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Written by: Fatima Mirza
Performance assessments as legacy systems have survived three industrial revolutions, but as we enter our fourth stage of digital revolution driven by knowledge workforce, it will become increasingly difficult to navigate through this stage without reinventing how we manage our workforce.
According to a survey conducted by San Francisco-based consulting firm, Achievers, only about 2 percent of HR leaders think performance management as we have known it has a meaningful impact on improving performance. It is not surprising to acknowledge that we have driven away good people by poor performance management practices.
So where did we go wrong on performance management? Even though SHRM reported in 2000 that change was in order if we needed to attract and retain talent. It took us over 15 years to initiate a new chapter on performance management led by the fearless actions of a few high profile companies.
Regardless of what the new avatar performance management takes in your organization, there are a few fundamental elements to consider that are influential in addressing performance management in any organization.
Culture of Performance Management
“Research by the Hay Group reported that the ‘Most Admired Companies’ had created performance management systems that take a well-rounded approach to measuring performance. Such measurements include teamwork, long-term thinking, building human capital, developing and managing talent, and customer loyalty”. (Insala, 2007).
Quite simply performance management is just another engagement tool where an organization achieves success by establishing a performance culture based on values specific to the business. Accountability for actions, transparency, customer service, innovation, employee development, commitment to goals, fiscal responsibility and many others constitute the core elements driving performance and business. Employees want to know and are paying close attention to how their careers are managed once they are hired. Are you doing things that show you are interested in your employees and are you committed to growing talent that drives business forward?
Seminal to any successful performance management system is a clear definition of what performance means and looks like for an organization. It’s not only important to establish that culture of performance but also spells out what that entails in terms of expectations, results and how that would be accounted for or measured. Once that is in place for employees to see, understand and experience it is not an arduous task to develop and motivate individuals who will contribute to the goals of the organization.
In an effective performance management system, you are not guiding the performance of individuals but also honing their skills and knowledge to perform effectively and support the organization’s strategy and plans. When you add the feedback and coaching element to performance, you are motivating individuals to perform productively.
Alignment and Leader driven
For performance management to make sense, it has to be aligned at two levels, corporate and individual. Alignment with business objectives, strategy and customer needs is at the core of any organization’s performance management program/system. The more challenging alignment comes from an individual’s ability to align themselves with their respective roles and the expectations that come with it. This is personal yet potent in driving change, development and making a difference to the overall outcome. What we have consistently failed to accomplish is assimilating information from various components of performance management and applying it to bridge the gap between expectation, measurable goals and satisfaction. This is where leaders need to pay most attention and ensure they are present to guide, coach and train employees to see how they contribute in painting the big picture.
“It's no surprise that companies with robust business performance are also companies with strong employee performance management programs”.(Insala, 2007) This finding was reported by the 2007 State of Performance Study, conducted by WorldatWork and Sibson Consulting, which surveyed more than 550 HR professionals.
The study found that "Performance management techniques for both the effective and less effective organizations are not very different. The greatest difference is the level of active leadership support and championing of the process."
The study also revealed that “The organizations getting the most impact from performance management are those that have strong leadership support, and that execute well in differentiating performance and giving performance messages.”
Over the years, we have all come to agree that the most important objective of performance management is Talent Management, and this must be demonstrated by leadership. As Mark Thomson, President and CEO of New York Times remarked on leadership that it’s “creating a safe place for other people’s talent." (THE FOCUS, Egon Zhender, 2015). Employees need to feel and experience the opportunity to apply their skills, develop their talent and do it in an environment that supports their willingness and desire to grow,
The performance management system must start with, be led by, and be committed to by senior management. Leaders are the biggest advocate for an effective performance management culture and when they practice what the organization is preaching, it reaffirms faith and respect for the system and fosters acceptance.
Educating Managers and Employees on Feedback
Managers, team leaders or whoever else is involved in assessing an individual’s performance are the real executors of a PM system. The success of any PM system depends on the ability of the leadership team to effectively administer it. Building that ability requires training managers in discerning performance levels, the art of feedback and developing interpersonal skills to connect (engage) with people. Feedback here include both recognition/appreciation and constructive assessment. Perhaps the hardest task in providing practical feedback is initiating the conversation.
On the same continuum, we have employees who aren’t exactly welcoming feedback. Being receptive to feedback about performance and reviewing their development isn’t something that is handled well by all employees.
”There is something that is much more scarce, something rarer than ability. It is the ability to recognize ability.” – Robert Half
So how do we overcome this fear of feedback and enable managers to differentiate between good and great performance. Quite simply HR needs to invest in training managers to developing listening skills, teach them to help employees receive and process feedback, and the most important one train them to be an effective coach. This approach works when this is an expectation that is driven from the top and requires practice, role-playing and support. According to a recent research paper by BlessingWhite, a division of GP Strategies "Performance Management: Assess or Unleash" (June 2015), workers who receive coaching are also more likely to view their organization’s performance management process rated as fair. (73% compared to 46% of those who don’t receive coaching). They are more likely to say performance management increases their engagement levels (50% versus 21%), accurately measures individual performance (56% compared to 26%) and gives them insight into improving their performance (70% versus 32%).
To keep managers motivated in executing an effective PM we need to recognize and appreciate managers that do a good job of managing their team’s performance and when they act as coaches and mentors to develop talent. It is a huge responsibility to develop an employee and HR needs to encourage and support managers in this endeavour.
Candid not Candied Conversations
The one time of the year where employees avoid their manager like the plague is the annual review. The performance conversation does not conjure a pleasant image. If we were to toss aside the traditional approach of performance reviews and consider the current feedback based approach. there is still the element of the discussion that continues to be a source of discomfort. Performance conversations are not the occasion to practice your oratory skills or embellish words or put on your Oscar Wilde hat. These are by no means easy yet have to be cultivated into feedback or conversations where you engage in a meaningful, honest and transparent discussion about an individual’s roles, responsibilities, performance, expectations and goals, in short talent management. So you owe it to yourself and the employee to be candid. In performance management, feedback has to be a supportive two-way process where both parties are committed and accountable for their performances and how their actions make an impact on the organization. The approach going into these conversations has to be open minded, willing to listen and be heard and more importantly depends on your ability to connect with the employee. Feedback conversations are not a platform to get personal with offensive or disrespectful remarks. The spotlight is on performance and development. Remember the success of the conversation or feedback is built over time and depends on your ability to establish trust and respect, which comes through an understanding of the employee’s work, realistic and objective observations of performance and recognition of achievements. This shouldn’t preclude you from having firm discussions to address poor performance and providing constructive feedback and resources to improve lagging performance because there is nothing more defeating that putting up with deficient performers.
Simplicity and Timely feedback
We all know that reward, and recognition are most impactful when given in a timely manner, are specific, within a context of a larger goal, and authentic. Even discipline follows this immutable rule! However we have failed to apply this simple logic to performance management. There is clearly no point in giving an employee feedback about the results of his or her performance up to a year or 6 months after the fact. Actionable feedback must be timely or frequent enough and constructive to influence performance and results moving forward. Hence the shift in performance management by breaking it down into frequent check in conversations rife with feedback. How often is enough, the length of the check in’s, does it require documentation and the contextual nature of such conversations are unique to an organization and its performance culture. While this may take a few tweaks to find the one that works best, the focus shouldn’t shift from timeliness.
What compounded the feedback problem was cumbersome review systems, forms and processes that were cause for much frustration, wouldn’t make sense and only added to the apathy in the process. If we are to truly transform our approach to performance management, we have to adopt a much simpler approach that is easy to use, offers greater flexibility, intuitive in flow, easy to comprehend at an employee's level and facilitates a positive acceptance by the employees. It’s not about building steps and work flows or creating forms that collect redundant information but making performance management systems more responsive and sensitive to the dynamics of workforce and the generational cohorts at work. Focus on skills, strength building, goal accomplishment and career aspirations. Don’t let forms and rigid processes detract from you from having conversations with employee’s in driving the organizational strategy through engagement, empowerment and encouragement.
Technology and Performance Management
The lack of technology presence in performance management systems was highlighted by Towers-Watson’s 2012 Global Workforce Study entitled, “Engagement at Risk: Driving Strong Performance in a Volatile Global Environment”. It was found that only 44 percent of organizations do an effective job of using technology to deliver the performance management process itself. One of the reasons why performance reviews have been eschewed is the archaic process and paperwork involved. There is a plethora of systems out in the market from simple off the shelf PM systems to sophisticated workflow based systems that enable a more fluid and intuitive approach to PM. We haven’t been receptive enough to advancements in PM systems even though we have been complaining about them for over 15 years. We won’t just be saving trees by adopting a more automated solution to performance management but also creating efficiencies in administering and supporting PM with a streamlined approach that engages the workforce in a feedback culture with real time reporting capabilities. Technology in performance management enables and encourages employees at all levels to participate in the process by literally placing performance management in their hands and triggers a culture of appreciation and recognition.
What is also lacking is the use of technology to support the corporate strategy through quality data that reflects the state of talent management. Data on performance management should feed the pipeline of real-time information about how individuals are performing and the skills and knowledge inventory in the workforce. This information is critical when it comes to assessing bench strength, developing current talent pool and workforce mobility in strategic planning. So take advantage of the solutions out there and free HR to be more strategic.
Assessment Gone Wrong
Here are two quotes that come to mind when we speak of performance assessment;
“Measurements that don’t lead to meaningful action aren’t just useless, they are wasteful” – Jim Clemmer
To which our bright friend Albert Einstein would say; “Not everything that can be measured is important…and not everything that is important can be measured.”
This is where performance management really broke down. The rank and yank or the forced distribution techniques did not make sense anymore and have been the main reason for dissatisfaction at all levels. When employees are treated as numbers and points, it is not only impersonal but sends a wrong message about how you value and develop talent in your organization. The assessment process should be relatively easy to understand and administer if the focus is on building up and moving forward. When goals are set collaboratively and aligned with the organizational strategy, there is a consensus on how goal accomplishment will be measured, and what measurement approach is used, it starts to impact talent. I do believe there has to be some scale of measurement to track progress and improvement or for that matter, even recognize achievement in quantifiable terms. A number as in a rating scale may not always be the right measuring unit, but our human nature needs a reference point that places us on a continuum of progress. To avoid the fixation on numbers and ranking, the approach would have to be forward-looking and speak to the developmental nature of performance management and with frequent feedback on how an individual’s performance is contributing to the larger organizational objective.
Performance Management & Reward vs Performance Management and Development:
There is an ongoing debate about separating performance management discussions from reward or compensation. I strongly believe that there are two very real outcomes of performance management one that is developmental and the other monetary benefit. There are arguments both for and against this debate. If we understand and believe in the importance of goals and money as motivators, then it only makes sense to club discussions on accomplishments with financial rewards. What’s more motivating and reaffirming than seeing how your performance (effort) has resulted in monetary reward and recognition (consequence). That association is undeniably strong and aligns with the motivation theories driven by extrinsic reward. There was a study conducted by Lawler (2003) to support that tying rewards to performance appraisals tends to be associated with more effective performance management systems.
So where does development fit in all this. Well, here is where we come across the fork in the road to effective performance management. Training and development discussions during performance reviews lose significance in the context of rewards and past performance and do not work. (Lawler 2000). This is attributable to the fact that discussions of performance and rewards typically are more focal in the conversation and distract us from meaningful discussions about future development.
However, if we have indeed transcended from the retrospective approach of performance management and also accepted other ways to assess compensation decisions, then it shouldn’t matter if reward and development were both equally important outcomes of performance assessment. Employees aren’t just satisfied or motivated with monetary rewards the more enduring ones that drive retention are embedded in developmental goals that speak to the future and individual progress within the organizational context. As long as we don’t favour one over the other, I do not see a problem in entertaining both discussions as part of performance management.
As we continue to evolve and improve performance management practices, I think we can all concur on the fact that it is not by any means an easy task to establish a performance management system and there is no perfect system out there that would be right for an organization. In my experience performance management works best when you build a culture of delivering results through accountability and investment in talent management. You have to commit to conversations about clarifying and aligning goals and expectations, building strengths, leveraging skills sets and collaborating on mapping a career path that becomes the underlying rhetoric.
Ultimately Human Resources will have to play an active role in adopting a renewed approach to change perceptions around performance management. Organizations are looking forward to establishing a performance management system that grows and sustains talent through engagement, collaboration and a culture of feedback and ownership of talent management.
Lawler, E.E. (2000). Rewarding excellence: Pay strategies for the new economy. San Francisco: Jossey-Bass.
Lawler, E.E. (2003). “Reward practices and performance management system effectiveness.” Organizational Dynamics, 32(4): 396-404