Manage Performance, Don’t Mangle It

Jan 24, 2019

By David Wentworth

How did we get to a point where the term performance management instills fear and dread at its mere utterance? Employees tend to loathe the process, which is commonly perceived to be little more than a vapid popularity contest that does nothing to recognize their work yet determines their pay for the next year. Managers see it as a huge time suck that culminates in a series of uncomfortable conversations and confrontations they would rather not endure.

At its core, the concept of managing performance makes complete sense. Any organization worth working for wants to ensure that its employees are focusing on the right things, achieving strategic goals and improving their performance. All of these factors directly affect organizational performance. Giving employees feedback on how they are doing helps them improve, offers managers insight into their teams, and provides leadership with an overview of the talent they have at their disposal.

So what happened?

Somewhere along the way, the idea of managing performance was twisted and contorted into the process of performance management. The desire for measurable data and practical efficiencies squeezed most of the human element out of the process. Instead of understanding why a person is performing the way they are, it became much more important to assign them a number or a label that satisfied a reporting requirement.

Part of the blame can be laid at the feet of the pay-for-performance culture. Don't misunderstand me—pay-for-performance is a powerful tool, and our own research points to the fact that adequately rewarding top performers is a good strategy. However, once merit increases became tied to the appraisal process, it created a bond that seemingly cannot be broken.

At the recent kick-off meeting for i4cp's Performance Management Exchange, members of the group were asked about the primary drivers for performance management at their organizations. The members cited many aspirational goals for PM, including improving performance, identifying development opportunities and aligning individual goals with organizational goals.

One thing that was not included, however, was determining pay raises. Yet, if you ask the employees at these or any other organization the same question, the majority will tell you that the appraisal process is for determining merit increases. Period.

Something needs to be done to fix that disconnect and ensure that employees understand the true nature and intent of managing performance. Employees need to have a clear vision as to the role performance management plays in the organization and this clarity needs to become ingrained in the culture. Once this happens, employees can become willing participants in the performance management process rather than reluctant victims who perceive themselves as being forced to participate in something that's being done to them.

Are you facilitating this understanding? Does your company have some type of mission statement for performance management? Do your employees know what it is? It seems as though performance management may suffer from an image problem, and desperately needs a marketing makeover. If your organization doesn't have a communication strategy in place regarding performance management, it's well worth considering putting one together.

As part of an effort to redefine performance management, i4cp has released the first in a series of Performance Management Playbooks. The playbook was developed using an analysis of two separate surveys on performance management with an eye on strategies and policies that are correlated with high market performance. We also spoke with several organizations, including i4cp members, and got their perspectives on what does and doesn't work. Those perspectives and insights are included in the playbook and we hope you find it both inspiring and instructive.

i4cp's 4-Part Recommendation:
1. Encourage continual, year-round feedback.
This can help keep the appraisal process from becoming a one-time, year-end burden. Continuous feedback keeps employees engaged in the process and preempts difficult—and perhaps confrontational—discussions at appraisal time.

2. Focus on what matters. Don't expend all of your precious time and resources determining whether to use a five- or seven-point scale. Don't look at high completion rates as the hallmark of a world-class PM process. These things aren't correlated with high market performance. Some of the things that are correlated include providing ongoing feedback, creating developmental plans and goal-setting.

3. Calibration is your friend. Use calibration sessions to demystify the process. One of the most common employee complaints is that PM seems like a mysterious magical black box and what comes out is senseless and arbitrary. A transparent calibration session can ensure that managers are being honest and fair.

4. Address and resolve poor performance. Simply rewarding high performers and ignoring low performers will not suffice. Similarly, culling the bottom 20% and replacing them would be a costly endeavor. Instead, identify the factors leading to the poor performance. Perhaps there are development opportunities that could help or conflict issues that can be resolved. Given the proper direction, a low performer can often become a high performer. If termination or similar actions are necessary, those decisions are made easier by examining all of the possibilities first.

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About the Author(s)

David Wentworth  is a senior analyst at i4cp.