Employees who feel they have satisfaction in their work will in turn translate into greater customer satisfaction, and this tends to result in higher profits. This will inevitably meet one of your firm’s objectives and therefore should be measurable and result in a reward for that employee.

Ongoing Coaching and Feedback

Be clear about the job expectations and how employees are performing against them. As workplaces become increasingly informal, this can be as simple as regularly talking to employees, making suggestions, and keeping them on track.

eBay uses a number of methods such as a pulse survey which enables employees to give candid, anonymous feedback to management on their day-to-day experiences in the workplace. It not only means that managers can strengthen their own skills and effectiveness, but also means employees’ concerns are addressed as well.

Google recognises the increasing trend to allow employees freedom in their jobs to be creative and entrepreneurial. This might mean the employee taking a risk to try out a new idea or approach in the course of their work. Managers might then need to suggest how to tailor this to ensure its success. In this way, they recognise their contribution to the firm’s growth and success.

Quarterly and Annual Performance Reviews

As well as ad hoc feedback, quarterly and annual performance reviews should be formally arranged regularly during the year. Both employees and managers should prepare for this meeting and use previous reviews or performance discussions as the framework for the meeting.

In many performance management systems, an employee fills in a pre-appraisal form that outlines their objectives for the following year. These should be discussed, expanded upon and agreed at the performance review. These should be measurable and trackable and tie in with the organisation’s own objectives.

Training and Development

Training and development programmes and personal development plans should be agreed with employees. The focus should be on addressing gaps between the knowledge, skills and abilities required and those actually displayed by the employee.

A 2005 CIPD survey on training and development revealed that while 78% of respondents had received some form of training in the previous year, 94% believed it helped them do their job better.

However, the survey also revealed that employees in small businesses were less likely to receive training. 73% of respondents from companies with less than 99 employees said they hadn’t received any employer-provided training in the previous year.

Tackling Negative Issues

Managers can understandably be afraid of tackling negative issues with their staff, but by bearing a few key points in mind, it can help motivate employees and steer them in the right direction.

Negative feedback will be most effective when it is timely, so managers need to take them aside and talk to them as soon as possible. Ideally this would be immediately after the behaviour or incident takes place. Be sure of your facts and have specific examples to draw upon. Unless you have witnessed the behaviour yourself, avoid references to hearsay. Avoid being emotive, personal or judgemental in your feedback.

Managers should ask questions, rather than launching into criticism that will immediately put a person on the defensive. Corroborating and discussing the incident will show employees you’re being fair and allow them to explain their side of the story. Offer an alternative type of behaviour that should replace the employee’s undesirable conduct, having clearly described its effects. Remind the employee that their behaviour is the problem, not them as a person.

Only give negative feedback after two pieces of positive feedback have first been given. By explaining how they are usually competent in other areas, you can empower employees to improve their performance after your meeting.

Recognising Positive Performance

Recognising positive performance isn’t simply a matter of saying ‘well done.’ It includes effective compensation and benefits linked to deliverable results.

Employees need to recognise their career paths and be kept aware of promotion prospects. This can be as simple as having an informal chat on a regular basis about those prospects opportunities for training towards promotion and helping to fund that training. Employees want to know where good performance will lead them and what’s in it for them.

Bonuses are the most common example of rewards and incentives aligned with employees’ goals and those of the organisation can serve as motivating factors. However, it is important to recognise employees’ creativity and entrepreneurship as well. For example, another of the Irish Independent’s Best Companies to Work For, the Crowne Plaza Hotel rewards employees who come up with ideas to improve service and profitability.

It goes without saying that an effective performance management system relies on good communication. Employees who receive regular advice and assistance in their work will be happy in their jobs. Happy employees increase client satisfaction as well as profits. With the right performance management system, a business of any size can achieve their goals in the same way as the largest multinational.