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Performance Management System Does't Drive Better Performance

The universally despised process that is only loved by Debbie. That's how I describe performance management. It doesn't do what it is designed to do yet, we keep doing it! Once a year we mobilise millions of people, and we ask everyone to look back on the year, summarise the year, and record it.

Like what the hell are you doing journaling retrospectively? Because that's all you are doing! "We found that creating the ratings consumed close to 2 million hours a year." Is the whole process going to yield the payroll cost that it takes to generate the ratings?

We were sold this idea that to manage performance we have to translate company objectives into SMART goals and cascade it to the individuals, chat about it quarterly (new addition to the madness), summarise it once a year and give a "Below, Meet, or Exceed Expectations" to everyone.

Then Debbie takes this biased (bad) data, calibrates it, if the data doesn't fit into her bell curve she asks managers to review appraisals accordingly, then puts us all in a box (9-12) and tells us that Steven from Finance is ready to be promoted.

Voila! Performance Management is completed. Has anybody's performance improved throughout the year? We don't know because that's not the purpose of the process. The purpose is to collect opinion pieces from managers about their people and decide employees' future based on that. It also serves the purpose for the organisation to tell us where our KPIs stand in comparison to the goals and whether or not we get the bonus. It says nothing about how Szilvia's performance was managed throughout the year.

Ratings don't drive performance it hinders it! If we know that the end goal of the review process is to get a rating we are going to show ourselves accordingly. This leaves no room for curiosity and openness to develop. Plus, nobody cares about the stupid rating only Debbie.

My biggest problem (out of the 20 million problems) with the system is that it doesn't encourage teamwork that companies love shouting about. It is a very individual-focused process which is wrong because for most jobs you cannot specifically define the individual's contribution to the team's KPIs. It is impossible.

So if we cannot clearly measure an individual's contribution to the team's goals and KPIs how did I bloody get a "Meet Expectations?"

As I am designing a system for a company I have thrown at least 20 questions at the MD making him realise that the whole system is just a process nothing more. He then asked what I had in mind. Well, it depends on many things but there are few key principles:

  • Performance management is in the daily action and clear expectations and not in quarterly chats or once-a-year reviews.

  • The quarterly check-in and the annual appraisal is performance evaluation, not management.

  • Measure team performance, not individual ones. Individuals can have specific projects to be added to their goals and measured on those in addition to team's goals.

  • The competency framework is designed for the team, not for individuals. Read here.

  • The whole system must motivate and inspire employees to perform better and to be curious and open about their development. It must not be about achieving the goals. That is the outcome of my focus on developing my competence.

  • Performance is not only hardcore business KPIs but projects that need to be done. For example, as a Talent Management Director, my role is to put the system in place. The measurement of it is easy. Did I or did I not put that in place and how well is it working? This is performance at an individual level, not team goals and organisational KPIs. Individuals don't understand how they contribute to those.

  • It MUST NOT feel like a process! It must be process-light and employee-led.

And then the name. What should we call this new approach to managing employee performance? I don't really care to be honest but it depends on what the purpose is.

If we want it to focus on developing employees let's name it Performance Development System which focuses 90% of the time on developing people and 10% on measuring the growth as opposed to only measuring and skipping the developing part.

PS: Next year, from the 1st of November, or whenever your annual appraisal process starts, wear a shirt every day that says "Meet Expectation". :-))) A "Meet Expectation" Xmas Jumper!!!!

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