Ask a top executive, first-line manager, rank-and-file employee, or HR professional what they think about their organization's performance management (PM) process, and you're certain to elicit a strong response—most of it negative. “Waste of time,” “going through the motions,” “bureaucratic exercise,” “painful,” and “performance mismanagement” are some of the (printable) phrases you are likely to hear. In today's ultracompetitive business environment, penalties visited upon companies for non-performance are swift and brutal.
So why is such a vital activity not handled well by more organizations? New research from i4cp uncovers game-changing strategies for leveraging PM to drive up organizational productivity.
High-performing organizations (HPOs) treat performance management as something more than a collection of human resources practices. In those organizations, PM activities share a common strategic purpose: engaging all of the organization's talent in building momentum to accomplish its mission. Contrast this with low performers that arm supervisors with little more than an appraisal form and a list of employees. No surprise that this approach fails to produce the kind of performance improvement that can affect overall corporate performance—the true purpose of performance management.
Five distinct hallmarks—direction, dialogue, inclusion, relevancy, and mission—characterize the most successful PM approaches. High-performing organizations’ leaders take specific steps to develop those traits and produce outstanding results:
1. Provide direction by fusing strategic and tactical approaches to PM.
In HPOs, leaders balance PM strategies. On the strategic level, they support an enterprisewide focus on high performance, making sure those activities required to achieve business goals drive skills development and recruiting priorities. On the tactical side, HPO leaders ensure ongoing goal review and managerial feedback. They also discuss accomplishments and development plans with employees.
Corning Incorporated, a featured organization in i4cp's research report, has a corporate model of performance management that illustrates a combined approach to PM. Corning's feedback practices have embedded PM in the business and truly drive outcomes. According to Hank Jonas, the company's manager of organizational effectiveness, “(PM) is really more about the business. It is not about HR. It is not about performance review. It is about ‘how did I satisfy you as a customer?’”
2. Encourage dialogue by teaching, facilitating and promoting effective PM communications.
Leaders of HPOs don't leave quality dialogue to chance. They insist that managers' development includes PM competencies, and i4cp identified this approach as a key differentiator of HPOs. Supervisors' training includes such critical PM concepts as developing goals, giving and receiving feedback, writing performance appraisals, conducting performance appraisal meetings and maintaining ongoing documentation.
3. Promote inclusion by applying PM with a broad and inclusive brush.
In HPOs, leaders regard PM as relevant to everyone, from board members and executives, to project teams and business units, to each individual employee. Organizational performance cannot occur in isolation; the performance of one feeds the performance of others. To increase inclusiveness, leaders eschew top-down PM discussions, instead inviting peers, subordinates, even customers into the process. Technology solutions make multirater feedback easier to implement, even at lower organizational levels. Phospate and potash mining leader Mosaic, another organization featured in i4cp's report, uses its PM system—EDGE (Evaluate, Develop, and Grow Excellence)—to schedule, manage, and document performance and career development conversations among managers and employees worldwide.
4. Ensure relevance by aligning and integrating PM with other organizational components.
Integration of PM information systems and data with workforce planning proved to have the highest correlation with market performance in i4cp's study, but integration with overall talent management also scored highly.
In U.S.-based companies, integration with compensation and rewards was the top differentiator between HPOs and lower performers. Achieving this level of linkage is impossible without a solid technology platform that integrates different talent management-related processes, such as talent acquisition/recruiting, learning and development, and workforce planning. For example, Corning ties PM to needs assessment and learning based on identification of developmental needs and objectives taken from the performance review. Performance ratings and the content of the performance documents are pulled in as part of the overall talent planning process. Corning further integrates performance review information into systems supporting succession planning and filling of open positions.
5. Tie PM to the mission by having leaders champion and actively participate in PM efforts.
Getting the entire organization to invest its time and energy in PM is more easily accomplished when C-suite executives see PM as a process vital to the organization's bottom line and one that has a positive business impact. The leadership team at Corning is highly involved in the PM process and participates in competency identification, calibration sessions, goal alignment, critical metrics discussions and progress reviews in open forums. Practices like these, along with virtual town hall meetings or Q&A lunch sessions, enable employees to see and hear that leaders back PM's importance. Furthermore, top executives' recognition of employee success stories and customer accolades help to connect personal efforts with key corporate success measures.
Practices applied in high-performing organizations prove that performance management can be productive rather than painful. When driven by a clear purpose that provides direction, promotes dialogue, encourages inclusion, creates relevancy and supports the overall mission of the organization, PM becomes a true performance differentiator.