It seems self-evident to say that the real purpose of performance management is to manage performance. When we talk about managing performance we are going well beyond supervision and into the realms of managerial leadership being exhibited at every level of the organisation.
Over the last 10 to 15 years, at 1st Executive, we have been instrumental in installing performance management systems in organisations large and small. We have applied these through paper-based systems, Excel models, and world-class performance management software. During that period the debate about the merits of performance management have raged strongly. To some extent it has been unfortunate that the phrase "performance management" is also applied to what is effectively a situational leadership technique designed to closely supervise under-performing talent to an acceptable level of productivity, quality or results.
Once we accept that true performance management is about managing existing and potential human resources to a high level of business performance then we can see that the commentary that has ranged between performance management being a complete waste of time and an essential component of high performing teams is instructional.
The truth is that all of these points of view are both correct and paradoxically incorrect at the same time. The March/April 2019 issue of Harvard Business Review runs a front-page headline that says "Why Feedback Fails" in which it explains how an incorrect approach to the performance management conversation can actually be detrimental to improved employee performance.
If I add this article to the breadcrumb trail of the last 10 to 15 years of literature it seems to me that there are a number of best practice considerations to be addressed when applying performance management:
1. Executive leadership needs to be accountable for results. The CEO or General Manager will generally be held accountable for the profit outcome. Sales will generally be held accountable for delivering revenue. Operations may well be held accountable for the efficiency that is required to generate profit and in simple terms, finance may be responsible managing expenses, investment and ROI. Other executive roles may have specific KPIs or business objectives that are based on inputs which contribute to the achievement of results. For these KPIs or business objectives to be effective they must be derived from the financial goals of the organisation.
2. Back in 2005, "The Workforce Scorecard" by Huselid, Becker and Beatty (Harvard Business Press) advocated a completely strategic approach to workforce management. It highlighted the importance of differentiating your workforce strategy in favour of roles that created value and ensuring clear line of sight with corporate objectives. In the opening words of its foreword it asked the question "How do we know?" In essence this was just a precursor to the need to be clear about what we need to know to succeed and then ensuring that in performance management we measure what matters most.
3. Taking "The Workforce Scorecard" approach it then becomes important to align values and behaviours, structured competency framework, and clear and accurate description of the responsibilities in all roles with the objectives of the business. This preparation then, in principle, ensures that performance management across the entire organisation is focused on strategic alignment of the workforce with the goals of the business. What this approach needs to succeed is a method that exists to provide feedback to employees who know their part in the plan.
4. This takes us to the heart of this most recent Harvard Business Review article which addresses the need to provide feedback in a constructive way, which highlights the often flawed opinion base of the reviewing manager and accurately describes the basis of those flaws. The article advocates an approach very similar to Gallup's strengths-based methodology which is something to be commended as it correctly identifies the purpose of "feedback" as helping "employees thrive and excel"
In conclusion, our view, that the critics of performance management methodologies over the last 10 to 15 years are both correct and incorrect holds true. In all of our work we seek to ensure that:
- Performance expectations are aligned with the plan
- That strategic differentiation in favour of value creation is commercially essential
- That the organisation measures what matters most role by role. For some this is results, for others it is the demonstration of soft skills, and for others the extent to which they can fulfil the requirements of the role with the correct degree of autonomy.
- Finally, that performance management conversations are held transparently to ensure that the employee is helped as much as possible to thrive and excel.
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