The promise of performance management is that an organization can define the type and level of performance it needs to achieve its mission and through effective integration and application of the programmatic elements can build a workforce that is in step with the organization and delivers the performance required. It is a purposeful and organization-centric approach to building a shared understanding of success and is the fundamental component of building the culture of your choosing rather than one that develops out of happenstance.
It sounds great, but why is it broken?
A Bit of Background
When we talk about performance management, we are dividing it into three sub-elements: planning, development and review. We discuss these elements and provide guidance to managers and others as discrete point-in-time events but really all three are regular, ongoing processes in which managers and employees engage—they are always occurring.
Performance planning is a top-down, organization-wide process that allows the organization to determine and align what it means to succeed, what it needs to do to succeed and what it needs of employees to succeed. It allows the organization to align its plans and resource needs at all levels and provides a common language so that strategic changes are more easily communicated and readily accepted – the promise of everyone on the same page.
Performance development is a lynchpin to building employee proficiency in those competencies related to organizational effectiveness and in the technical skills related to their functional areas. Having the right talent starts at recruitment, but performance development means building employees who will deliver organizational success if you are investing in the right competencies and people. It means not only determining current employee proficiency but also assessing employee potential for the future.
Performance review is a solidifying factor or bond. Every employee wants to be—and be recognized for being—valuable to their organization. They want to know how they are doing, whether their manager is satisfied with them and where they stand within the organization. As representatives of the organization, managers necessarily share with employees how their contribution stacks up to their job and what was asked of them. This type of constructive assessment, done courteously and objectively, brings the promises of performance management home at an employee-level and initiates other desired actions: employees may become more engaged and work toward promotion, may take on new challenges for continued growth, or may look for opportunities outside the organization.
Areas to Improve to Yield Desired Culture
There is so much written today about the problems with pay-for-performance that it seems clear we consultants and experts must have been involved. Some have always been with us, such as rater bias – the very human manager bias that delivers assessments which are not objective – and some are more recently occurring due to generational and cultural changes. Keeping in mind that performance management is a very human process so there will always be room to improve, there are several fundamental areas where the system fails today and should be addressed.
Irrelevant Performance Measures
Often, performance is discussed in the context of competencies and outcomes unrelated to organizational competencies. So, clear employee competencies may exist but there is no conscious link between them and what the organization needs to succeed. There are certainly cases where senior leadership appears to be at fault because they cannot articulate organization competencies, business plans or needed resources, but it is more often a problem with the competencies selected or how proficiency relative to them is defined. We see this more where organizations have employed an off-the-shelf technology solution and used the documentation provided or where an organization has adopted a prepackaged solution but not effectively implemented it. They use measures that sound good but mean nothing relative to organizational performance.
Forfeiture of a Cultural Understanding
We also see organizations rely on manager judgment without providing any organizational context to how the organization wants to view performance and excellence. Rather than defining these organizationally and providing appropriate manager training and guidance, organizations rely on what the manager already knows or his or her personal philosophy of what great performance is. Even in the best circumstances, this forfeits an organization’s opportunity to instill desired culture at a crucial employee touch point.
Understanding What is to Be Done
Among numerous other areas that can be improved, the last major area we believe is critical is your managers’ effectiveness at defining the work that needs to be completed and how your organization wants it completed. Objective definition allows a shared understanding of the job and what is required—the very basics of work. This aids greatly in reducing the conflict sensitivity that causes organizations and managers to not fully disclose positive and negative aspects of employee performance which affect engagement.
About RSC Advisory Group
RSC Advisory Group, LLC is a management advisory and consulting firm specializing in pay and performance. The RSC team is comprised of long-time senior advisors and technical specialists who work with clients across the United States. We employ a client-centric approach to help clients in several compensation areas:
- Board & Executive Total Compensation
- Employee Pay & Total Rewards
- Sales Compensation
- Global Remuneration
- Compensation Surveys & Research
Contact us today to see how we can help you and your organization.