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I’m a big consumer of international business publications like Harvard Business Review, the Economist, and the like. For the last few of years, human resources-related content from these and similar sources often discuss issues directly and indirectly related to performance management, and the verdict is in: performance management, as we know it, is simply not working.
What was once seen as a way to monitor and guide employee performance, has evolved into an administrative burden for managers and an unconstructive exercise for employees, with the only real driver for it being that it is a corporate requirement and the determinant of compensation.
When performance management came into existence, the intent was good: it was a way for employees to understand what was expected from them by their managers, tell them how they were performing, and what they need to work on. The reality of the execution of this, and the evolution of how both companies and people worked is where this fell short.
A formal discussion between a manager and an employee once or twice or even three times a year, does very little for building the relationship between them, and very little for giving feedback that is timely, useful or constructive. What often ends up happening is that it is a one-way line of interaction where the manager tells the employee what went well and all the things that went wrong. Because the end result of what organizations want from the process is a rating, this has become the goal of performance management.
There is a lot of lost value in what performance management often is versus what it could be. The manager-employee relation is the most critical relationship in any organization and also the number one reason employees leave companies. Like all relationships, it needs to be an on-going and highly interactive one. Employees seek on-going dialogue, not just a one-time feedback – whether on how an assignment is going, when things are going well, when things are not going well, when they are facing an issue, when they seek to learn something, and a range of other instances.
These interactions are coaching and development opportunities that help both the employee and the manager, and are a fundamental element in building rapport and trust between them. These interactions need to be often and timely, not a few times a year as is mandated by performance management systems in most workplaces.
Employees often struggle to understand their role in the bigger picture. Performance goals that are assigned to employees sometimes do not correlate to organizational goals or targets. This causes confusion and disengagement as the employee doesn’t understand the importance or impact of their role. The role of the manager in this process is vital. Employees who understand their contribution to the company are more engaged and committed than those who don’t.
Performance management needs to include lots of feedback to be relevant. and not reflect just one perspective – the manager’s. There are other important perspectives when looking at how an employee is doing that include team members, subordinates, peers, customers, and vendors, among others. Including as many perspectives as possible gives a balanced, more concrete view on how an employee is doing.
There are a number of companies that have removed performance ratings from the performance management process. While there are various points of view on how successful this is, those who have implemented a no-ratings approach consider the value this brings as the focus of discussions is about constructive conversation versus a struggle on the rating.
There is great value in a more progressive, interactive performance management approach. This would include very frequent conversations between an employee and the manager, and they need not be long nor formal. A more inclusive feedback approach from various stakeholders who work with the employee would provide better clarity on what the employee excels at and what they need to develop. The goal of performance management needs to be on-going, constructive interactions that are beneficial for the employee, manager and the organization.