Twenty-five years of designing, administering and training managers about performance management systems taught me one disheartening truth – almost all managers, regardless of level, really don’t understand the point of performance management. You can sense a manager’s perceived lack of value in their performance management process when you hear things like:
“I have to get through this annual HR imposition so I can get back to my regular job.”
“This is the process we use to figure out merit increases right?”
“What performance management system?”
Most (if not all) managers and employees from across various industries and disciplines seem to share the same complaints. Performance management programs are cumbersome, don’t really differentiate between high and low performers and are too handcuffed by their links to pay. There is too much effort on avoiding the appearance of being unfair, so everyone basically gets a “meets expectations” rating.
They require lots of effort and work, provide little to no return on that investment, as company performance rarely meaningfully improves, no one is getting developed and lots of really good employees and leaders get disillusioned and frustrated by the process. That is, if you have a system at all.
These complaints are fair and not new. Performance management’s poor track record shares almost universal disappointment. So why is it this way?
In my view, we’ve lost sight of the point of performance management. Lack of clarity and alignment around what actions are most important and how best to achieve them creates friction. Misunderstandings between managers and employees or among coworkers based on work style differences create conflict, politics and work arounds rather than complementary, effective teams. Managers are not properly developed in managing others and themselves, and often lack skills to move from doing the work to doing the work through others. And within the context of this noise, we try to set goals, measure progress and deliver rewards.
Let’s get back to basics. Performance management is a system that should accomplish three basic outcomes:
Align the performance priorities and efforts of everyone in the company to the purpose (the mission and vision) and strategy of the company
Improve company performance results year over year – for every position – not just sales
Develop and advance the employees performing the work so they can make more meaningful contributions
What we need is less performance management and more talent optimization.
It all starts with the organizational purpose – a vision and mission – a company’s reason for existing. This ought to explain what you do, whom you do it for and why anyone should care. During my leadership development class, I always ask my students to tell me the mission and/or vision of their company. No one ever can. How can I know my purpose if I don’t know my company’s purpose? If I don’t understand my purpose then I can’t prioritize what things are most important for me to work on, what I should delegate and what I should drop. How can I manage the work of those who report to me?
Understanding our purpose allows us to focus on the 20% of vital actions and behaviors that produce 80% of the results. This includes getting the right people into the right seats at the right time. Managers must be trained and developed to become rigorous about defining the talent needs and specific roles required to deliver results. Each position should have a scorecard; measurable outcomes that are crucial to supporting the overall company goals. This enables placing current and future talent into the best roles for their success. Once people are in the right seats based upon their aptitudes, skills and passion, each person in each role is positioned to deliver at their peak, and we can begin to improve results year over year with greater velocity.
And, of course, how are we developing people for the future? How are we hiring, onboarding, developing and preparing our talent for advancement? Do they know what is expected of them, what is most important and have the tools? Are they emotionally invested? How do we define promotional guidelines, competency requirements by level, career paths and succession plans to help give our people a line of sight connecting their efforts to both company and their own personal success?
All managers of an organizational are accountable for delivering results in the best way possible. Their most important tool should be a talent management system. If a performance management process doesn’t do that – one or more of the three outcomes above are missing. Try getting back to basics, measuring the most important people metrics, and focus on developing a talent optimization methodology instead.
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