Five Strategies For Improving The Impact Of Performance Management

-The problems associated with performance management in most organizations are consistent, chronic, and predictable. Employee objectives are not focused or aligned with business strategy.
It is no secret that one of the most difficult challenges facing leaders in organizations today is what to do about performance management. Study after study shows that both managers and non-managers are very dissatisfied with performance management and often view it as a necessary evil required to make defensible salary decisions. The problems associated with performance management in most organizations are consistent, chronic, and predictable. Employee objectives are not focused or aligned with business strategy. Performance information and feedback is not widely accessible or very helpful. There is little meaningful dialog between people about performance and improvement. Both managers and employees dread the end-of-year "conversation", and managers often avoid giving an honest assessment, choosing the pain of another year of an under-performing employee over the pain of delivering a critical review. And the list goes on. So the question becomes: can performance management be saved? Indeed, should it be saved?

Yes, of course. But saving performance management in your organization will require some investment and a lot of follow-through. Many of the causes of ineffective performance management have to do with its treatment as a task-based, transactional activity as opposed to a key business process that is integrated with other business processes and that must be managed, similar to strategic planning or new product development. Good performance management is in essence good business management, and there are four elements to performance management that are helpful in thinking about it as a key business process - the four Ms:

  1. Model: The performance model of the company that is aligned with its business model. The performance model reflects the organization´s distinct set of beliefs about how it will achieve performance levels that are superior to its competition. Research has shown that the best performing companies do not have the most elaborate systems for managing performance, but have a strong commitment to a distinct performance ethic and hold leaders accountable to its principles.
  2. Messages: Performance messages are the principles and guidelines that are repeatedly and consistently communicated to the organization about the levels of performance that are required, why the organization must achieve those levels, how that performance will be achieved, and the role of performance management as a key process.
  3. Methods: Performance methods reflect the roles, tasks, tools, technologies and activities used to carry out the performance management process at the enterprise, unit, and individual levels.
  4. Management: Performance management reflects the rigor and discipline associated with the ongoing execution and management of performance management as a business process (not just a series of transactions), including the ways in which the organization reviews, assesses, and holds itself accountable for carrying out good performance management practices.
In the end, performance management is a classic case of not being about design, but about intent and execution. With this in mind, five proven and integrated strategies for improving the impact of performance management should be considered:

  1. Invest heavily in the performance model, or ethic, of the organization. Define the intent of performance management and champion the cause relentlessly. Demonstrate that performance management is, in essence, good business management. Give managers and employees the training and tools to carry out the process, and then hold them accountable for its success. At a major diversified conglomerate, performance management is considered to be the number one most important responsibility of managers and part of the fabric of the culture - and this behavior is role-modeled at the top of the house beginning with the CEO.
  2. Explicitly connect individual and team goals to relevant strategic business objectives. This is less about cascading goals, and more about helping individuals and teams become more literate about the business and how their contributions can have impact. It is about a combination of top-down and bottom-up goal setting that can remain fresh and meaningful even in the most dynamic environment. At a leading Northeast commercial real estate company, employees are expected to define personal "commitments" or objectives that tie directly into a shareholder value tree that maps out all of the key measures and drivers of business performance. Employees use a user-friendly tool to determine which elements of the value tree they can impact the most.
  3. Integrate disciplined enterprise performance management with individual performance management. Begin by ensuring that performance management is effective at the enterprise level with respect to goal setting, strategic business planning, measurement, and performance information sharing. Then focus on individual and unit performance management and its linkage with the enterprise. A leading credit card services company is currently investing a significant amount of time and energy in integrating its strategic planning and performance management processes. In the end, they will be successful if the two processes become one.
  4. Create an environment that fosters great feedback. Help people learn how to seek, give, and receive feedback in constructive ways. Hold managers accountable for initiating performance conversations. Develop multiple sources of performance information that employees can access through user-friendly tools and technologies. Require that multi-rater processes be accompanied by some degree of face-to-face conversations. A large restaurant franchiser recently switched from requiring two "reviews" per year to four "performance conversations" as a way to foster better dialog and more meaningful feedback between managers and employees. They now face the not-so-insignificant challenge of sustaining this practice over time.
  5. Build close partnerships between managers and employees for performance improvement. Reinforce the concept of shared accountability for managing performance. Define the manager´s role as a coach who provides tools, information, and direction as needed. Expect employees to drive the process and take ownership for their own performance. Use the performance management process as a key way to engage people in the business and as a mechanism for helping them understand how to impact business results. Drawing on the experiences of the real estate company mentioned above, the design of the performance management system has helped increase the overall understanding of the business and serves as a true catalyst for performance improvement as opposed to a burdensome transaction at the end of the year.
Implementing one or more of these strategies is not easy. It takes courage and commitment and belief in performance management as a key driver of business success. And it begins with leadership role modeling the desired process and behaviors. Because so many organizations struggle with performance management, improving its effectiveness can create true competitive advantage, and in the end, bring a high return on investment.

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