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:
- 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.
- 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.
- 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.
- 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:
- 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.
- 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.
- 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.
- 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.
- 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.