Performance Management – Love or Hate?

Performance management, that dreaded time again

2020 has passed extraordinarily quick and we are once again nearing a performance review milestone, the year-end! Performance management is one of those processes that is often simultaneously loved and hated. You may wonder why I express it in that way.

Performance evaluation practices, widely credited to Frederick W. Taylor, date back more than a century. Taylor basically concluded that observation enhanced shop floor efficiency, his observations and ideas gave birth to management science which in turn led to mass production. His principles still fundamentally underpin employee performance assessments today.

There have been refinements with the adoption of balanced scorecards and KPIs, however these have arguably added complexity as companies grapple to measure increasingly complicated work tasks! Measures have become increasingly granular whereas many roles have evolved to require deep expertise, critical thinking skills and independent decision making. Add to this, the use of bell-curves to “normalize performance ratings” which intuitively sound brilliant but actually don’t work in talent-performance areas like law, business, sports or academics.

Survey after survey find that more than 80% of managers and employees dislike performance evaluations. Case in point, a CEB (now Gartner) study found that 95% of managers are dissatisfied with how performance evaluations are done and 90% believe that the results produced are inaccurate. 

With this empirical evidence, it naturally prompts the question of how can we manage performance better? What skills do leaders need to master so that team member performance is where it needs to be, and employees see the system as fair and objective?

Performance feedback, a better way

You might be thinking: I’m bound by the HR process so what can I do as a single leader? Let me start by acknowledging that many companies still hold onto antiquated performance review processes but this doesn’t prevent leaders from being skilled in managing their teams.

Let’s use an example to illustrate a typical business occurrence.

Judy is a mid-management leader; she has to evaluate her team of 6 front-line managers. Her team is part of a sales function of 50. The functional leader requires that performance ratings fit a bell-curve shape. Judy’s team has 4 of the function’s top 5 performers. She submits the ratings of 2 A+, 2 A and a 2 B ratings (assume the rating options are A+, A, B, C and I).

HR quickly comes back and tells Judy, you must have a normalized curve so no more than 1A+, 1A and everyone else B or lower. Judy fights hard for an exception on the basis of the wider population but is unsuccessful in her quest. She reluctantly decides to make 3 of her team Bs and 1C in addition to 1A+ and 1A. The performance meeting day arrives for each of her team – her four lowest rated employees take it badly; it is a complete surprise! Judy is not prepared to take responsibility for the decision because she doesn’t agree with it and tells each of the individuals affected “I fought hard for a higher rating but HQ forced this distribution so there is nothing I can do about it.”

There are many things Judy could have done differently. All of us can do things differently, and without contravening the HR procedures.

Actionable performance management steps

Let’s start with Judy’s controllable actions:

1. Real time feedback: Performance evaluation outcomes should never be a surprise, if it is then it’s a clear signal of poor leadership! Feedback should be real time, whether positive and constructive. Only through regular feedback can an individual meaningfully improve their performance or behaviour.
2. Clear measurable objectives: adopt an approach that establishes clear goals or objectives  which measure and adapt throughout the year as the business changes. This is best done on a performance management platform, such as Squadley. This approach serves two purposes. First it allows delegation with confidence. Second it prepares both leaders and employees for their next opportunity. 
3. Qualitative and quantitative feedback mechanisms: allow the individual to adapt themselves real-time, as needed. It offers timely performance coaching feedback and is a far more effective way to help employees. It contrasts the criticism or talking about (in rating discussions) approach that tends to occur in performance review processes.
4. Objective Multi-person inputs: the idea behind this is using crowdsourcing to solicit real-time focused feedback. It is done throughout the year, using a tool like Survey Monkey, based on specific interactions with an individual. Perhaps in projects, advice given, response times, communication style, teamwork, etc. The leader weighs feedback against the frequency of interactions and establishes an objective assessment rating.
5. Be a facilitator and champion: remove obstacles that hinder an individual’s performance (or that of the team). A leader’s role is one of champion. Leaders are arguably only as good as their team so it makes good business sense to help team members shine!

These are the actions that Judy can take herself, regardless of the HR process. They strengthen her ratings cases during wider functional ratings discussions – the measure is objective and harder to dispute! 

Applying new steps to old performance management processes

In truth, we are on an evolutionary improvement journey where some companies are better than others. For instance, GE, Google, Microsoft, Eli Lilly, Facebook, Cargill and many more have led the way over the last couple of years.

Whether our organizations change or not, as leaders, we can provide better feedback during future performance management cycles using these simple actions.

Let’s return to Judy and see how these actions may have impacted the outcome.

• The first obvious difference would be a very different conversation with HQ on performance ratings. Including objective peer, business partner and other stakeholder feedback strengthens the ratings assessment relative to more subjective comparative ratings from other leaders that do not use a similar approach.
• Another clear difference would be that Judy would own the ratings assessment (rather than HQ) which places the pressure on her to ensure regular and real-time feedback occurred throughout the year. Being in the driver seat is infinitely more empowering, leading to deeper and more meaningful one on one conversations.
• A third differentiation, and perhaps the most important from the individual’s perspective, would be the lack of surprise. Nothing demotivates or demoralizes more than a bad news surprise – real time feedback ensures this never happens.

Now the outcome becomes

Judy is a mid-management leader; she has to evaluate her team of 6 front-line managers. Her team is part of a sales function of 50. The functional leader requires that ratings fit a bell-curve shape. Judy’s team has 4 of the function’s top 5 performers. She submits the ratings – 2A+, 2A and a B rating supported and documented with the deep and wide stakeholder feedback received throughout the year.

HR quickly comes back and tells Judy: “Thank you, this information will be very helpful in the relative rating discussions within the function to ensure we rate individual performance objectively and fairly.”  

The relative performance discussion takes place and Judy secures the ratings she submitted because of the evidence supporting each rating. The performance meeting day arrives for each of her team. Team members are energized and motivated with the discussions because it reflects what they’ve objectively seen and heard all year! 

Your turn

Sign into the Member Section or comment below to share your views, tips and tricks to secure a better outcome in performance management processes.

Give it a try!