Performance - From Managing to Developing

Behavioural Incentive System

Performance management is an ongoing process that aims to improve organizational performance by enhancing the performance of individuals and teams. Typically, it involves setting individual goals and expectations, monitoring progress, providing feedback, and facilitating employee development. The ultimate goal is to align employee performance with operative or strategic objectives and to maximize success.

Performance management is one of the key expressions of an organizational culture, as it provides a rewards and a punishment framework for everyday behaviour. Used wrongly it can sabotage even the most competent teams. Used wisely it can turn average teams into dream teams.?

Abuse

Mismanaging probation periods can severely harm organizations and new employees from the start. When companies neglect to implement effective probation checkpoints, new hires miss out on early feedback crucial for their success. Without timely guidance, they remain unaware of performance issues and lose opportunities to improve. This lack of attention and communication can lead to forced redeployments or even unexpected last-day terminations creating a feeling of a chaotic, uncoordinated and non-transparent culture. New employees may struggle to integrate into their roles without proper guidance. Their skills and potential remain untapped, while the company struggles with the side-effects of high turnover rates.

Some organizations misuse Performance Improvement Plans (PIPs) as punitive tools rather than developmental aids. They issue PIPs without prior feedback, leaving employees feeling surprised and demoralized. Even more, some organizations do not have a PIP process in place at all and resort to immediate firing of talent. Taken to the extreme, there are organizations which have set a forced attrition rate target, and for them PIPs are often just an excuse, a formal mechanism to achieve that target and "get rid of low performers".

In today's dynamic and accelerating world, clinging to rigid performance frameworks can hinder both employees and organizations. In a blind commitment to "performance and efficiency" one common misstep is the overuse of SMART goals (Specific, Measurable, Achievable, Relevant, and Time-bound). Applying SMART goals in rapidly changing environments forces employees into narrow parameters and "tunnel vision" - leading them to only care for and see challenges and opportunities directly bound to their goals. Conflicting team goals, which naturally occur in any organization, result in escalations. Commands are never questioned for business value, but executed blindly just to reach the KPIs. This approach might work well for less experienced staff, which require explicit instructions, goals and a directive modus operandi. It may also fit well to certain cultures, where top-down deployment of goals - down to specific individual contributors - is not only accepted, but rather expected. While useful in stable and predictable settings, such approaches can be too restrictive in fast-paced, VUCA environments. This is prominent especially in the IT and tech industry, where narrow, personal one-year goals often become irrelevant already in the second quarter of the year.

An overemphasis on metrics is based on a century-old "Management 1.0" philosophy that "what gets measured gets managed." However, this often leads to a culture where "what gets measured gets gamed." Employees may focus on manipulating numbers to meet targets rather than genuinely improving their performance. They might prioritize activities that look good on paper (simply because they can easily be measured), but offer little real value. Leaders may even prefer and accept that because it is "simple" and "measurable." Or because they lack competence in that domain. Or because they are too overworked to dig deep enough and co-create something more meaningful with their employee. This behavior undermines the purpose of performance assessments and can lead to a false sense of accomplishment.

Setting high expectations without providing empowerment is one of the most common dysfunctions. It is a pervasive and replicable "feature" of an organization that can be encountered at all levels - from the board to the CEO, from the CEO to their mid-management, and from the mid-management team to the associate level. Employees are expected to achieve ambitious goals, but lack the necessary resources or decision power. The management team is asked to achieve specific targets, but they lack the needed budget, capacity or, most importantly, time. Micromanagement from the next level, sugar-coated under the umbrella of "transparency", replaces autonomy. Such behavior is especially vivid when external, existential threats are at play - the true nature and culture of the organization reveals itself at times of crises. In such environments it is hard to set reasonable and isolated personal goals, and even harder to fairly assess their achievement.

No one is an island. In our daily work we interact with leaders, peers, subordinates, and customers. We encounter stakeholders in various roles - often times the same people, but acting with different "hats". We leave a certain impression with each interaction, and these impressions accumulate over time. This entirety of our interactions can be compiled into a holistic picture of our work within the performance assessment process. The abuse? A manager, who is not interested in compiling this picture. A manager, who does not understand the content, because they are so far away from employee's area of expertise. A manager, who only superficially communicates the feedback and is not willing to roll up their sleeves. A manager, who sees feedback as a chore, and not an opportunity for growth for their teams.

Infrequent or reactive feedback compounds these issues. When feedback is only given in response to problems, employees focus on don'ts and miss out on dos. A focus solely on criticism (or "constructive feedback" in positive leadership) damages morale in the long-term. Employees may feel their efforts go unnoticed unless there's an issue. This approach fails to recognize successes and doesn't offer much emotional safety.

Generic and non-specific critical feedback further undermines the process. Phrases like "you always..." or admissions like "I can't give concrete examples, but..." offer little value. They leave employees guessing about what needs to change. Without specific instances or actionable suggestions, it's challenging to accept feedback or work on improvements. This vagueness leads to frustration and feeling of underappreciation.

Use

Implementing Probation Period Checkpoints (PPC) is a practical way to support new employees. Apart from the operative one-on-ones with their leader, this means having one or two dedicated checkpoint meetings with their leader and their HR People Partner to exchange feedback in all directions. For the organization it is a precious chance to learn about the effectiveness of the onboarding process, early struggles of newcomers, but also validation of their recruitment decision. For the associate an early, structured feedback offers an objective reflection of their efforts, and, if needed, a chance to correct the course and ask for resources.?

Whether during the probation period, or later on in one's professional journey, Performance Improvement Plans (PIPs) can provide a much needed support when the performance does not meet the expectations. The underlying cause could be anything from the personal or professional realm, or a specific organizational constellation that the person struggles with. Within the PIP framework, typically a few specific goals and timelines are set out for the employee to achieve. For each of those their respective leader also commits resources on behalf of the organization, like mentoring, training, counseling, redeployment to a different team, etc. PIPs should be seen as a commitment from the organization to invest time and resources in getting one's performance on track.

Transitioning from fixed, pre-set personal performance metrics to more fluid, adaptable contributions based on business dynamics and motivation can completely revamp engagement. Often times, it means allowing people to discover their passion and supporting them to express it in a way that supports the business in a unique manner. When contributions are derived from intrinsic motivation, employees feel empowered and they will go above and beyond what even their leaders might envision as scope. Every day they will seek for and discover new opportunities without any nudging or guidance, and may even uncover a completely new branch of business activities. Two employees may hold the same position, but they will approach their tasks in a different manner, because they are.. well, different people. Allowing for this flexibility in the way job descriptions are crafted, in the way internal career ladder is applied, and the way personal performance is managed and measured - can make all the difference for one's contribution.?

Performance management is often linked to one or the other skill framework and their assessment scales. Skills Framework for the Information Age (SFIA) is one of the many, which can guide professional development. These frameworks provide a common language and good pathways for growth. Skill frameworks work best when a leader's assessment is contrasted with the employee's self-assessment, allowing for constructive discussion and reconciliation of different points of view. However, these frameworks should be used primarily as long-term professional development guides, and not directly linked to promotions; direct linkage leads to excessive focus on KPIs and gaming the system.

When leaders are not experts in a specific domain, they can still support with understanding and integrating feedback. They can encourage employees to seek 360 feedback and then spend quality time looking into it together. The leader's role in this case would be that of a coach, asking guiding questions and provoking self-inquiry. Even when the leader and the associate are not working closely together on a daily basis, the leader can and should proactively reach out to one or the other stakeholder, asking for honest and, if required, confidential feedback. It is the leader's responsibility to break this down into tangible and understandable points, often filtering out less relevant or fuzzy statements.

Keeping notes for each team member throughout the year enhances the feedback process. Written notes and accounts of behaviors, challenges and achievements help leaders provide specific examples during performance management dialogs. This practice makes feedback more relevant and helpful, and it only takes minutes to jot down a few sentences. Accumulating observations over time allows the leader to discern behavioural patterns. These patterns may reveal both strengths and areas needing improvement. Moreover, keeping detailed notes helps prevent recency bias, where only recent events influence evaluations (which is sometimes consciously abused by employees by going the extra mile just before the assessment). This fairness builds trust between the leader and team members, and employees feel recognized for their overall efforts and contributions.

Praise and recognition for a job well done boost morale. Acknowledgment of achievements reinforces positive behaviors and makes employees feel valued and appreciated. Recognition can come in various forms, from verbal praise to formal or financial awards. Note, however, that in culturally diverse and international environments, a uniform method of offering praise might result in unforeseen reactions. In some cultures, a public praise even for minor achievements is expected and cheered. In other cultures, such praise would be inappropriate and seen as setting the bar too low or picking "favourites". In yet others, praising individuals in public might conflict with their modesty or hurt peer dynamics.

Allowing employees to fail safely is absolutely crucial for success. Focusing on learnings, effort, and commitment encourages risk-taking. When failure isn't feared, creativity flourishes. Employees are more likely to experiment, propose new ideas and take over more responsibility. As they do, employees develop leadership skills and a deeper commitment to the organization’s goals. Emphasizing learning over perfection cultivates adaptability and accountability.

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Coming up: Calibration - Equality, Equity and Fairness

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