Should performance management be based on objective standards?
Some degree of subjectivity may still be required
May 2, 2017
By Brian Kreissl
A major trend in performance management these days is organizations doing away with formal annual performance reviews. One of the biggest criticisms of performance management programs in most organizations is the processes are inherently subjective, biased and subject to the whims, personalities and characteristics of individual managers.
There is no question performance reviews cause major headaches for managers, employees and HR practitioners. Almost no one ever looks forward to having a performance review meeting — either as a manager or employee. It is also true that managers are biased, sometimes play favourites and don’t always really know what their direct reports are up to on a daily basis.
They often end up assessing employee performance based on individual goals that are aligned to cascaded organizational goals and objectives. While there are definite advantages of using the management by objectives (MBO) approach, the problem is priorities shift, roadblocks happen, unforeseen circumstances arise and employees often end up focusing too much on formal goals to the detriment of other important factors and deliverables.
But with less focus on direct supervision on a daily basis and a greater emphasis on results, performance management has become extremely focused on the attainment of goals in many organizations. That’s not necessarily a bad thing, especially if the goals relate to organizational strategies and priorities and employees had a hand in setting their own goals. Goals also need to be meaningful, reasonable and somewhat consistent in number, level and scope for similar positions in order to be fair.
Performance management lacking objectivity
I find it strange how so many HR practitioners and organizations complain that their performance management processes lack objectivity and use that as a rationale for abolishing performance reviews. But then when they do end up doing away with annual reviews, the process becomes even more subjective — especially where compensation, hiring and promotion decisions continue to be based on performance.
If there is no formal yardstick to measure performance, how can you have a pay for performance culture? Doesn’t that actually end up making things even more subjective and biased if there is no real performance data to base such decisions on?
Done properly, my personal belief is the process can be managed in a way that is much more objective, constructive and helpful if managers are coached and trained in how to evaluate performance and provide feedback to their direct reports. The goal is to be as objective as possible while still retaining some degree of discretion and subjectivity and take individual circumstances into consideration.
Several courts and tribunals have commented that decisions relating to employee performance should be based on objective standards of performance. Otherwise, there is likely to be a great deal of inconsistency between different employees and managers and throughout the organization.
Some managers are more lenient than others and everyone has their biases. There are also rater errors such as the halo/horn effect, primacy, recency and central tendency bias.
For that reason, goals, metrics, targets and quotas tend to be helpful, as well as clear and transparent information about what satisfactory performance actually looks like. Proper documentation including job descriptions, training manuals and standard operating procedures can also help make the process as objective as possible.
Individual circumstances are important
However, it is important to recognize that individual circumstances may need to be taken into consideration. For example, I remember hearing about two delivery drivers in the United Kingdom arguing about their routes and who had the more difficult job.
One driver’s territory covered a large part of Scotland, but the other’s territory consisted of just a few city blocks in London, England. While both delivered a similar amount of goods, the driver in Scotland covered a lot more distance on his route (although admittedly the driver in London probably had to deal with more traffic congestion). It simply wasn’t possible to reduce everything to numbers in such a situation.
Another important consideration is that managers need to consider the “how” as well as the “what.” For that reason, performance management should consider not only the attainment of goals and objectives, but must also consider how those goals were achieved by also evaluating the employee in relation to organizational values and ethics.
One resource readers might find helpful in managing employee performance is the newly published Human Resources Guide to Managing Performance in the Workplace by Susan Singh.
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Brian Kreissl is the product development manager for Thomson Reuters Legal Canada's human resources, OH&S, payroll and records retention products and solutions.