Performance management is one of the most demanding challenges facing employers today. Along with winning in the “war” to attract talent, the development of that talent and the full engagement of employees—performance management is one of the cornerstones of a meaningful HR strategy. In reality, all that an organization does is performance management. All of the analysis, planning, controls, execution and evaluation are aimed at being better. In a competitive context the survivors are those who are best at managing their performance and their cost base. In the public and not-for-profit sectors the performance imperative is often driven by an increasing degree of public scrutiny in matters of efficiency, ethics and sound governance.
Performance management can be defined as the skills, processes or initiatives that are used to maximize human effectiveness in organizations. It is strategic in that it should link to the longer term goals of an organization as well as integrating with other aspects of organizational life such as communication, operational realities, employee needs and expectations, stakeholder needs and a continuing list of often conflicting demands.
It can involve issues of skill, behaviour, development, rewards, relationships, culture, leadership style, coaching, training and values alignment. Developing, implementing and managing such a successful initiative is complex and demanding work if one is to overcome the many challenges.
Why Performance Management Is So Difficult
It is Counter-Intuitive
Most people struggle with the responsibility of correcting others, telling others what to do and generally forcing an agenda on another. The culture can vary by industry or organization but for most new supervisors or managers this represents a huge learning curve. Not surprisingly, some of the least effective individuals are often skilled at “working the system” when they perceive there is a reluctance to address issues that need dealing with.
Many employees, including managers, have experienced decades of broken promises, half truths and less than honest leadership. Whether in the political domain or in recent illustrations of corporate irresponsibility, many are suspicious of attempts to engage with them even if the intentions are honourable. People no longer listen to propaganda or “spun” messages—they watch what organizations and leaders do and even then they respond with caution. Most employers understand that profit is not a dirty word, that organizations need to compete and that their best security is to be a part of a successful organization. They just want honesty; they want to be treated as adults and they want to have a say in matters that affect them.
The History Of Performance Appraisal
The history of performance appraisal is rooted in an in industrial-age context of assembly-line production, deep hierarchies and unchallenged management authority—a very small “carrot” and a very big “stick.” Many attempts at performance management still carry the cultural signature of a highly authoritarian age. Unfortunately, we live in a world where talented employees make minute-by-minute decisions about how much discretionary effort they give to their employer. It is a world where many have the luxury of engaging in analysis of job satisfaction and whether the organization reflects their values—luxuries most of our parents wouldn’t have dreamed of. The old stuff simply does not work and it never did—it only controlled behaviour and labour in a world where few had choices.
Too Much Reliance on Systems
Performance management is a process not an event and will need some form of supporting structure or system. However, the system is not the object of the exercise—it is simply a facilitating mechanism and the bureaucracy should be kept to a minimum. There is far too much emphasis on “the system” but the HR system is not where people live, work and make their contribution. This is exemplified in many performance appraisal systems and e-appraisals that have become self-perpetuating monuments to the beauty and symmetry of statistical analysis. Of course, organizations need data and of course technology can take over the heavy lifting but to look at some applications, one could reasonably assume that the object of the exercise is to collect, collate data and present data. It is not surprising that many managers and employees may go through the motions but have “checked out” as a result of data and system fatigue in a process that they perceive as irrelevant.
Performance management is first and foremost an inter-personal activity and work is another definition of a relationship where the nuances of personality and communication and the dynamics of task, common need and motivation come together in what can be a problematic relationship. Rosabeth M. Kanter, the former editor of the Harvard Business Review, wrote a challenging book called “When Giants Learn to Dance.” In this dance called work, smart organizations put the emphasis on the relationship, not the process! Most employees want to come to the dance, not just to meet basic needs but to be a part of something, to develop and utilize their talents and enjoy the buzz of achievement and meet a deeper need that recognizes that somehow our work is a part of who we are.
Ironically, many organizations expend immense resources trying to “engage” employees—a totally relational concept that attempts to develop a deeper psychological contract with employees—and then proceed to implement an unbearably complex performance management system that defeats the very objective of the exercise and regresses to a clinical exchange of numbers. Amazing!
The internet is rife with organizations offering e-appraisals which completely eliminate the need for people to actually talk to each other. Somewhere, we have lost our way.
Not Enough Focus on Skills
If an organization sees its appraisal process as the primary vehicle for performance management, it is in trouble. Performance management is a daily activity and supervisors and managers need to be highly trained in the coaching and counselling skills to deal with a wide range of issues on a daily basis. Without the confidence that only comes with acquired skill and practice, they tend to swing between the extremes of avoidance and emotional reaction. Acquiring the confidence to address poor performance and the emotional intelligence to know when to encourage, when to teach, when to reward, when to challenge and when to praise is fundamentally important.
In a recent report on “Creating People Advantage,” the Boston Consulting Group in partnership with The World Federation of Personnel Management Associations (WFPMA) said, “…leadership development is closely linked to talent management. Furthermore, the value added by management and managerial engagement contribute critically to outstanding business performance in today’s increasingly complex organizations.”
Steps For Success: Begin at The Beginning
1. Your organization
Take the time to truly understand what your organization does and how you do it. What are the critical levers of success? What is your differentiation or competitive advantage? What are the needs of the various stakeholders? Dream what exceptional performance would look like for the organization, its customers and employees. What is the vision or collective aspiration either in product, commercial or culture terms?
Get down into the soul of what your organization does. Talk to line managers, consult with employees, understand the challenges and needs at the point of execution. These are the ultimate customers and if it doesn’t have perceived value to line managers and employees, it will become just another dead process.
2. Think architecture
Begin to scope the guiding architecture or concepts that should drive the values, methodology and simplicity or complexity of your model. What assumptions are valid and what would be the primary goals of a process in your organization? What is unique about your structure, activity, geography or people that needs to be considered?
What is the direction of your HR strategy? Do you have goals in the area of talent acquisition, development, retention or engagement? What are the demographic and succession issues? This intellectual analysis is critical in getting the ultimate design right. One of the greatest challenges for HR practitioners is to be able to get their heads out of “control” and “process” and think and function strategically.
Above all, do not buy a process and let the process drive the design, focus or culture of your model. The process and technology tools are the easy part. The hard part is getting a model right for your organization and its people…then you worry about what process would facilitate that outcome.
3. Get committed
Performance management is not a manipulative process designed to get blood out of rocks. It is fundamental to survival in a globally competitive environment where outsourcing, exchange rates, labour rates and legislative environments drive many commercial decisions. The “where” and “who” of running a business has in many cases become a pragmatic decision that ends up in a discussion of productivity, results and leveraging the variables to maximum effect. In this world, one should see performance management as nothing less than a fundamental activity to ensure survival, jobs, quality of life and sustainability. Do not apologize for getting passionate about performance management and at every opportunity elevate it from an HR process to an organizational imperative.
Employees will often put up with a lot but what really drives people to despair is when there is obvious injustice in the workplace. Often poor performing employees are rewarded by not incurring any sanction or downside for their poor performance. Often their poor performance is actually rewarded by having work taken away and given to a high performer. This absurd phenomena then punishes the high performer with the ultimate insult, completing the work of the poor performer.
Unless the high performer is an exceptional human being, their performance will eventually regress to the lowest common denominator. Assuming that the training and resources are equal, there needs to be correction or some form of sanction for poor performance and make sure that good performance is rewarded.
Day-to-day performance management (the core of performance management) is about managing justice in the workplace as much as it is about organizational success.
4. Shape the model
Develop a tentative outline of the process. This will usually start with an agreement of overall objectives, how performance will be defined and measured, how poor performance will be addressed and how good performance will be rewarded. Will the model also address development, engagement, retention, values alignment, etc.? Identify those elements which appear to be foundational and what elements may be subject to revision, adjustment or further consultation. Then test the concept with several groups of managers and employees. They must own it and work with it. If it doesn’t work for them, it doesn’t work!
5. Work out the detailed design and process
• How will organization goals feed into the process?
• What will you use for performance definition?
– Job descriptions?
– Performance standards?
– Key performance indicators?
– Role profiles?
• Who will use the process
– Team Leaders?
• What scoring or metrics will be used?
• What is the process
– What is the link to disciplinary process?
– Who does what with whom and when?
– How is information gathered?
– What are the links to talent management, succession planning, training and development, leadership development?
– What are the links to pay and other rewards?
• What is the detailed implementation strategy
– Testing with focus groups
– Training!! Everybody!!
– Piloting the scheme
• Who will lead and manage the implementation? This is serious organization development work.
The nature of work has changed dramatically in recent years and performance management is more important than ever. However, HR practitioners and other decision makers need to move past outdated assumptions and models that no longer apply in a contemporary setting. The Society for Human Resource Management in the US estimates that up to 90% of all performance management processes in place are “unsuccessful.”
Managers and employees need to be heavily involved in all stages of design and totally aware of organizational needs, priorities, threats and opportunities.
Daily performance management by skilled leaders is the most important element in achieving high levels of performance which only flows by tapping into discretionary effort. People are tired of complex methodologies which are often disconnected from their real world of work and the pivotal relationships that often drive motivation.
Organizations need to take the subject seriously enough that they commit the time and intellectual effort to get it right for the needs of their organization and their people. HR practitioners are challenged to think past products, process and programs and enquire into the psychology and dynamics of what it takes to maximize the “engagement” potential of each employee. Only when you have an engaged employee will you have their emotional, intellectual and active commitment to high standards of performance.
© Bill Bradford and Sue Traynor, Performance Management Consultants