Performance Management: a 365 Day Commitment

Contemporary approaches to performance management extend far beyond the annual performance appraisal, and incorporate concepts of corporate communication, leadership accountability, and individual factors impacting engagement and motivation. While it is widely acknowledged that effective performance management plays an integral role in the achievement of organizational goals, a staggering number of organizations fail to realize the potential of their performance management systems. Why is this? There are four common, cascading issues that impact on the successful implementation and ongoing effectiveness of performance management systems.

Communication:

Clear communication of the mission, vision, and corporate strategy plays a central role in positioning performance management efforts to succeed. To oversimplify, performance management is about aligning individual goals and performance with the goals and objectives of the organization; about achieving a functional symmetry between an organization and its human capital in pursuit of greater business outcomes. While the factors that engage and motivate employees (indeed, even to attend work in the first instance) vary greatly from individual to individual, when organizational expectations are communicated with skill, management can find enough common ground with its people to align employees with organizational strategy. Therefore, performance, and its effective management, starts with effective communication.

One common issue affecting the success of performance management systems is the inability of senior leaders to effectively communicate strategy. Performance management is about clearly defining the ends; the future state in which the organization wishes to exist, and outlining for employees the means by which they should pursue those ends. When leaders fail to break their mission, vision, and strategy down into achievable actions, the issue is twofold: firstly, if leaders cannot break their vision down effectively, it is unreasonable to expect that the efforts of work units and individuals will align; and secondly, if individuals cannot see a clear link between the daily duties they perform and the ultimate success or failure of the organization, they are unlikely to contribute their best work, and it is difficult for them to remain engaged. It is unreasonable to hold an employee responsible for not meeting performance expectations, when those expectations were never clearly expressed.

Clearly communicate what success 'looks like' within your organisation!

Accountability:

Management accountability and the willingness to accept ownership of performance management processes are essential components in sustaining performance management efforts. Performance management, not unlike other management responsibilities, requires more than a fleeting interest and occasional attention; it is about regular, honest feedback, and supporting individuals to achieve performance expectations. When a manager is committed to getting the best out of their employees, every single day, the organization will ultimately benefit from increased employee engagement and the productivity increases that go along with it. As managers have the most intimate understanding of their operational goals, and how they connect back to overarching strategy, they are best equipped to divide divisional goals amongst their employees and monitor progress.

While senior managers generally acknowledge the value of performance management systems, managers are often reluctant to accept ultimate accountability or take ownership of performance management activities. The Human Resources department is often seen as the ultimate owner of the performance management system, with managers viewing performance management activities as extra duties/responsibilities that sit ‘over and above’ their substantive role. In reality, the most important job a manager does is ensure they get the best out of their people, every day. Just as an organisation must ensure its leaders possess the necessary skills to communicate the vision, it must also ensure they possess the skills and required confidence to manage their people. An organisation owes its people the courtesy of ensuring that those charged with managing their performance know what they're doing.

Hold your managers accountable for the performance of their people!

Inclusion/Involvement:

The importance of employee involvement when setting and reviewing performance expectations cannot be overstated. As the name suggests, ‘people management’ is all about people, so it stands to reason that including those individuals in the performance management process is a reliable way to ensure ownership of performance goals, and increase engagement. Positional power is one of the weakest forms of power, and wherever possible, should not be relied upon to achieve performance management goals. A collaborative approach which affords all parties an equal opportunity to contribute to goal setting provides greater organizational benefits, as colleagues work together to maximize results. A good manager is also open to critique of their own performance, and should be willing to hear any concerns their people might raise. Indeed, such candid exchanges can provide the insight required for managers to improve their own performance, which in turn, enables them to foster greater team results.

Not only is it important to include employees in the planning stage of performance management, but also to maintain their involvement throughout the entire performance management cycle. When it comes to performance appraisals, there should be no surprises; the yearly formal performance appraisal should simply be a review of matters that you have both previously dealt with. As performance issues arise, or operational needs change, managers should work with employees to improve behaviours or modify performance plans. It is critical that organizations understand the importance of employee engagement for enhancing job performance and the need to provide employees with support and resources to fully engage themselves in their job and the organization. If an organization can position its employees to play a real and genuine role in the management of their own performance, then it has taken a great step toward successful performance management.

Involve your people in setting and measuring their performance goals!

Reward:

Finally, never underestimate the important connection between effort, performance, and reward and recognition. For performance goals to be effective, they must be specific and measurable, cover key result areas, be challenging but realistic, and importantly, be linked to rewards beyond the immediate attainment of the goals themselves. Each employee is an individual, and different motivators, both intrinsic and extrinsic may appeal. Management need to demonstrate to employees that effort will be recognized and rewarded, in both financial and non-financial terms.

Expectancy theory, first proposed by Victor Vroom, suggests that:

Employees will be motivated to exert effort when they believe that it will result in a desired level of performance (expectancy) and this performance is linked to rewards (instrumentality), not punishment. Finally, the initial effort is, of course, dependent on the employee valuing the expected rewards (valence)

In other words, employees need to believe that their daily efforts will culminate in a positive assessment of their performance, that this positive assessment will result in a reward, and that the reward will be meaningful/worthwhile. A common mistake made by human resources departments, in partnership with managers, is assuming that all employees will be motivated by the same rewards. Therefore, it is important to consult with employees to assemble an appropriate array of reward options, so that each employee can find meaning in the pursuit of performance outcomes. Another common mistake that organizations make is the failure to differentiate between below-average/average performers, and top performers. Performance management serves as an important communication tool regarding the types of behaviours and results that are valued and rewarded by the organisation. Leaders must set the right example by rewarding and recognizing the actions and behaviours they want to see more of, and just as importantly, act swiftly to deal with poor performance, moving these individuals ‘up or out.’ Organisations must make use of the performance data they collect, and identify/invest in their best.

Reward your people with things they actually care about!

What do you think?

What are the keys to successful, sustainable performance management?

Good luck and God bless! I am really excited…..

Cheers, Happy Reading

Gagan Malhotra