I’ve a confession to make – I’m a Performance Management Geek. There many not be too many Performance Management Geeks in the world, but I’m one (the only one?) of them. Ever since my first job in Sydney, I’ve been fascinated with how companies match the needs of the business with the performance of individuals. This fascination led me to several opportunities designing Performance Management Systems and having countless conversations about Performance Management Systems, with both staff and managers. Here are my top 3 insights into why the current performance management paradigm doesn’t work.
#1 – Jobs have become more complex
The concept of performance management has been with us since the ’50s, when life was considerably more simple and straight-forward. Jobs have become much more complex. Jobs with routine tasks, tangible outputs and consistent rhythm do still exist but many jobs have become more complex, requiring broader knowledge and skill sets.
The current performance management paradigm assumes relatively quick mastery of a role i.e., it is possible to master a role during a performance management cycle (typically 12 months). This assumption is implicit in rating scales – in the vast majority of rating systems, the rating is the same for someone under-performing and someone who is still (appropriately) learning their role. For example, using an Outstanding, Exceeds Expectations, Meets Expectations, Below Expectations, Unsatisfactory, there is no discernible difference in the Below Expectations rating given to someone who is 6 months into their role and learning quickly and someone who is 3 years in their role and struggling. Yet humans like some sort of bench mark so dropping ratings altogether isn’t necessarily the solution.
#2 – Managers Don’t Have Clear Vision of Roles they Manage
Back in the day when I managed teams, I had both a very clear understanding of what each role was designed to deliver and how to gradually build up the skills, knowledge and competence to succeed in each role. I thought that was a fairly normal thing for managers to know. Turns out I’m the odd-one-out and very few managers actually have a clear understanding of their team’s roles or how to develop people into them. This might not sound particularly important but an implicit assumption of the current performance management paradigm is that managers have a clear understanding of the purpose of the roles within their team and how to develop incumbents. And it gets worse the more senior we get. Senior managers get less clear about their own role, let alone their managers’ roles or how to develop their managers.
#3 – Performance Management Objectives Override Job Purpose
Since the ’80s, when MBO (management by objectives) became all the rage, performance management has focused on setting objectives and rewarding their delivery i.e., the assumption has been that if you deliver your objectives, you are performing. Result? People did what it took to deliver their objectives.
In the nineties, there was a recognition that how a person behaved while delivering their objectives mattered (a bit) too, so the idea of behavioural objectives gained ground. While behavioural objectives were a welcome addition, it still side-stepped the natural outcome of rewarding specific objectives i.e., if my bonus is based only on delivering these specific objectives, then my focus will be on delivering these specific objectives, regardless of what the full extent of my job might actually be.
This might not sound like a big deal but here’s what happens on the ground – staff focus on their objectives which will only be partially aligned to their actual role. They do the more obvious tasks of their role while mainly focused on delivering their objectives. They don’t bother with some aspects of their role so those bits won’t be done. These aspects of their role fall into 2 categories: (1) there’s no immediate discernible consequence for not doing them so its not noticed (but over time, there’s a cumulative impact); or (2) they have to be picked up elsewhere, often by someone more senior. The multiplier effect, in terms of time, cost and opportunity costs, kicks in and, very quickly, the organisational system is under pressure.
This is a fatal flaw of the current Performance Management paradigm that, ironically, the performance management system rewards. Add in the impact of roles getting more complex and managers not fully understanding the purpose and expectations of their teams’ roles, and it results in a constant reaction to the swirl of the dynamic. On the ground, this translates into managers always chasing their tail, sorting out problems, becoming bottlenecks, as everyone waits on them, staff becoming dis-empowered and disengaged, resources being misused, cost of business delivery inflated and profit margins eroded.
Re-thinking Performance Management
If we step back and take a wider look, an organisation is made up of roles designed to deliver specific outputs/outcomes, The roles combine into an organisational system. If parts of roles aren’t delivered, it puts the organisation’s overall performance under pressure. Having clear sight of all aspects of all roles makes it easier to develop consistent performance expectations and more objectively evaluate performance. This insight has led us to working with clients to design a Role Dimension framework, which has radically altered performance conversations, both for current roles and in the context of career conversations. This has allowed a real understanding of what performance in a role really means and how it really contributes to the company’s performance.
We have re-categorised objectives into developmental objectives and strategic objectives. Developmental objectives focus on building a person’s capability to master all aspects of their role and, depending on their role, may take 2-3 years to master. The typical response has been “that makes sense” because they can see their road-map to mastery, how they are going to develop over the coming years and how it fits into their wider career development. Not only that, but they have the opportunity to accelerate their development in a fruitful way.
We have also used a more nuanced rating scale which actively acknowledges that people are in learning mode and on track. While someone who is still learning their role can’t expect to be rewarded to the same level as someone who is fully competent in their role is, it separates them out from people who are under-performing, resulting in a much more positive and appropriate experience.
