It feels like we have been talking about performance management forever. In our conversations, organizations are telling us that performance management practices are not just ineffective; in some instances, they’re painful. In fact, when we recently asked managers in one organization how performance management was handled, our two favorite answers were: “with a pointy stick” and “like it’s 1979.”
Why this is important:
We are at least 7 years into the performance management “revolution”, and yet, many (rightfully) have a healthy skepticism about whether the new approaches are any better than the old. In fact, recent research by McKinsey & Company found that 54% of respondents still don’t believe that performance management has a positive impact.
Despite myriad articles and case studies about simplified ratings (or no ratings at all), separate performance and compensation conversations, real-time feedback and the technologies that support it, agile goal-setting, and coaching and development as a part of performance management, most organizations would admit that performance management is still a struggle.
Today, we’re launching a formal research study, sponsored by Glint, into what organizations are doing with respect to performance practices and how effectives those practices are.
Peformance shouldn't just be managed; it should also be enabled.
The premise for this project is that we have moved from an era where organizations only had to concern themselves with performance management to one where enabling performance is equally as important.
In the beginning…
A hundred years ago, performance management was much less complicated than it is today. Organizations were looking for a way to understand the return on their people investment. During the first industrial revolution, as assembly lines and other methods for increasing efficiency made an appearance, people were plugged into those systems and processes.
The worth of an employee was much more easily quantified than it is today. Tasks had a “right” way, and because measures associated with those tasks were objective (e.g., cycle time, number of widgets), it was easy to determine how well an individual performed based on those numbers. It created a transparent and equitable way to compensate employees.
The times, they are a-changin’…
However, we’re not living through the first industrial revolution; we’re living through the fourth. And there are some differences.
First, the work organizations are asking employees to do is different and much harder to measure. There are increasingly fewer ‘right’ ways to do a task because employees are continuously adjusting to changes in both internal and external environments. Instead of a set way of doing things with a set way of measuring things, employees are often left with nebulous job responsibilities and organizations are left with even more nebulous ways of assessing them.
As a result, “performance” has necessarily become less of a technical term. Instead of objective measures, shifting goals and strategies make it necessary to use more subjective measures when appraising employee performance.
Second, employee expectations have also shifted. As our societies continue to evolve toward a knowledge and information economy, compensation has become only one of many factors that keep employees with an organization. Employees now choose roles and tasks, not solely based on compensation, but also on things like how interesting they find the work, whether there is room for growth, opportunities for recognition, and what types of skills they can learn.
These expectations have prompted organizations to supplement traditional performance management processes. They are no longer just worried about the outcome or throughput; if organizations invest in individuals, they also want to measure their propensity to learn and their attitudes as a part of their overall performance.
As a result of these changes, many organizations have implemented a hodgepodge of old practices that don’t quite fit current conditions, and new practices that are applied haphazardly. As organizations try to blend the old with the new, gaps are introduced that result in frustration and uncertainty, both for the organization and for their employees. We currently see that frustration in the market. Gaps include:
Focusing on management or enablement, but not both
It is likely that during this last performance management revolution that we threw the baby out with the bathwater. Performance appraisals are an important part of how organizations compensate and create fairness, and throwing them out has caused havoc in more than one company.
As we begin to adopt some of the new ways of doing things, it becomes doubly important that we figure out how we fulfill some of the more traditional reasons for performance management. (By the way, if you’ve managed to create performance management practices that balance both of these, we would love to talk to you.)
Treating performance as a stand-alone challenge
Currently, most organizations look at performance and performance management as a separate set of practices and measures. However, how employees perform is ultimately the culmination or result of all other people practices.
This means that incentives, recognition, compensation, wellness programs, career management, coaching and mentoring, and engagement programs impact the performance of the organization. Truly enabling performance means taking a holistic approach to people practices by looking at all parts of the organization and understanding how they impact individuals and their ability (or willingness) to perform.
Missing the perspective of the employee
Most modern performance management practices have been conceived of by leaders of organizations and management consultants. Strangely, a lot of organizations limit upstream feedback to engagement surveys and the occasional 360. In the case of performance management, we think employees are in a unique position to tell us what would be useful to them in order to perform better. As a part of this study, we will be asking them.
Ignoring inherent bias
Performance management processes as implemented in most organizations are inherently biased. Most processes are largely subjective, no matter how many times a year a conversation is conducted. While a manager’s and peers’ opinions are important and valid to appraise performance, new technologies and access to new data can provide additional information that may create more fairness in the process and provide the organization with much more information about who is performing well at what tasks and in what instances.
We want to explore that further.