Before we throw the baby out with the bathwater, let’s take a step back to understand the real issues
By Claudine Kapel
Many organizations are critical of their performance management process – and with good reason.
For many, performance management is just an unpleasant administrative task involving reporting on employee goal attainment and assigning performance ratings – two activities that deliver limited value to departmental performance in the moment.
Frustration with the process has prompted some leaders to press for either doing away with performance ratings or eliminating performance management altogether.
But before we throw out the baby with the bathwater, let’s take a step back to understand the real issues, as well as how some of the challenges might be addressed.
First, despite all the rhetoric, most organizations today still engage in performance management because it is not a program that can be eliminated, but rather a process for getting work done through people. And organizations will always need a way to facilitate how work is assigned, undertaken, managed and reviewed.
In addition, many organizations want a system for managing how employees are compensated, developed, and deployed. And a performance management process typically provides key inputs to be considered when making decisions on pay, training, and promotions.
So, while many managers and employees don’t like or value the process, the tasks associated with performance management are central to how any effective business or operation is managed. Essentially, we can’t live with performance management – but we also can’t live without it.
Best practices to performance management
That said, some savvy organizations are leading the way in reinventing performance management so it delivers greater value. Kapel and Associates recently completed a study on emerging and best practices to better understand how these changes are unfolding.
Overall, what generally leads performance management to falter is the lack of attention to the specific needs of its three major stakeholder groups – leaders, people managers and employees – and the extent to which these needs are being met.
Simply put, leaders and managers want to be able to recruit and retain top talent, and they want their people to deliver their best to help the department and the organization achieve their priority objectives.
Similarly, employees generally want to do their best, and they also want their manager to support and guide them, when needed, so they can be successful. And they’re looking for a lot more than just “feedback.” They want coaching and advice on how to solve problems, build relationships, and get the job done right. In addition, they want to be rewarded and recognized for their contributions, including through development and advancement opportunities.
Most of the things people want out of performance management relate to how work unfolds in the moment, with an eye on current and future success. But the typical performance process delivers just the opposite. It involves looking back and judging the past without necessarily fostering the dialogue and coaching needed to make the current employee experience positive and productive.
The employers that are most positive about performance management are taking a similar approach. In particular, they:
- leverage goal setting as a means of connecting employees and their work to the broader priorities of their departments and the organization overall
- emphasize day-to-day interactions between managers and employees, focused on solving problems, achieving department objectives and delivering a positive employee experience in the “now”
- emphasize ongoing coaching and development instead of the delivery of “feedback” once or twice a year
- use customized competency models that are relevant to the user group and applied as part of day-to-day people management activities
- use a simplified performance rating scale that contains just a few key levels, so managers aren’t forced to split hairs when scoring their people
- consider not only employee performance, but also employee potential, when developing their talent strategies.
Figuring out pay for performance
As organizations rethink their approach to performance management, one common stumbling block is how best to address the link between pay and performance.
But budgets for salary and wage increases have been quite modest for as far back as most people can remember. That means the dollars given to top performers aren’t really that much more than what are awarded to everyone else.
This is one of the reasons why the process of rating performance is so unpopular with managers and employees alike. It is also why simplifying rating scales can be helpful. There is no point in distinguishing across multiple levels of performance if there are no dollars to make corresponding distinctions in rewards.
The compensation dimension will hopefully be resolved in time, but that is a story for another day. In the meantime, organizations have ample opportunities to take performance management to a new level, where it is elevated beyond being just a burdensome administrative task to a process that delivers real value.
Claudine Kapel is principal of Kapel and Associates, a compensation and human resources consulting firm based in Toronto. She can be reached at email@example.com.