Practical Leadership - Performance Management

I was at a meeting a month or so ago. The Senior Manager was in a foul mood and had berated his direct reports each time they started to make a point. Company performance had taken a hit. It was a shame as there had been a great effort to increase results. This had worked for a time, but things had now slipped back. The atmosphere in the room was tense.

Pressing the button on his computer, the Senior Manager brought up a new slide on the screen. The slide showed the results from the latest staff satisfaction survey. The results were grim. Staff felt they weren't communicated to and that line managers didn't listen. They didn't feel engaged and thought their opinion didn't count. Moreover, 85% reported that they hadn't had a performance appraisal this year, a key part of the performance management system in place.

'I want every employee to have a performance appraisal by the end of the month, without fail,' said the Senior Manager, 'there will be no excuses or you will have to answer to me.'

It was the seventh of the month and the Senior Manager's direct reports shifted nervously in their chairs and fiddled with the papers in front of them. They knew that they had no choice but to complete the task. Every one of them would now have to go away, speak to their middle and junior managers and change all of their priorities yet again.

What followed was a case study in how not to do performance appraisals. Meetings with staff were hastily arranged. If an employee's line manager was not available to complete their performance appraisal, another manager stepped in. The fact that the reviewing manager had not worked with the staff member during the year and had little objective evidence of performance seemed an irrelevance. Meetings were arranged at short notice, with little time for either party to prepare.

By the end of the month all the appraisals were complete and the paperwork filled in. The Senior Manager would, no doubt, reflect on a job well done.

Performance management is described as a way of improving individual employee performance in order to achieve the goals of the organisation. It generally consists of agreeing objectives between the manager and the direct report, putting these down of paper, reviewing them on a regular basis and undertaking a final thorough performance appraisal at the end of the year. It all looks pretty straightforward.

However, there are few processes that managers carry out in their day-to-day duties that are so badly executed.

What do we find in practice?

Objectives and goals for the forthcoming year are imposed and not agreed between the manager and direct report. One-to-one meetings are rarely carried out and are the first things that get cancelled when the office is busy. The yearly performance appraisal concentrates on events that happened in the preceding weeks as opposed to the year as a whole. The appraisal invariably involves completing complicated documentation designed by a Human Resource professional, who no doubt would think again if there was a chance that they would have to do what was being asked of line managers. Indeed filling in the pages of forms often becomes the main objective of the performance appraisal meeting.

There are big problems here. You see, for an employee, there aren't many things as personal as reviews about their own performance at work. The chances of demotivating even the best team member are high. They want these discussions to be fair and thorough. Staff want things recorded on paper and on file about them to be correct and complete. There are few things that a manager can do to upset a keen and hard-working staff member down than screw up in these areas.

I'm afraid it gets worse. Many companies use performance management processes to determine the level of employee pay rises or bonus payments. Telling an employee that they haven't delivered their objectives and that this will impact remuneration is a difficult conversation at the best of times. However, when achievement of the objectives has been hit by factors outside the control of the employee, it becomes a real stinker. Particularly when the employee suspects the pay rating process works against them in the first place.

This brings me to the crux of the issue.

The best employee performance management systems have a number of characteristics. A key characteristic is that employees have had input into the design of the system and know that their inputs have been taken into full consideration. The system should be simple and easily trained out to staff on their induction or training days. There should be total consistency in the way that managers apply the system right across the company and senior managers should ensure they check and review the results it produces.

Here is the hardest thing.

Somehow organisations need to think clearly about how their performance management system is actually working in practice and where things are failing. They need to take each point raised and think of a better solution.

Some of the things that companies are doing includes dispensing with annual performance management systems and replacing them with processes that ensure employees receive instant feedback from their line manager when things go well or there is a problem. Sometimes this feedback is received from fellow employees as they tend to know what is really happening or staff from other departments. 360 degree feedback processes have been implemented to try and capture employee feedback on how they are being managed so the process is not one-way.

Sometimes it is the team that is appraised, reflecting the fact that one individual employee often has to rely on others to deliver.

The best employee performance management systems are ones that follow the guidelines above and have been thoroughly thought through by the company and how they will actually operate in practice. Performance management is an area where an 'off the shelf' solution will often cause more trouble than it is worth.