Rethinking Performance Management

The current traditional performance management (PM) system is broken for two reasons. First, because of its underlying philosophy of evaluating people against goals and against each other; this was believed to boost organizational performance, and second because of bad management practices including:

1. Lack of transparency. Employees want to know how they are doing and what they need to change or develop so that they can grow and go further.
2. Rear view mirror focus. Looking at how employees have performed over the last 12 months is not enough. The business environment is continuously changing calling for a more agile and real-time PM approach.
3. Forced ranking and lack of motivation. If the organization is telling employees 'most of you are going to be average' how inspiring would that be? PM, as a process, needs to be an engagement tool. Unfortunately, we are too far from that being the case.
4. Managerial dysfunction. The immediate supervisor plays a fundamental role in managing employees' performance. Yet, a large percentage of managers are not managing the PM process effectively. Typically, managers:
   • Do not provide enough job clarity. They focus on tasks (what needs to be done) rather than on results (the why of the job or what needs to be achieved). Any job needs to be understood in terms of the few key results that need to be achieved through it. This is what is meant by a job’s key result areas (KRAs).
   • Do not track performance continuously.
   • Do not provide relevant, continuous and passionate feedback.
   • Do not coach for higher performance.
   • Fall into several end-of-year performance evaluation traps: subjectivity, bias, central tendency, halo effect etc.

How to remedy this unhealthy situation? How to make PM a strategic business activity contributing to the achievement of company objectives? The answer is simple, yet not straightforward to implement.

It all starts with the job description. Most of the job descriptions that I have seen throughout my consulting and training career are task oriented rather than result oriented. They tell the employee what should be done and to whom without specifying the why i.e. the result of the task. There is no need to describe the how of the task. Leave it to the employee to design the best way to achieve desired job results. That is why I recommend rewriting job descriptions with no more that 4-6 Job key result statements (Job Key Result Areas) that highlight the expected main results of a job. Instead of having 15 tasks to do, the employee will focus on the very few job KRAs. Consequently, the employee will stop just doing and will necessarily start delivering. Once the KRAs are set, the manager and employee must mutually agree on specific KPIs to measure those desired KRAs and assign target numbers to those KPIs aligned with company goals and objectives. This is what I mean by introducing more job clarity into people's jobs. It is the primary function of the immediate manager. Consequently, the employees know exactly what is expected of them and will act accordingly. Isn't that engaging?

There is no meaningful PM without measurable KPIs. The best way of instilling PM responsibility and accountability for managers and employees is making sure they have clear, precise, and concise KRAs to focus on and KPIs to measure them. PM activities should be directly linked to those KPIs and related targets. This is a critical managerial duty.

Next, we need to introduce a new underlying PM philosophy, one that adopts a coaching and development model rather than a model that rests on competitive assessment and rigid compliance. The new approach to PM is that by identifying people's strengths and weaknesses we can coach them and develop them to improve overall organizational performance. This will allow organizations to see themselves as a place for people to fulfill their potential and become successful. With this new philosophy, PM is as much about measurably promoting and reinforcing core values of collaboration and teamwork as it is about cultivating individual skills and capabilities.

Implementing the new philosophy requires a new breed of managers; multipliers rather than diminishers (read Liz Wizeman's fascinating book, Multipliers). Managers that are multipliers bring the best out of their people and they amplify their smarts and capabilities. In their presence ideas grow, challenges are surmounted and hard problems are resolved. Multipliers are participative managers, coaches, developers and enablers of others. They are true leaders, servant leaders. Diminishers are just the opposite (strict, old fashioned bosses). Look around you, how many multipliers do you see? No PM approach (even the traditional one) can generate and sustain desired organizational results without the presence of multipliers. Hiring and promoting to managerial positions the right people becomes an essential ingredient of a sound PM culture. Companies need to promote multipliers rather than managers.

The reason I am stressing the role of multipliers as an essential ingredient of the new PM is their ability and readiness to maximize feedback time with their people. Feedback time is the biggest cultural and organizational impact of a new 21st Century PM system. Big organizations are presently trying to improve their systems of feedback through the adoption of a new generation of software with chat interfaces using AI to create nudges to encourage managers and teams throughout the day. Instead of annual or even quarterly reviews, talent oriented organizations will encourage and enable near constant feedback. This is the best way to engage employees, improve their performance and effectively contribute to organizational results.