Google's Performance Management System

Contents (Jump to)

1. INTRODUCTION

2. FORMULATION OF HR STRATEGY

3. IMPLEMENTATION OF PERFORMANCE MANAGEMENT:

4. EVALUATION OF PERFORMANCE MANAGEMENT

REFERENCES:

1. INTRODUCTION

The practice of human resource management is concerned with all aspects of how people are employed and managed in organizations. The main principle of human resource management is to make sure that the organization is able to attain success through people. HRM aims to increase organizational efficiency and ability and the capacity of an organization to achieve its goals by making the best use of the resources available to it. Human resource management mainly deals with organizational behavior, organization design and development, people resourcing, performance management, learning and development, rewarding people and employee relations.

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In the organizational context, performance is usually defined as the extent to which an organizational member contributes to achieving the goals of the organization. Performance management is a regular process to improve organizational performance by improving the performance of individual persons and teams. The performance management strategy is practical to be the procedure of providing the study about the performance of the employee and is consider being the important tool in the decisions taken by the human resource department. Performance management is defined as “Performance management is a strategic and integrated approach to delivering sustained success to organizations by improving the performance of the people who work in them and by developing the capabilities of teams and individual contributors” (Armstrong and Baron, 2004).

Performance management is the method of formulating, implementing and evaluating the work performance of employees, so that the organization will achieve their goals and objectives. Successful performance management is designed to develop performance, recognize performance requirements, and provide feedback related to those requirements and help with career development.

‘The overall aim of performance management is to establish a high performance culture in which individuals and teams take responsibility for the continuous improvement of business processes and for their own skills and contributions within a framework provided by effective leadership’ (Armstrong, 2006).

The objectives of performance management are (Hawkes, 1998):

• To sustain employees to find knowledge and skills to do their job well,
• To encourage in the ability of improved standards of work performance of an employee.
• For employees to work towards definite goals.
• For employees to get regular feedback on performance and
• For employees to achieve personal growth through acquiring significant knowledge and skills and attitudes.

In today’s business environment, the company’s bottom line is to make more profits in long term by attracting, retaining and motivating top talent people for utmost performance. The approaches of companies for attaining profits are by offering the best rewards in the industry. The company which is in that list is Google Inc.

Google early years, the search engine attracted an ever growing number of trusty users, which finally lead to an initial public offering valuing Google at US$ 23 billion. After the IPO, Google under the professional leadership of CEO Eric Schmidt, has grown greatly and continuous to innovate and expand into a numberless of industries, such as communication and web applications etc. The modern environment in which Google operate is very competitive. According to Google employees and their technical knowledge is company’s greatest advantage (NYU IBA, 2008).

This case study will focus on performance management tool of reward and feedback system of Google. Concentrating on how reward system is influencing the employee performance? And what are the methods used to evaluate the feedback performance management?

2. FORMULATION OF HR STRATEGY

2.1 Process of Performance Management:

Performance planning and agreements:

This process helps people to get into action so they can achieve planned and agreed results. This process briefly focuses on the elements like what has to be done and how it should be done and what is to be achieved. And this process is equally concentrated on developing people; helping them to learn and giving them the support they need to do well. The managers and the individuals carry out performance and development plan jointly. These planning should lead to an agreement on what needs to be done by two parties.

This process is concentrating on

• Role profiles
• Objective settings
• Measuring performance and assessment
• Performance planning
• Development planning

Role profiles –

This section describe the function in terms of the key result areas; define what the role possessor desires to know and be able to do and how they are likely to behave in terms of behavioral competencies and maintenance the organization’s core values.

This process will concentrate on rising the role profiles, defining the core result areas, defining the technical competencies, defining the behavioral competencies, and core values.

Objective Setting –

This process describes the organizational goals or objectives to achieve over a period of time by the departments and the individuals. This will give ongoing role or the work objectives, targets, tasks, behavioral expectations, values, performance improvement, learning, and integrating objectives to manager and the individuals.

As per (Armstrong, 2006) most of the organizations follow SMART mnemonic to summarize the characteristics of good objectives.

S (Specific) – Clear, understandable and challenging.

M (Measurable) – quality, quantity, money and time.

A (Achievable) – challenging but in the reach of a experienced and committed person.

R (Relevant) – related to the objectives of the organization so that the goal of the employees is associated to corporate goals.

T (Time framed) – objective is to be completed within a timescale.

Measuring performance and assessment –

This process is a significant model in performance management. It is the main finding for providing and generating feedback, it identify where things are going well and where things are not going well, so that necessary action to be taken.

The criteria for measuring the performance should be (Armstrong, 2006)

linked to the strategic goals

Focusing on inputs, outputs and outcomes, and behaviors.

Point out the data or evidence that will be available as the source for measurement.

Be as specific as possible in accordance with the purpose of the measurement and the accessibility of data.

Give a sound basis for advice and action.

Be comprehensive, covering all the main aspects of performance.

The CIPD surveys of performance management in 2004 discovered that, in order of significance, the following performance measures were used by the respondents (Armstrong, 2006).

• Attainment of objectives
• Capability
• Quality
• Contribution to team
• Customer care
• Working relationships
• Output
• Flexibility
• Skills/learning targets
• Aligning personal objectives with organizational goals
• Business awareness
• Financial awareness

Performance planning –

The performance planning is part of the performance management chain, which involves contract between the manager and the person on what presently needs to do to achieve objectives, move up standards, improve performance and develop the required competencies. It also establishes priorities the key aspects of the job to which attention have to be given. The aim is to make sure that the meaning of the purpose, performance standards and competencies as they apply to everyday work is understood. Agreement is also reached at this phase on how performance will be measured and the proof that will be used to begin levels of competence. It is important that these procedures and evidence requirements should be known and fully approved now because they will be used by persons and managers to check and demonstrate achievements (Armstrong, 2009).

Personal development planning –

Personal development plans provide a learning action plan for which employees are responsible with the support of their managers and the organization. It may contain official training but, more importantly, it will include a wider set of learning and development actions such as self managed learning, training, mentoring, project work, job improvement and job enrichment. It is likely to focus on development in the existing job, and to improve the capability to make it well and to enable individuals to take on bigger responsibilities, extending their ability to accept a broader role. This plan therefore contributes to the success of a policy of continuous development that is predicated on the belief that everyone is able of learning more and doing better in their jobs. The plan will also give to enhancing the likely of persons to carry out higher level jobs (Armstrong, 2009).

Managing performance throughout the year:

Managing performance is that it is a continuous process that reflects normal good management practices of setting direction, monitoring and measuring performance and taking action accordingly. Performance management should not be imposed on managers as something special they have to do. It should instead be treated as a natural function that all good managers carry out. This approach contracts with that used in conventional performance appraisal systems, which were usually built around an annual event, the formal review, which tended to do well on the past. This was carried out at the behest of the personnel department. Managers proceeded to manage without any further references to the outcome of the review and the appraisal form was buried in the personnel record system (Armstrong, 2009).

Performance review and assessment:

Performance management is a permanent process it is compulsory to have an official review once or twice a year. This will give an idea on the key performance and development issues. There are mainly five performance management elements for review meetings; they are agreement, feedback, measurement, positive reinforcement and dialogue. These elements will leads to the end of the performance management cycle by informing performance and development agreements (Armstrong, 2009). The criteria for the performance review are

• Achievements with respect to objectives
• The level of skills and knowledge possessed and applied (Technical competencies)
• Performance is getting effected in job by the behavior (Competencies)
• Day-to-day effectiveness

2.2 Learning and Development:

Employee development is the main method followed by most of the organizations to develop organization performance, which in turn requires a perceptive of the processes and techniques of organization, team and individual learning. Performance reviews can be regarded as learning events, in which employees can be encouraged to think about how and in which ways they want to develop. Development programs are reflecting the needs of sequence plans and looking for to promote leadership skills (CIPD, 2010).

In a successful organization, employee developmental needs are addressed. Developing in this case means increasing the ability to make through giving training, develop new skills or by giving more responsibilities. Introducing the processes of performance management provides an outstanding opportunity to identify developmental needs. During the planning and monitoring of work, deficiencies in performance become clear and can be addressed. Areas for improving good performance also show up and action can be taken to help successful employees progress even better (OPM, 2010).

2.3 360 – Degree feedback:

360 – Degree feedback recognizes the difficulty of management and the value of input from a range of sources. The feedback is frequently unspecified and may be presented to the employee to the manager or to both employee and manager. Some organizations do not arrange for feedback to be mysterious. Whether or not feedback is anonymous depends on the organization’s culture (Armstrong, 2009).

The main advantages of having feedback are

• Individuals get a broader viewpoint of how they seem by others.
• It gives people a broad view of their performance
• Increased awareness by senior management.

The main disadvantages of having feedback are

• Employees or managers do not always give honest feedback
• People may feel stress in receiving or providing feedback
• Too much official procedure (bureaucracy)

In organizations they do not have a practice of open feedback; it is likely that 360 – Degree feedback will be seen with greater levels of distrust.

2.4 Reward:

Reward management is concerned with the formulation and implementation of strategies and policies in order to reward people fairly, equally and consistently in agreement with their value to the organization (Armstrong, 2009).

The aims of reward management are

• Reward people as per the organization want to pay for.
• Reward people for the value they creating.
• Build up a performance culture
• Motivate people and obtain their commitment.
• Help to attract and keep the high quality people the organization desires.
• Operate fairly
• Operate transparently

2.5 Rating performance:

Rating scales can be defined alphabetically, or numerically. Initials are sometimes used in an attempt to disguise the hierarchical nature of the scale. The alphabetical or numerical points scale points may be described adjectivally, for example, a= excellent, b= good, c= satisfactory and d= dissatisfactory.

2.6 Advantages and concerns of performance management:

The advantages of performance management are

• Performance management focuses on results instead of behaviors and activities.
• Aligns organization activities, and processes to the goals of the organization.
• Explains long term views of the organization
• Provides specificity in commitments and resources
• Provides specificity for comparisons, directions and planning.

The concerns expressed about performance management are that it seems extraordinarily difficult and often unreliable to measure phenomena as complex as performance. People point out that today’s organizations are rapidly changing, thus results and measures quickly became obsolete. They add that translating human desires and interactions to measurements is impersonal even heavy handed.

2.7 Role of line managers and HR managers in performance management:

Human Resource division at any organization has unique challenges, it has to make sure that the employees are motivated and dedicated to the organization with complete reliability and honesty. However, at the same time, the Human resource division has to make sure that the market dynamics are not badly affected by the total volumes of investment involved in the process. And also line managers are crucial to the success of performance management. But there can be problems with their commitment and skills and it is necessary to involve them in developing the process, provide training and guidance, gain top management support, keep the process simple, emphasize that performance reviews provide for quality time with their staff and need not be stressful if conducted properly.

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The main objective to the success at Google Inc. is simple work procedure apart from the incredible perks and compensations. There are a few fundamental rewards existing at Google like, there is no real hierarchical structure in the company, and it works in small groups it will give an opportunity to maximize the performance and this follows a flat structure. The ideas getting at the work place which are shared within the groups. Even though they work in smaller groups, they will have a project manager to look over the development of the committees. The company treats the small groups and teams as individual start-ups (NYU IBA, 2008).

3. IMPLEMENTATION OF PERFORMANCE MANAGEMENT:

3.1 Methods of performance management:

There are number of methods we can use for managing performance. Below table shows some information on a number of official methods of performance management that may be used (Department of Economic Development, Tourism and the arts, 2010).

Process

What is this method?

Where is this method used?

360 – Degree appraisal

This method gives a valuable approaching into how the person’s work and behavior. This method is often used for managers and supervisors. While the values of this method are very useful, it can be administratively good method for small businesses.

This method is used when funding and time is available.

Where it is important to get quite a few perspectives on a person’s performance, for example in the customer service roles or where the person is working across teams.

Self assessment

Just the name suggests, the individual assesses their own performance to set criteria. This is a good method for identifying where the businesses opinion of performance and the individuals opinions are different.

Where there is an interview based performance management process

Competency based assessments

In this method they will access skills and capabilities.

Ability can be harder to define in jobs with a high level of vagueness or where outcomes are not clearly express, such as managing relationships with staff.

Where there are task oriented jobs with little or no ambiguity or decision making responsibility.

Management by objectives

A collaborative method, the MBO defines goals and future targets by consultation. Future tasks, behavior and productivity, for example, are discussed and a SMART plan is created so that the manager and staff member are aware of what needs to be achieved, to what standard and by when.

Where the business uses formal processes to manage performance and where outcomes can be measured accurately.

Google feedback program –

Google implements formal and informal feedback system to evaluate their employees. At Google, an employee’s manager report and individual reports are considered for the evaluation process. Its formal system of evaluation uses 360 Degrees review method. The employee will also selects three or more officials to review his performance. These reviews are made twice a year and this will reflect on the performance review with an employee’s bonus. Anyways, there is nothing surprise because regular checking of the performance is a form of informal feedback system and they are more comprehensive than a formal review which is performed twice a year (NYU IBA, 2008).

Google reward program –

Google reward system extensively makes use of these formal and informal feedbacks, where the bonuses are based on the combined performance of the corporate, team and an individual. It got a complex structure of promotions and stock options within the organization. In addition, there is a strong clan society within the organization and comparatively flat organizational structure, making the company more a fusion of the two reward system.

One of the Google’s most exhilarating employee rewards is its capability to offer stock options. Stock options are typically to exercising the option and purchasing stock at a given date or not, however Google has decided to take a more innovative approach to its reward. Transferable stock options are a compensation program that Google developed for the purpose of allowing employees to trade their options off to a bidder. In this way, Google not only increases the value of every stock option given to its employees but also enhance its option’s valuations (NYU IBA, 2008).

4. EVALUATION OF PERFORMANCE MANAGEMENT

Google feedback program –

By considering all the above statements, we can say that Google has room to improve upon its feedback system in terms of making it more stabilized and prearranged. In addition, one-on-one interaction should be encourages as much as possible. The informal feedback should come in some sort of format that helps employees more than hurts them, and gives beneficial analysis rather than negative and strange feedback (NYU IBA, 2008).

Google reward program –

What is Google’s incentive in giving out these perks and rewards?. Well it is becoming increasingly important to attract and keep top talent in an increasingly competitive job market. With competition from technology giants like Microsoft and Yahoo! Google is offering US$2000 to the current employees, if they refer a friend to work at Google. At the same time these perks and rewards help differentiate Google from its competitors that have expanded their own benefits program in recent years.

Despite the seemingly phenomenal environment at Google, we believe the company should consider the system of perks to ensure a stable employee base in the future. In the future, an overemphasis on perks may not build sufficient employee commitment, especially if competitors can imitate Google’s programs. Thus, it is better Google slowly merge the perks with the rewards system. Increasing employee rewards, rather than merely offering interesting perks will in the long run help increase employee productivity and loyalty (NYU IBA, 2008).

REFERENCES:

Armstrong, M. and Baron, A. (2004). Managing performance: performance management in action. London: Chartered Institute of Personal and Development.

Armstrong, M. (2006). Performance Management: Key Strategies and Practical Guidelines. 3rd Ed. London: Chartered Institute of Personal and Development.