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Performance Management: The Final Frontier?

Blog Two in the “HR as the Killer App” series

By Diane Bock

Diane Bock Captain’s log. Stardate 2259.55. Computer analysis confirms our new Performance Management System resulted in improved job performance, high engagement, and trusting relationships among leaders and the crew.

Holy moly! That Captain Kirk from Star Trek not only regularly saves the universe, he’s got a stellar performance management system! This tells us exactly what we have to do to achieve the same result. First, develop a utopian society; second, wait 245 years…

Okay. That’s not going to work for us. Beam me up to reality.

SpaceAs you know, Performance Management is (probably) the number one reason why employees criticize the Human Resources function. One expert goes as far as saying that Performance Management should be eliminated, calling it “destructive, fraudulent, bogus, and counterproductive.” Another outlines eight critical failures while Psychology Today says the human brain is hardwired to feel bad about and defend against any and all criticism.

Are performance management systems at their core just….highly illogical?

Some organizations have implemented promising alternative approaches. Adobe shifted away from performance management “systems” in favor of performance management “behaviors” with a process they call “check ins.” As a result, undesired turnover decreased. Motorola Solutions eliminated performance ratings and began using a separate process for compensation decisions. This reduced the time HR spent on complaints by more than 50 percent. And employees found the new approach to be more simple and fair.

Fascinating. But how do you determine what’s right for your organization?

For a comprehensive and practical guide on a good performance management system, I’d recommend Bob Rogers’ book Realizing the Promise of Performance Management. Chapter six describes nine best practices—that unfortunately—are not commonly applied.

Meanwhile, let’s make sure you haven’t activated the self-destruct sequence on your current system. Here are some pitfalls to avoid.

  1. Using Performance Management as the way to set pay raises
    If you set pay raises through just the performance management system, you have a compensation system that will be gamed, not a performance management process. It can’t do both. Make pay decisions based on overall performance but also on factors such as the budget, market conditions, and other appropriate non-performance factors.
  2. Using forced or stacked ranking to fire people
    Forced or stacked ranking means rating employees on a bell curve…forcing a certain percentage of every manager’s employees to be marked for dismissal, regardless of actual performance. This method might be a cultural fit for a few organizations. But for most, it’s a warp core explosion. Yes, dealing with poor performance is absolutely necessary. But this method can turn a collaborative environment into a game of thrones as employees withhold cooperation or sabotage one another to avoid being labeled as the loser.

    Microsoft famously discontinued this rating method as did Ford, after facing lawsuits and other troubles. The range of unintended negative consequences associated with stacked ranking are described in this article by business and Human Resources guru Edward Lawler.
  3. Having no real accountability
    HR is responsible for reminding managers to complete the process. Managers are responsible for the performance of their group. But who is responsible for making sure the performance management process actually has a positive effect? Lack of accountability is the dark nebula that confounds needed improvement. But from a nebula, a star can be born. Use this accountability question to engage in a discussion with your line management. Build clear accountabilities for them and for HR to oversee the impact of this business management process.
  4. No focus on performance conversation skills
    There’s evidence that only half of organizations provide any training on performance management. That training typically focuses on processes and forms and not on interpersonal, coaching, and communication skills.  And while those skills are typically lacking, leaders need them every day to guide and engage employees! Spend your training time providing a positive behavior model of what to say and do, with robust opportunities to practice, practice. practice. Otherwise your performance management process has no life support.
  5. Triggering too much fear
    The author of this Corporate Executive Board blog says performance reviews can induce a fear state. Being judged and rated will do that even to high performers. Nobody’s brain works well in a state of fear.

    Triggering the brain’s reward center more would be a better experience for everyone. Assign an active role to employees to report on their own performance and results. Include a forward-looking discussion on ways to grow and capitalize on future opportunities. Setting employees up for success in this manner (also called proactive coaching) is the most rewarding way to increase performance.

Performance Management may or may not be your final frontier to conquer. However, as many HR leaders are dissatisfied with their performance management system, I’m guessing it’s on your list of things to do. I hope the thoughts and links provided here help you to boldly go where you may not have gone before so that your organization can live long and prosper!

Diane Bock is a senior consultant for DDI’s Leadership Solutions Group and is passionate about helping organizations drive business results through people.

Posted: 10 Sep, 2014,
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