Is your Performance Management process broken?

Posted in : HR Updates on 17 September 2014
Angela Schettino
Think People Consulting
Issues covered:

Angela Schettino writes:

Has your organisation embraced successful ways to manage performance? Are you instead one of the many organisations in NI using a ‘broken’ process which fails to impact and drains resources?

'If it Isn't Broken...'

They say, ‘if it ain’t broke then don’t fix it’. There has not, in fact, been a great shift in the core principles established this past decade around what constitutes effective Performance Management (PM). What has perhaps changed is the level of flexibility many organisations are now enjoying in how they apply their systems to suit their evolving status and the extent to which PM is linked to other things such as Engagement measures, Company Values, Career and Talent Management and Succession planning. The core principles of Performance Management most notably defined by Armstrong and Baron in 2007 are broadly still regarded as best practice.

Their definition of PM is still the most widely used and is as follows;

‘A process which contributes to the effective management of individuals and teams in order to achieve high levels of organisational performance. As such it establishes shared understanding about what is to be achieved and an approach to leading and developing people which will ensure that it is achieved.’

What they recommended for PM isn’t in fact ‘broken’, the problem appears to be that many organisations still are unable or unwilling to apply the principles in the way that will give them the best results. This is often due to a perception that the time required to invest in good PM practice is not worth the likely outcomes. We suggest that ‘New PM’ is about making performance management work for your organisation. At its very core good PM is about good management practice and need not generate unnecessary or bureaucratic process. More organisations are embracing HR practice which is tailored to specific needs, rather than trying to make something already established ‘fit’.

Fundamentally the best PM systems will include these elements;

  • Strategy - Managing Performance will be part of a strategy which relates to every part of the organisation. It will be linked to all HR Policies, Organisation culture and Communications. PM will reflect mid to long term goals.
  • Integrated - Vertical and horizontal integration means that PM is a way of providing a ‘line of sight’ to all employees about the vision and goals of the organisation and how their own role contributes to the achievement of that. PM is linked to other business and performance measures as well as running across departments and teams.

The latest CIPD survey on this topic showed that most companies were still using traditional activities / methods within the PM toolbox, the most frequently used were;

  • Performance appraisal
  • Objective or target setting
  • Regular review meetings to assess performance
  • Development opportunities
  • Performance-related pay
  • Career Development meetings
  • 360 degree feedback

Key Lessons from the Past Decade

Angela Armstrong is considered to be one of the leading thinkers in the UK on this topic. She was recently interviewed and asked about key lessons for business in 2013 on how to manage Performance efficiently and effectively. Angela highlights the following points;

  • The focus should be on the future. Too many unproductive PM discussion focus heavily on the past. The worst managers use reviews as an opportunity to relay a catalogue of old misdemeanours rather than focusing on future development needs.
  • Attempting to combine performance review with annual pay review is not always a good idea. For some organisations, combining performance review with annual pay review has led to discussions becoming contrived and less honest, reducing the value of the review process. This can be particularly damaging when performance outcomes are more qualitative, such as posts which require personal service or long term projects which do not have short term measurable outcomes.

Appraisal and reward can be successfully combined but works best when posts are highly results driven and outcomes are predominantly about tangible measures, such as sales or production.

  • Individual reviews are about great and honest conversations. Too many organisations still allow review discussions to become overly formalised and insist upon boxes being ‘ticked’. The most successful organisations have been able to create an environment where regular, honest discussions around performance are the norm and that managers equally are able to listen and act upon feedback from the employee about what might be hindering performance. The discussion should include observations about appropriate behaviours. Many mangers still find discussions about behaviours the most challenging aspect of individual review.
  • Review the ‘how’ as well as the ‘what’. The ability to identify and review a core set of behavioural competencies which complement your organisational values and culture are now the mark of a good appraisal system. If you expect employees for example to act with integrity and passion and continuously innovate, then this should be clearly explained and understood from the outset. The organisations that do best at this have described what this kind of behaviour ‘looks’ like when it is displayed well (or not so well).
  • Continuous regular dialogue. There is no pattern to who does PM well. Large and small organisations, those with budget to throw at elaborate systems and those with no budget at all are equally challenged by the dilemma of how often to dedicate time to performance review discussions. The truth is, good performance review should be second nature to a good line manager, should never be an ‘event’ but an ongoing continuous dialogue. It is helpful to create the expectation that employees take responsibility for having time booked in to discuss their performance. The regular discussion can be brief and focussed on how to equip the employee to become more successful. If there is poor feedback, deal with it and move on. Half year and full year review meetings should not be about dredging up old criticisms but focussed on overall achievement and future development.
  • Managers make or break a good PM system. Time and again we are told that the best PM is reliant on managers who are confident and skilful in engaging their employees in regular, constructive discussion about their performance. Larger organisations such as KPMG and Santander have developed toolkits for managers which aim to assist them in managing conflict, difficult conversations and the art of giving constructive feedback as well as direction on what to do if performance does not improve. In any organisation it is vital that a priority is given to equipping managers to manage people well. This will impact on all aspects of the organisation not least performance but invariably raises levels of commitment and engagement.
  • No recipe for a great system. A number of research projects have described the success of PM across a range of organisation types. This shows that there is no recipe for success. John Lewis have streamlined their process so that only one system exists across the whole organisation linking performance to the annual pay review, whereas previously seventeen different systems existed, conversely Carey Olson law firm have no standard process but adapt their approach to each individual. They ensure that appraisal is not linked to instrumental decisions such as reward, training or promotion and prefer their discussion to be about ‘relating’ rather than ‘ranking’. Both organisations have refocused their approach, trained line managers and report significant improvements in employee engagement and performance levels.

What we do know is that in order for your organisation to improve performance you need to be able to describe what good performance looks like both in terms of outcomes and in terms of behaviours. Employees must be clear about the part they individually play in the success of the organisation as a whole and how they can personally become more successful in terms of their own performance. The greatest asset any organisation will have is the capability of line managers to deliver these discussions with regularity, integrity and honesty in order to achieve continuous improvement.

This article is correct at 21/10/2015

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Angela Schettino
Think People Consulting

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