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Why Performance Management Should Come with a Warning Label

By Tom Schott

Tom SchottAs someone who has spent 20+ years working with hundreds of companies to improve organizational and leadership performance, as well as 15 years managing a high-performing team, I have yet to find a businessperson who would argue that some version of performance management isn’t good, and necessary. Yet a fierce debate has arisen between what’s good for the company versus what’s good for employees. Of course, when done correctly, performance management is good for all. But in either case supervisors are placed (or caught) in the middle.

Maybe we can begin by asking which word in the term “performance management” should be emphasized?

For the company, the list of priorities for the performance management system might start with goal-alignment, accountability, documentation, and performance reviews/evaluation. Most of these lean more to the “management” side of the equation, and pushed too far these well-intentioned drivers of successful performance can go very quickly from being hand-rails to hand-cuffs for employees.

As for employees, effective performance management is about growth and development, feedback, engagement, “ownership” of their jobs, and realizing their potential. From this perspective, it’s more about the “performance” side. But leaning too far in this direction doesn’t assure us of getting stuff done, hitting goals, and growing the business.

So, should performance management be more about performance…or more about management?

Enter the supervisor, the administrator of company process, with procedures to follow, goals to set, forms to file, evaluations to be made, and rewards and consequences to deliver. These are all acts of management. At the same time, supervisors are responsible for a group of people and need to create energy, inspire maximum effort and risk-taking, deliver feedback, and celebrate success—the positive acts of an effective leader.

Can we see performance management as a balance between managing AND leading that benefits both the company AND employees? That, though, demands more questions: What’s the right balance? And what happens when we get out of balance?

From what I’ve seen, in lieu of good leadership, management tends to rise to fill the void. On the other hand, without some degree of good management, how do we ensure and measure success?


Where we may have gone wrong

It is a huge mistake to think that just because an organization has a defined process, and perhaps a slick electronic tool, that managers will be good at performance management. To the contrary, simply having people report to you, and the ability to fill out a form, does not mean you suddenly understand the intricacies of performance management (setting goals, coaching for success, accurately observing and giving feedback, learning from mistakes, and reviewing performance).

Could it be that some companies try to develop supervisors—or worse yet, try to fix “broken” supervisors—by overhauling their performance management process? Might we all be better off first trying to dust off a few of the needed skills from the basic leadership training most supervisors have already been through at some point? (I remember in the 1990s, before all of the technology was available, many of us HR vendors would refuse to sell performance management to companies that did not first commit to developing the culture to support it. We’ve gotten soft.)

Instead, it seems that today the loudest cries are to do away with performance ratings, which, of course, some see as akin to doing away with performance management altogether. But this is merely a kneejerk reaction to the scientific proof that people don’t like hearing about their own poor performance.

However, just as I’m sure our local soccer or baseball teams would prefer only to use a scoreboard when they are winning, is this a good idea? Do we really want to back away from using performance management just because research has shown that people prefer not to have anyone document or discuss their poor results?

Let’s get serious. All supervisors rate their employee’s performance, and subsequently the performer, whether it is overt or not. Have you ever tried to give good feedback without first establishing (“rating”) whether the performance was either good or bad? Does doing away with ratings, whether they are positive or negative, solve this problem, or does it just conveniently make the “noise” go away?

If a company (or supervisor) is primarily using performance management as a tool to dole out compensation, or to create a legal foundation for a RIF, then they have it backwards. But if a company (or supervisor) is using performance management to drive development, improve performance, or achieve success, then they’ve got it right. Both scenarios rely on a supervisor’s ability to observe, rate, and give feedback on performance.

Good supervisors know this. Good supervisors do this. For them, performance management is about serving the team to maximize everyone’s potential and contribution. Poor managers, meanwhile, misuse the system. At best, they see it as merely goal-setting, reviewing (but not necessarily improving) performance, and keeping score. But often, it’s even less. Their approach disempowers employees, removes ownership, uses a negative version of accountability, and stifles risk-taking and creativity.

Maybe it’s the supervisors—not the system

Could it be that the prevailing negative view, and the variance of a company’s performance management system, is directly related to the variance in the quality of the supervisors? If so, what does that say, and what does that mean?

The data from a 2013 Gallup study suggests that if you have highly effective leaders, you probably don’t need a performance management system and if you have poor leaders, you probably shouldn’t even try to use one (that’s my interpretation anyway). What they essentially found was that employees who rate their manager as “good” also tend to rate their company’s performance management system as good. Those who rate managers as “poor” give the same grade to their performance management system. In other words, the system you choose will make little difference to performance if your managers don’t know how to get the best from their people.

So where do we go from here?

The research and trend that continues into 2016 show companies saying they will move away from the traditional annual performance review and employee ratings, and instead move to adopt more frequent, ongoing, agile, and coaching-oriented performance management platforms. Seventy-one percent of organizations want to improve or reinvent their approach; some go so far as to use the term “reengineering” performance management.

But just listen to what they are prescribing in this “new and improved” view of performance management:

  • More frequent communication.
  • Regular feedback.
  • Ongoing coaching for development.
  • Meaningful objectives that help people align their efforts.

Do these descriptors suggest we are moving forward or backwards?  Is this “modernizing” performance management, or is it more accurately going back to basics?

Perhaps we needed the volume of noise (i.e., handwringing over the sorry state of performance management) to shake things up? But the solution is not to expect a different process, new form, or slick software to magically produce a better result. Instead, if it gets us to pay greater attention to these good, solid, core skills, then it all seems to be taking us back to a good place. This may be our biggest opportunity.

I have a theory, and it’s something like the old saw that says “a fish starts to stink from the head.” In other words, if you don’t like the way performance management is practiced in your company, look upward. If performance management is done wrong within the company, chances are it is done wrong at the top of the company. If senior management is setting good objectives, having frequent coaching and feedback discussions, evaluating and reviewing performance on a regular basis, and helping people identify and focus on developing and improving, I find it hard to believe that the people who work for them won’t do the same.

Long ago, we used to ask companies what their senior executives were willing to do with their own performance management practices. We did this because people tend to manage and lead others the way that they themselves are being managed and led. If you’re an executive reading this, and you are complaining about the way your company uses performance management, what are you courageous enough to do differently yourself?

So, once again, which word should we emphasize, management or performance? As a leader, if you are not making it about performance, maybe it’s time to rethink what is behind your desire to lead.

Tom Schott is vice president of strategic accounts for DDI.

Posted: 04 Mar, 2016,
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