Reinventing Performance Management

The debates and discussions surrounding the topic of performance management are nothing new, nor are they helpful. I’m not going to argue here why performance management is broken (we all know it’s rigid, infrequent, biased, disengaging and most importantly doesn’t accurately measure performance), nor will I argue why it’s a process that is mismatched with the way modern organizations (should) operate - with speed and agility. But I guess I just did.

The problem is that people constantly dwell on the existing processes and methods, exploring how they can optimize what’s already a proven broken process. Besides this making zero sense, it also hinders progress and innovation in the space. ‘Optimizing a broken process’ does not move us forward. Re-engineering the whole process from scratch does. When such a substantial amount of organizations suffer from the same problem, it’s time to focus on a new solution to fix the problem. It’s time to reinvent performance management and not simply improve it.

A lot of practitioners, HR thought leaders and the media proclaim OKRs as the ‘saving grace of performance management’ but I’m afraid they’re not and they don’t work for everyone. Personally I (and other contrarians) think they are merely glorified KPIs and don’t accurately measure performance. While this may be an unpopular take, remember that you rarely hear about their shortcomings because companies tend not to publish transformations that have failed (aside from Spotify here). There have been many organizations that have implemented OKRs unsuccessfully, and that makes sense - we aren’t all Google, we don’t have their culture and so just because it worked for them doesn't mean it will work for us. Anyways, I digress.

The thing is, despite the repetitiveness and drab of the discussion, there’s never been a more pertinent time to have it and more importantly to actually make the changes necessary to fix it once and for all.

When it comes to performance management in the new world of work, we face three key problems:

1. The things we measure - are truly the results we get. Establishing ‘success measures’ tied to business strategy can positively impact outcomes, eg: Measure ‘failures’ and you stifle innovation. Measure ‘risk taking’ and you foster innovation.  
2. How we measure them - reflects on the culture one has. Are you using ratings and ranking employees? Are you measuring by ‘lag’ means (KPIs) or by ‘lead’ means (4DX). 
3. When we measure them - are we assessing performance on a certain date or measuring and improving continuously in real-time?

The new approach is significantly different from what most traditional HR practitioners and managers are used to until now and while I may be presenting slightly contrarian thoughts, I do retain the belief that sustaining what already works for you is valuable - as long as you are certain it works for everyone and not only you. Or worse, because ‘this is how we've always done it.'

For now I propose (in the below graphic) the following shifts in both mindset and practice.

Perhaps it’s obvious that there is a clear pattern within this evolution which includes moving away from a top down, fear-based approach, focusing on the past and moving towards a ‘future focused’ growth mindset approach. Until now, performance management has been what I call ‘date based’ - “on this day, at this time, we will measure performance”. This makes very little sense to an outsider like me. Imagine a scenario where sports teams would adopt this approach and assess a player’s performance a few times a year, as opposed to the current methods of tracking performance in real-time with wearables, trackers and daily weigh ins. I’m not suggesting that we monitor the hours of sleep and nutritional intake of employees but I am suggesting we focus on enabling performance in sync with the work we do on a daily basis and not periodically.

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Key Focus Areas:

Feedback is never an easy thing to get right so it’s critical managers and employees get continuous training and tips on how to give and receive feedback effectively (article to come). It’s also crucial to measure the quality of feedback on a frequent basis to ensure that feedback is useful and not just ‘another HR policy’. Remember it’s not just that you give feedback, it’s how you give it, when you give it and why you give it. Ask yourself are you giving criticism because it’s your job as a manager to reprimand people for their mistakes or if you genuinely care about improving your team’s performance and morale. Focusing on strengths over weaknesses has proven to increase engagement and profits.

Recognition is now an integral part of performance management. In fact, I’m confused as to why people use separate systems for performance and for recognition because it’s one in the same. Not only is recognition a basic human need, it’s already proven to increase workplace performance. Never underestimate the power of recognition and the impact it can have on performance and morale. Additionally, always consider whether praise should be private or public. Remember in the same way ‘you get what you measure’, so too, ‘you get more of what you praise’.

Coaching should work in sync with feedback to empower people to perform better. Especially after giving critical feedback which may create anxiety for employees, following on with a coaching plan shows the motive behind feedback and shows that you truly care about their development. Continuing my sports analogy, when the team or a player has under-performed in the first half of a game, you can bet your last dollar the halftime talk from coach is nothing less than encouraging, motivating and strategically focused on how second half should be played better to ultimately win the game. (there’s a reason sport team managers are called ‘coaches’).

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An Action Plan:

Before making any changes, first and foremost every organization needs to ask themselves a few questions and dissect the problem diligently. Why do we do performance management in the first place? What are the outcomes and benefits we want to get out of it? And most importantly, does any part of what we do now actually increase performance and motivate employees? (Consider using the ‘5 Whys Method’)

1. Seek Feedback:

Ensure this is a collaborative process and approach the problem from everyone’s perspective, executive to intern. Making everyone not only feel included in the process but acting on their feedback is essential in an effective transition. Ask things like: “What do you like about PM now and what could be improved?” “What do you actually want to get out of it? “How do you think PM could help you be more productive at work?“ 

1. Make Small Improvements:

After receiving feedback, identify which focus areas to act on immediately (always go with the lowest hanging fruit). Going too big with any transition initially is overwhelming and induces anxiety across the board. See how you can use design thinking to re-create the employee/manager journey of performance management from beginning to end.

1. Train and Pilot:

Ensure managers have sufficient training in feedback, recognition and coaching. Introduce the new changes in smaller pilot groups before launching company wide. Test your assumptions and see what worked and what didn’t in order to make the iterations necessary before rolling out to everyone. 

1. Sustain Cultural Shift:

As change agents will know and research from McKinsey confirms, 70% of all transformations fail. This isn’t an email with a presentation titled 'The New Way We Are Doing Performance Management,' nor is it an announcement in a company all-hands by the CEO (although executive buy-in and role modelling is vital in a successful transition). This will be a cultural shift which takes ongoing effort, monitoring and improving. Over communicate the ‘why’ and the benefits of these changes to each stakeholder and relay how their involvement contributes to the broader purpose of the organization. 

In addition, measuring and rewarding the success of implementation will likely improve its chances of success. Hold managers accountable to giving consistent and quality feedback and factor their results as a contributor to their bonus amounts. On a slightly more negative note, it’s also critical to identify blockers / resistors to the changes, as these individuals can create a toxic and inconsistent culture.

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Lastly, technology has a huge role in enabling and facilitating the change (not making the change) and can be powerful in the area of performance management specifically. Now, obviously I am biased as to which tool you should use for ‘performance enablement’ so I will just leave you with these 3 things to have in mind when selecting a tool. 

1. User Experience: In their personal lives, employees are using apps like Instagram and Tinder which are beautifully designed and boast remarkable user experiences, yet when they arrive at work they have to face using legacy ERPs/HCM tools that are rigid, complex and just damn ugly. The effect of this lowers product usage and ultimately the levels of engagement and adoption in the new transition. 
2. Address Your Problem: Ensure the tool you select solves your specific business problems and use case. Don’t be clouded by buzzwords and AI solutions, be certain this tool has the functionality to facilitate your new process effectively.
3. Cultural Fit: Assess how aligned the different vendors you consider are with your culture and if their methodology matches yours, or what direction you are going in. Some vendors are also more hands on and helpful in cultural implementation (not just IT implementation).

Don’t forget to include all stakeholders in the selection process from the onset. Ensuring buy-in from all parties (IT/Ops/Finance) will increase the chances of a successful implementation. (Bersin Academy - HR Tech Workshop can guide you through the process in greater detail).

I’ll end off by emphasizing that in order to make progress in ‘Talent Management Innovation’, we need less ‘Management’ and more ‘Innovation’.