Performance Management System in Maxim
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Maxim is a micro-finance institution that offers its members low interest loans. It also offers a wide range of other financial services provided by banks such as debit and credit cards as well as some current and fixed deposit accounts. However, their loans are only available to account holders and depositors. This means that a bulk of monies advanced to clients in form of loans come from deposits. These loans are often offered below the rates offered by major financial institutions; and they are limited to $1 million. Maxim is focusing on meeting the financial needs of individual entrepreneurs as well as small enterprises. They do not require large borrowings. Currently, the company has approximately 2600 branches and 1.3 million members across the country. For the past 7 years, the company has implemented more than four performance management systems. However, unfortunately, the firm has not been successful in streamlining the workforce performance with the company’s strategic objectives especially increasing the number of members considering the firm’s liquidity depending highly on the members’ deposits.
After being appointed as a managing director (MD) of Maxim, I have carried out a study regarding the inability of the firm to successfully track and develop the firm’s talents. My finding has revealed that this great failure in a different performance management system is highly attributed to a poor implementation process. This has ignored the significant aspects of an effect performance management. For instance, the company did not take any inconsideration on the need for the continuously employees’ performance reviews. Performance reviews were done twice in a year; and the employees were left to fill in review forms without any proper supervisors’ involvement. No feedback was issued from reviewers regarding the employees’ performance. It lacked seriousness. Maxim was operating in a strict hierarchical system causing a major barrier to the effective interaction between leaders and the workforce that would have assisted a great deal in identifying, monitoring and correcting undesirable employee behaviors. Finally, there were no administrative actions taken in response to the results of a performance review considering that the good performance had not attracted rewards.
My capacity as the MD of Maxim requires that I steer this company towards achieving its strategic objectives. For this reason, I must ensure that the employees’ activities, which are one of the main components of the company’s success, are aligned to strategic objectives. Without committed, dedicated and highly trained employees, realizing the company’s core objective will remain elusive. The key Maxim’s strategic objectives are its vision and mission. The firm’s vision is to be a leader and the microfinance of choice to small enterprises and individual entrepreneurs. The firm’s mission is to provide the sustainable financial solutions to entrepreneurs and a small-scale business for the increased employment. Identification, measuring and development of the employees’ performance on a regular basis is important for ensuring that they are congruent with Maxim’s strategic objectives. However, this is only attainable through an ideal performance management system that the firm has not been able to achieve since its inception. I have come up with a robust performance management system that takes into consideration the components of an ideal system. The key among these components include but not limited to a continuous appraisal and reviewing, effectivefeedback and coaching, rewarding performance, proper training for evaluators, practicality, strategic congruent, meaningfulness, acceptability and fairness.
Strategic objectives are the ones of the most important components of the organizations’ success. This is because they shape the direction of the company. Above all, most companies rely on their strategic objectives for remaining competitive over a long period of time. Strategic objectives often stipulate the company’s both long term and short term goals and without a proper guidance and direction. These important goals may be difficult to attain (Venkateswara, 2000). The role of employees in steering the company to a strategic objective is enormous considering that the company cannot operate without the human resource. As the leader of Maxim, I will strive to ensure that the company’s strategic objectives are congruent with the individual and team activities through an effective performance management system. It is noteworthy that the biggest purpose of the performance management system is to assist management in achieving strategic objectives of an organization.
I believe that an ideal performance management system to Maxim is that, which is a strategic congruence in the sense, it reinforces the workforce behaviors that are geared towards achieving the company’s goals and shunning those with the least focus on the set goals. An effective system should be that it promotes the overall organizational goals at the expense of individual and team goals (Smither, 2009). In other words, organizational goals must always supersede individual ones. For this reason, all workforce activities must be designed in such a way that they align with organizational goals. For instance, the biggest Maxim’s strategic purpose, which is its vision, explains the company’s long-term goals. This is to be the microfinance of choice to all entrepreneurs and small-scale businesses in the country. It is obvious that this goal cannot be achieved if the staff activities are not geared towards this objective. For instance, the sales and marketing personal will have to constantly improve their sales skills and expertise ether through a formal training or coaching by supervisors in order to attract more people into registering as members.
An ideal performance management system for Maim must take into consideration a need for the performance planning. This will be the first component of the performance management process, which is the foundation of the system. The performance planning is important because it brings together all the participants in performance management. They are the evaluators and employees at the beginning of the session (Aguinis, 2013). It is during this period that the staff members are given a chance to suggest the key performance areas, the expected level of behaviors, targets, and how they can be achieved over a given period of time considering. The importance of the performance planning is to ensure that all participants in the performance management system are represented effectively by allowing them to provide some inputs on how the system should work (Venkateswara, 2000). The process of developing the system should not be left to the leaders only considering that it needs to be inclusive and take into account the interests of everyone. This means that this should be affected by the outcome of the system. As a leader, in Maxim, they understand that with the increasing of the globalised workplace, the workforce often consists of people from diverse backgrounds which range from nationality, age, gender and religion. This diversity may translate into different views about understanding the performance management. Thus, everyone in the firm must be involved directly in the process of designing and implementing the system. The goal of carrying out the performance planning is to make the system acceptable to everyone in the firm considering that an exclusive system can be a safe ground for resistance and legal challenges.
An effective performance management system that I consider implementing in Maxim is that engaging the workforce in a continuous review and appraisals. Performance management is not a onetime event. It must be ongoing throughout the business cycle (Smither, 2009). It is noteworthy that factors to assessed need to be objective and existing measurable aspects that must not only be in numbers. It should also include other personal attributes. For instance, cashiers can be reviewed based on the time spent on the counter serving clients and willingness to work after the normal working time during busy periods. Most businesses fault by carrying out the performance review once in a year. By doing do, they fail to monitor the work behavior of an employee throughout the year. A continuous review is important in reminding the staff about what is expected of them by the employer (Thompson, 2006). This is because most employees and supervisors often tend to believe that their input in the performance system is not such important, and the process is not objective. What matters is a job description in the performance contract. However, it cannot be the only performance benchmark for employees considering that business environment changing from time to time. Such changes may require the alteration in the current work practice to more favorable ones. For instance, a market environment can narrow down the competition to the quality consciousness. This means that the company will have to realign all company’s operations to be quality cognizant. Otherwise, they will risk losing their market share. The continuous appraisal of the employees’ performance is also significant for making some administrative decisions such as promotions, demotions or termination of an employment contract.
An ideal performance management system for Maxim must be acceptable and fair to every stakeholder in the organization. I will implement the system that is acceptable to every participant. This is considered by everyone to be fair. Perception alone that the system is not fair can lead to the failure of the entire system even if other preceptions of the system are ideal (Smither, 2009). The employees will be highly demoralized to work alongside the system that is unjust to them. Therefore, I will strive to ensure that the system maintains the key tenets of fairness, which range from the distributive, procedural, interpersonal and informational justice. For instance, I would ensure that employees from all the states undergo through the same performance evaluation and receive the same rewards relative to the particular performance in order to promote the distributional justice. An ideal performance management requires that evaluators carryout their tasks in a nondiscriminatory manner in order to promote the interpersonal justice (Aguinis, 2013). The same case applies with the informational justice, as the information issued to justify an administrative decision must meet performance requirements. For instance, if the sales team are rewarded based on exceeding sales target by 10%, then those with the less percentage should not be given any bonus. This could demoralize top performances as they will consider this conduct unfair.
An ideal performance management system that I would implement in Maxim is that it respects the need for specificity. An ideal system calls for leaders to inform their employees what a specific function entails and the level of standards that must be maintained during operations (Smither, 2009). This means that all employees will be informed in advance, what is expected of them. For instance, Maxim understands that it has to increase its members to 10 million and rise its coverage to all states within the next 5 years in order to increase its market share. This target will be communicated to all relevant stakeholders especially the sales and marketing team being charged with the responsibility of convincing individual entrepreneurs and small businesses to register the company’s services. All the responsibilities related to how they can attain these targets will be communicated to the workforce in good time to ensure smooth operations of the performance management system. The company staff will also be informed in advance about how the performance will be measured as well as the types of rewards linked to the specific performance. If not all this information is communicated to the employees in advance, they may noot realize the objective of the performance management system.
An ideal performance management system will take into consideration the need for an effective feedback process between the participants (Aguinis, 2013). I recognize the significance of an effective feedback process between the supervisors/evaluators and staff members. It is noteworthy that the feedback process should be a continuous process considering that many aspects in the system rely on the effective feedback. To begin with, the employee development cannot proceed if evaluators did not communicate evaluation results and suggest areas that require some improvements. According to Venkateswara (2000), employees need to be constantly reminded of new objectives and goals after every assessment to ensure that they remain focused on achieving organizational objectives. For instance, if cashiers fall short of the targeted customer attendance the evaluators must investigate why they did not meet the targets and explain to them what is expected to improve the performance. The organization will seek to implement a feedback process that is aimed at improving the performance of employees rather than criticizing them. The feedback can also be an important way for motivating and boosting the workforce self esteem.
Employees who are always updated on their progress, especially on successes and areas of improvement often feel valued and recognized. This may fuel their future performance and consequently increase their esteem. Additionally, employees also tend to gain a better understanding of the specific criteria that define the job success. In that sense, a successful performer is continuously receiving an update about the performance (Smither, 2009). As the leader of Maxim, I will strive to ensure that I have built a strong feedback culture in the organization as an effective performance management system will thrive on under such an environment. The feedback culture will involve a two-way communication process, whereby the information will be exchanged rather than delivered from one point to another only (Thompson, 2006). For instance, the evaluator will not only be feeding the worker with the information about the quality of his/her performance without taking into consideration the input of an individual employee. Finally, the feedback process will involve an honest, factual and open communication between participants.
An effective performance management system must be standardized. This means that I will have to implement the system with the uniform evaluation criteria and methods to every individual all the time in Maxim to allow participants to have the faith in the system. Inconsistency in evaluation methods and various aspects of performance can bring a conflict in the organization and distrust in the system as employees are often prepared for the initially communicated evaluation methods and performance requirements (Aguinis, 2013). It is vital that evaluators maintain a certain level of strictness in all evaluation processes. This will instill a high level of seriousness during the performance evaluation.
Maxim’s ideal performance management will require that evaluators receive a proper training regarding the crucial undertaking. Evaluators are the eyes of any organization considering that they will be proving a feedback managing the administrative decision-making and most importantly engaging employees in a coaching process. Another important role of evaluators is evident in the fact that they will be continually interacting with the staff members most of time (Venkateswara, 2000). This means that evaluators must be properly trained on various issues of performance management especially on those related to the employee behaviors, conducting appraisals and measuring results. In other words, evaluators should adequately understand the responsibilities of the staff before beginning the performance management process. They should have the effective interpersonal skills if they have to attain their objective without much hustle considering that they will interact with different employees from a diverse background. All the recommended evaluators will be allowed to work in that area on a temporary basis to allow the management evaluate their abilities to deliver. Those evaluators, that have proved to understand their roles effectively will proceed for the training and subsequently offer a permanent evaluation job.
An ideal performance management system to implement in Maxim should be valid and concise. This seeks to ensure that only issues that are relevant to a task will be evaluated. Those issues that are out of control of the employee or outside the scope of the performance objective shall not be evaluated (Aguinis, 2013). I will strive to ensure that the choice of the evaluation criteria is the one, which takes into consideration all the relevant performance features and ignores all the features that seem important to the process to promote the validity. Employees are often informed in advance what is expected of them in case of the failure to do that during the evaluation process by incorporating things that are out of control employees may demoralize them (Venkateswara, 2000). For instance, cashiers in Maxim cannot be evaluated basing on their ability to sell loans and increase their membership.
An ideal performance management system for Maxim should have an effective reward system. I will establish the reward system for recognizing top performers within the organizations. Reward is a vital component in the system considering the role it plays in motivating employees and improving the employee commitment to exceed set targets (Kimmons, 2010). The organization seeks to incorporate different forms of reward, which will include a tangible and intangible combination of both. The tangible rewards for top performers will include a wage increase, bonuses trophies and a share of profits; while intangible ones will mainly consist of the promotion and education opportunities.