Linking Organizational Strategy to Individual Performance through the Performance Management System

The Hotel Ole’s competitive strategy is “to use superior guest service to increase the length of stay and return rate of guests, and boost revenues, and profitability.”

HRD Director Sue Smith knows that the Hotel Ole’s performance evaluation system is archaic. When the owners started their first hotel many years ago, they went to paper supply store, and purchased a pad of performance appraisal forms. The supervisors currently utilize this form to conduct annual performance appraisals on all their employees. Supervisors indicate whether the employee’s performance in terms of various standard traits including quantity of work, quality of work, and dependability is excellent, good, needs improvement, does not meet standard. Unfortunately, there has been very little guidance given to supervisors concerning how to conduct these interviews, or concerning what should be done after they have been completed.

Sue Smith knows that, among other things, this appraisal tool does not force either the supervisor or the employee to focus on the extent to which the employee workforce can help the hotel to achieve its strategic goals. There seems to be very little consistency across supervisors as to the extent to which they include goal setting, coaching, and employee development issues in their appraisal interviews. Although the stated objectives for appraisals are that they should be linked to the organization’s competitive strategy, and thus reflect the organization’s reward system, there is no formal means for doing this.

Director Smith has decided to form a task force that would develop a performance management system that focuses the employee’s attention on taking those actions that would contribute to helping the organization achieve its goals, for instance, in terms of improved customer service. As such, the task force will need to develop a performance management system (PMS) that focuses on both competencies and objectives related to the strategic statement.

Task Force Mission: Consider the following topics: annual appraisal ratings, appraisal interview, feedback, goal setting, coaching, linkages to employee development, and linkages to organization rewards. Using as many of these elements as necessary to meet the organization’s stated strategy; the task force is to design an effective performance management system.

Note: You may find it helpful to visit the website www.successfactors.com (Links to an external site.) for a review of items considered important to the success of an organizational performance management system.

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