Human Resources: Performance Management: Tricks of the Trade or Just Something You Should Already Know?

One of the most complexing and frustrating challenges a reward designer has is how to manage the performance process. How do you credibly evaluate employee performance well enough to use it as at least one element that helps determine pay?

Let´s start with our view of the ´state of the art´ on performance management. First, why do we need to worry the performance management challenge? Here are some possible reasons to have effective performance management in place:

1. Identify ´Superkeepers´: Who are the employees with the most critical skills that are absolutely essential to making your organization a success? Unless your organization has some way of identifying them, it´s unlikely you can focus on their growth, nurturing, and retention. Superkeepers are the people your company must retain through thick and thin. They are the people that make the performance difference the company needs. Many of the top-performing organizations believe that no more than 5% to 15% of the total non-management employee population are the essential Superkeepers. And performance management can help you keep them in leadership´s mind´s eye. It also provides the platform for nurturing and development.

2. Skill and Competency Growth: Performance management is a powerful tool for identifying the essential skills and competencies the company needs and to assess the extent to which these critical skills and competencies exist in the workforce. It communicates the skill/competency need to employees-individually or as members of tightly knit teams or loosely-associated, groups. And, performance management can help the organization´s employees undertake the acquisition and application of these skills and competencies to ensure they are available when and where they are needed. When combined with the role of identifying Superkeepers, the skill and competency growth role for performance management is central to ensuring a continually improving workforce.

3. Performance Feedback: The role of the new manager and supervisor in the high-performance workplace is that of coach and trainer. The performance management process (not the performance management ´form´) is the basis for this feedback. It is the way performance ´course corrections´ are made. It creates the opportunity for dialog and communications about expectations and accomplishments. It is the way to document what is going on in the performance improvement process and what the next steps in workforce continuous improvement might be. Performance management done at it´s best is a daily process and creates dialog about how people become increasingly valuable to the company.

4. Basis for Pay and Rewards: If not for performance, what should be the primary reason for adjustments in pay or the awarding of incentives or other rewards? Performance management, when well done, can help distribute whatever rewards the company has to the most deserving employees. So performance management has a highly practical application-helping to align pay and rewards with how the company values employees.

So, the business case for effective performance management is transparent if not obvious. The problem is that once the hard-to-refute argument for performance management is made and accepted, too often everything goes down hill. Either the solutions posed are so elaborate and confusing they are unworkable, or they are focused on the ´design of the form´ rather than getting those giving and getting the performance feedback ready to effectively exchange information and plan a route to success. As they say, ´the devil is in the details´ and performance management will consume organizational energy if it is to work.

Some Performance Management Tips
First, effective performance management has little or nothing to do with the form you complete to support the process. We have a client with a world-class performance management process that uses what they call The Annual Piece of Paper to support the performance improvement and feedback process. You heard it right-a single piece of paper, on one side, that supports an effective and legally defensible performance process.

The strength of the solution in this case it just what it should be in your case-managers and employees trained to make performance management work; and, even more critical, to subsequently put the solution into action. And it´s championed and role modeled by the senior leadership team.

Now that we have that behind us, let´s give you our ´big four´ suggestions about making performance management work to the betterment of your company and employees:

1. Simple but Powerful: We have an elevator speech analogy about nearly everything we encourage organizations to do concerning pay and rewards-and performance management is a key example of this. "If you get on an elevator at the first floor with someone who does not understand what you are trying to implement, can you get them to grasp it by the time the elevator gets to the 20th floor?" It is not how long the process is, it is how powerful it is. Processes must give clear and accurate feedback. They must communicate goals and expectations. And performance management processes must support getting and applying these and it must have celebration and rewards. Many organizations put the parties to the performance management process to sleep before the messages come through. Remember the ´elevator speech´.

2. Measures and Goals Prevail: The fewer the performance messages you give, the more likely it is that you will successfully get the behaviors and results you desire. This means focusing on the most essential goals and measures that can be best influenced by the employees involved in the measurement process and making the measures and goals understood and accepted. Maybe 3-5 is the limit because people just cannot be successful if they are confused by too many performance requirements.

3. Performance Management is Coaching: First get the substance of the dialog between managers and employees about performance down cold-then, and only then, develop the supporting documentation systems to support it. Change in performance comes from involvement of those responsible for helping employees do better and the employees who are interested in doing what is right for the organization and for themselves. Practice, training, understanding goals, tracking progress, daily discussions about progress, and making it important to the organization is what counts. Then a form to be completed can be developed in short order that will get the paperwork part of it done.

4. Follow-up, Follow-up, Etc.: Performance management processes don´t manage themselves. All the policies and procedures you develop to support employee performance will not replace the personal follow-up the process needs to be sustained. This means making performance management a part of ´the way it is done here´ in your organization. It must become part of the culture and not foreign to the culture. It must make your organization attractive to people who want to have their performance judged as well as leaders who are willing and able to provide useful feedback and help the people do what´s right. Performance management is a people thing and not a forms or software thing and feedback is the engine that makes it work.

From Slogan to Reality
Nobody will oppose the concept of performance management. It is like ´motherhood and apple pie´. But making it really work is quite another thing. Our two cents proposes that your organization needs a solution that is simple and powerful. Performance management that will work rather than create bureaucratic and legalistic paperwork and complexity. Goals and measures are the juice that makes performance management work. Picking them and making sure they are understandable, reasonable, achievable, and add value to the business when they are accomplished is the business reason for performance management. Also, coaching and feedback are what performance management is about. Finding out what the organization needs, communicating these expectations to employees, getting them ready to get the work done, holding managers and employees accountable, and communicating and championing it in are the essentials to performance management.

So, before you call up a bunch of organizations and ask them to send you their performance forms, start with some of the ideas we hope we have planted with you. When you ask other organizations what they do relative to many human resource topics-and performance management is certainly one of these topics-you must keep in mind that organizations and people are different and customization to your business needs is what makes it all work.