Performance management is a common practice in companies, despite some issues. Learn how to avoid these common mistakes to succeed in performance management
8. You’re setting goals the wrong way
You’ve got everybody on board, everyone is ready to see what will come of the system if they commit to it.
So you start setting goals that you will use to compare against you actual performance.
That’s where a lot of things can go wrong, and many management horror stories begin.
- Goals that are set at the top are not cascaded properly down the organisation, because they are too general and provide no guidance for implementation
- Goals become outdated but are still pursued to conform to the process, causing delays and misalignment with sudden strategy changes
- Goals cannot be updated because managers are given no information as to how to do that
- Goals are pursued by individuals in their own interest instead of the interest of their team or organisation
- Etc. Etc.
You might have heard of SMART goals (an acronym for Specific, Measurable, Attainable, Relevant, and Time-framed), often presented as a sure-fire way of setting goals efficiently. But it turns out SMART goals may not always be so smart, or at least as guaranteed to work as predicted.
That’s what Pulakos and O’Leary seem to believe:
Jobs that lend themselves best to setting goals have relatively static performance requirements and defined productivity metrics, for example, many manufacturing jobs.
[...] However, setting goals for today's increasingly knowledge and service-based jobs is more challenging. The fluid and unpredictable nature of these jobs means that one's objectives can change frequently, necessitating continual revision and increasing the work associated with performance goals (Cascio, 1998; Pulakos, Muller-Hanson, & O'Leary, 2007; Pulakos & O'Leary, 2010). Even when jobs are relatively predictable, goals set at the start ofthe performance cycle often carmot account for special assignments or other duties that may arise during the year. Goals also do not work well when goal attainment is dependent on factors outside the employee's control or team-oriented (Locke & Latham, 1990; Lawler, 1994; Ployhart & Weekley 2009). Some jobs do not lend themselves to setting objectives at all, such as many R&D jobs in which it is impossible to predict when and what discoveries will occur.
Many authors echo that sentiment, such as Harry Levinson in Management by Whose Objectives?
The higher a person rises in an organization and the more varied and subtle the work, the more difficult it is to pin down objectives that represent more than a fraction of his or her effort.
The authors advocate for a more informal approach to goal setting with regular discussions between managers and employees.
9. You don’t give feedback often enough, and don’t know how to do it
More regular discussions brings us to the topic of feedback and communication.
According to research done by SAP, employees, and especially millennial employees, are asking for more and more feedback.
Unlike in the old once-a-year performance review paradigm, employees are expecting to get feedback on a more regular basis.
Instead of storing up feedback to lash it out during performance appraisal, it might be advisable to apply a simpler principle: give feedback as soon a problem begins to appear, but also give positive feedback when things are running smoothly. That way, you’re not hiding and bad surprises for the annual review when it comes up.
As obvious as it may seem, a performant organisation is one that does not wait for a year to fix its problems.
Of course, that leaves open the question of how exactly that feedback should be provided.
You have probably heard about constructive and negative feedback: the latter is to be avoided. If there is a performance issue, do not linger on the issue itself, explain how to fix it, and how to make the employee better.
Good communication will be required at all stages of the performance management process, and it is especially important with more sensitive subjects.
10. Your focus is too narrow
As we have seen in point 7, picking the wrong goals can have disastrous consequences.
One way to avoid that is to adopt a broader focus: do not insist only on increasing sales, profits or stock price, which tend to lead to internal rivalries and value destruction.
In fact, Peter Drucker himself, creator of Management By Objectives, one of the most famous ancestors of the performance management tradition, thought that performance objectives should be set in no less than eight key areas:
- Market standing
- Physical and financial resources
- Management performance and development
- Worker performance and attitude
- Public responsibility
That may seem like a lot, but focusing on a broad set of areas allows for them to act as a checks-and-balances system that will prevent the search for performance in one area to damage other parts of the business.
11. You’re only paying attention to individuals, not to other layers
As we’ve alluded to earlier, performance management is mostly known for its dreaded performance appraisals.
The problem with annual performance appraisals is not only their inefficiency and destructive effects on morale, it is also their centeredness on the individual employee.
Performance problems are seen only individually: you fix a cog in the machine to improve performance.
But a more holistic approach is necessary. What needs improvement could be the environment, the processes used by the team, the structure of the business unit, the organisation as a whole, you name it.
Worse, even assuming that performance improvements in each individual guarantees aggregate improvement is not warranted.
Here again, a broader vision is required to assess performance improvements and avoid illusions.
12. You’re putting the manager-employee relationship at risk
Pulakos and O’Leary emphasise the issue in their paper:
Done effectively, performance management communicates what's important to the organization, drives employees to achieve results, and implements the organization's strategy. Done poorly, performance management not only fails to achieve these benefits but can also undermine employee confidence and damage relationships.
Here, the system can work against the relationships, which will cause people to enforce the system and strain relationships, or keep their relationships and make the system ineffective.
For example, employees want guidance, but they don’t want it to be documented because it could undermine their advancement. Conversely, managers feel compelled to overrate their employees to avoid adverse effects on morale and motivation.
Collaborative culture is slowly destroyed by the constant comparing of employees by managers during reviews, not to mention the concerns about the accuracy and fairness of the process.
And for good reason:
[Performance reviews are] wildly inaccurate, for one: CEB’s research finds that two-thirds of employees who receive the highest scores in a typical performance management system are not actually the organization’s highest performers. Go figure. The reviews are ineffective, too: Managers told CEB that conventional reviews only generate a 3- to 5-percent improvement in employee performance. They’re also surprisingly inadequate: Just 23 percent of HR folks surveyed by the firm say they’re satisfied with their organizations’ performance evaluations, down from more than 50 percent a decade ago. Eighty-five percent have either made changes in the past year in hopes of improvement or plan to do so in the next year.
13. You’re not doing anything with the information
If you’ve managed to overcome all the issues so far, and have a functional performance management system running, you’re probably collecting a lot of data about the performance of your staff.
Now is the time to use it. Not just file the reports and never read them again, but analyse them and offer useful recommendations to change your organisation and improve its performance.
The information collected should help managers explain the situation more clearly and take informed decisions.
- Did the employee get unclear objectives?
- Is the employee missing a critical skill to achieve his job more efficiently?
- Is he missing an important resource?
- Is he disengaged, lacking motivation?
Now that you have a more precise understanding of the performance problem, you can solve it more easily.
14. You’re not leveraging technology
Many of the problems outline above may seem simple to fix to younger audiences well versed in new technologies. Need to change objectives on the fly? Why don’t you? Isn’t there an app for that? Why wait for the yearly paper form to fill and give back to your manager?
We work online, shop online, socialize online, we are connected 24/7 – online.
Enterprise technologies are not far behind. Perhaps you are still in a workplace that restricts or bans social media, but they are in decline. Perhaps your organization refuses cloud-based applications for privacy or security reasons, but they are in decline. The fact is: organizations that try to block out the world simply ostracize themselves. And they are in decline.
An agile, social and mobile work environment. You will set dynamic goals and adjust them in response to change; your manager will provide just-in-time coaching wherever you are; skills and knowledge you need will be recommended and streamed to you; your performance journal will continuously capture and cluster feedback, ideas and suggestions from your peers and customers; your formal annual performance review will be permanently deleted from your calendar…and you will finally be in a position to manage your own career.
Although her vision has not come to pass as quickly as she expected, we expect it will soon or later. And its main driver will be new technology.