Performance management has been the elephant in the room for many organisations for quite some time. The traditional model no longer works, but this shouldn’t come as a surprise. We know this approach hasn’t always deliver on its promises of greater employee engagement or satisfaction, but apart from the headline-grabbing minorities that have ditched ratings systems and annual review meetings, most of us still persist with the tried and trusted.
Article by Tim Scott, People Director – Fletchers Solicitors.
So, why do we keep using a system that doesn’t work? To some extent, it is largely because we simply don’t know what to replace it with. Consider how most organisations ‘do’ performance management. First off, there will be a formal meeting between an individual and their manager – this mostly happens once or twice a year, but in some cases, it could be as often as once a quarter. Then, there will be a form to complete, with preparation required from both parties, followed by a discussion and finally (hopefully) an agreement reached. But, there are several fundamental issues with this traditional approach. One common feature found within a lot of traditional performance management methods is the rating system. But as most HR practitioners will know, where this system exists, the conversation usually becomes all about the rating. The more complex the rating scheme, the more negative the impact will be on performance management, and effective discussions about performance will become lost in the rating debate.
The link between performance ratings and employee wages increases the problem. Despite significant evidence that pay is not a key motivator for most employees -above a certain level at least – many of us continue offering performance-related salaries. Dan Pink’s seminal book, ‘Drive’, tells us what really motivates people: autonomy, mastery and purpose. However, on the whole, it appears that these elements are absent from most performance management processes, and businesses are failing to take into account what workers actually want. HR professionals are often placed in a position of compliance enforcement. We are usually referred to as ‘the policy police’ – a derogatory term, but one that feels particularly appropriate on many occasions. The role tends to become all about the process of HR – but process does not promote meaningful dialogue with staff. Instead, it reduces performance management to a box-ticking exercise. The success of a performance management system is too often judged on how many reviews were completed on time or how many people in the organisation had set objectives. But this tells you nothing about quality, just whether the managers can follow a process or not.
If we think about how goals are set in practice, many organisations take the annual review approach, and performance documents are looked at just once a year. By the time they are reviewed, the targets or goals set have often become irrelevant or forgotten. People are then assessed against these goals, which becomes both a pointless exercise and promotes a sense of unfairness with the employee, whose own goals and targets may have changed.
Setting goals in the traditional sense can also be a key problem with performance management as we know it. In today’s changing environment, with new technology having an impact on everything we do and how we do it, few organisations can implement long-term plans. Five-year plans are often out of the question – even two years is ambitious in some sectors. By the time objectives come to be reviewed, the situation has moved on and working practises have changed. Objectives set under the SMART model (you know the one: Specific, Measurable, Attainable, Realistic, Timely) can also be unhelpful within a changing business space. They offer an overly rigid framework in a world where organisations need flexibility and agility. These objectives also provide specificity when employees are engaged and motivated by something else entirely: autonomy. Performance management systems need to give people the opportunity to assess their own performance and set their own goals and objectives – with support and guidance – rather than having this pushed on them by their manager.
It doesn’t have to be this way. We have a more detailed understanding today of what actually happens in the brain when we are faced with a performance review situation. Put simply, performance reviews can often cause a ‘threat response’. We only have to hear the phrase ‘can I give you some feedback?’ and we subconsciously brace ourselves for attack. Ratings systems make this worse. Performance ratings are rarely accurate; it is impossible to distil a whole year’s worth of performance into one simple score. Attempting to do so can increase those feelings of unfairness and threat. A fellow HR director recently shared their experience of removing ratings from their performance management system. This process was instead replaced with open and short questions asking how employees felt about the work that they were doing, what was going well and what they would like to do differently – this is a coaching and enabling approach. And what was the feedback from the organisation? It was harder to hold these deeper conversations, but the outcomes were felt to be much more positive and this can only be a good thing. When performance management doesn’t work in an organisation (by which we normally mean people aren’t filling the forms in on time), the process often receives the blame. This becomes the excuse, and the reason staff use for not completing the review form. So, as HR professionals, we make changes to the ratings systems, or the document that’s sent to employees. Instead, we need to seriously consider what performance management should look like for our organisations today – and tomorrow.
If performance management isn’t delivering on its promises, then the solution is usually simple. The first and most important step is to find out why. It’s not about just changing the process – or even scrapping it altogether. Before any changes are made, there needs to be an investigation into why the old process isn’t working and a well-thought out discussion about what it will be replaced with. Going from bad performance conversations to no performance conversations isn’t going to lead to much of an improvement. Consider starting the process by asking employees one question: how would you like to be performance managed? Of all the issues with traditional performance management – and there are many – the most fundamental is that one model is used everywhere. Whatever the sector, whatever the industry or job type, it all looks very much the same.
HR needs to take a different approach. Instead of implementing rigid processes and forcing structured reviews on workers, there should be a greater focus on informal performance discussions where employees have more say. These discussions should explore how often workers feel they need to meet with their manager, or how often they would like to discuss development. And employees need to be supported in setting their own goals. Businesses need to provide the guidance and support, rather than just asking staff to fill in impersonal forms. Instead of generating the threat response, this approach will create more positive and rewarding results. When organisations are diverse, performance management should be too. Tempting as it is to look at what other organisations have done, not one business is the same.
There is no such thing as ‘best practice’ in HR, only an approach that best fits the company’s diverse needs. Successful organisations are the ones that can be inclusive. Truly inclusive organisations understand that treating everyone the same isn’t the answer. Instead, it is about meeting people where they are, and providing different approaches to performance management – approaches that are as individual as the people that work for us. Good leaders seek to listen and understand, and the right behaviours amongst employees are encouraged and championed. Performance management is inevitably undergoing some changes and there is significant room for improvement to bring it up-to-date with today’s workforce. We need to move away from the traditional rigid processes we have been hanging on to for so long – we know they don’t work. Now is the time to break free and put our colleagues at the centre of the performance discussions now, and in the future. After all, without people, our businesses would simply cease to exist.
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