As organisations revise their performance management approaches, they need to consider training their managers in the process of measuring performance. Otherwise, they risk weakening the system.
Most organisations don’t have their approach to ‘performance management’ figured out yet. This insight was one of the key take away from a series of Korn Ferry Pay Forum discussions held this year. While delegates and panellists seemed to agree that performance should be recognised, the general feeling is that current systems to measure employee effectiveness, capabilities and behaviours are not delivering.
It should come as no surprise then that 65% of respondents in one of our recent reward surveys are currently reviewing the link between performance and reward and many are doing a comprehensive review of their performance philosophy and performance management process.
Most performance management programs follow a standard model. Once or twice a year line managers are expected to speak with their subordinates and provide them with an evaluation of their performance. This evaluation, tied to remuneration outcomes - short-term incentives, annual fixed pay increases or both often results in a numerical rating (usually between 1 and 5).
The problem often highlighted with the traditional approach is that little or no attention is placed on what the business is getting out of the performance management; how it’s linked to organisational goals, what data is obtained, or what is the data being used for besides informing fixed pay and bonus/STI decisions. For instance, is the performance management process helping us identify leaders? Is it influencing positive changes, improving innovation?
Training the rater
Equipping managers to do performance management well is another area that is often overlooked. Simply rating employees and forcing them in a curve is not managing performance. The essence of performance management is about evaluating performance and helping people perform better. There can be a strong subjective element in the process and any performance evaluation can be hugely influenced by the rater as it is the ratee.
The reality is that people have been blaming ratings or talking about ratings being an issue, but the issue has been about manager capability in performance management. Organisations haven't invested in making managers more capable, they haven't put in a process that allows for continuous process management – focusing on the year-end ratings instead.
At one of our Pay Forums a panellist joked that if her company got rid of ratings, a thousand managers would say “Thank God I don’t have to do performance management anymore.” Which is obviously not the case. It was clear in the discussions that organisations are aware that they need to train their managers to have regular and meaningful performance conversations with their subordinates, how to communicate effectively and provide feedback.
What's your performance management trying to achieve?
Performance management can be done on the back on an envelope if your organisation is clear on what it’s trying to achieve with the appraisals and also has managers well equipped to properly carry out the task.
But of course, in the age of connectivity, you don’t have to rely solely on a piece of paper. Capturing input from peers, subordinates and collaborators on the fly can be done with the plenty of tools available, including easy to use, mobile capable software tools.
A final point that everyone seemed to agree is that it’s about time that organisations are questioning and revising their performance management approaches. Taking a step back to consider their objectives for employee performance processes, and carefully designing and testing new ways of evaluating performance will serve organisations well.