Taking Back Performance Management

Taking Back Performance

“What got you here won’t get you there.” – Marshall Goldsmith

Every organization is trying to activate strategies. These strategies provide an organization with a direction, and they require action to realize the best impact. Action is contingent on people, and the role of people in activating strategy is often underplayed or undervalued. As the way we work and the work we do continues to evolve, the ways we define, measure, and reward performance must also evolve so that we can get to where we want to go.

Performance management is in the midst of a renaissance. The traditional model exists largely to manage risk. It does this by focusing disproportionately on past performance and asking one person, typically the direct manager, to assign arbitrary ratings or rankings against poorly defined goals. This results in compensation decisions that are riddled with unconscious and implicit bias. It’s an administrative burden and arduous process typically executed during one of the busiest times of the year for those on the front line—and after all that, the research indicates it doesn’t actually improve performance.

Many organizations are striving to replace this outdated model with a more agile, forward-thinking, and performance-centric approach. The goal of this approach is to enable employees to grow and develop the mindsets and skills that not only improve both individual and team performance, but also contribute to the organization’s strategic goals. The results are stronger employee engagement, greater clarity on the performance value-chain, and happier stakeholders.

Sounds simple, right? OK, maybe not simple, but it may not be as difficult as you think.

If your organization is looking to activate a performance strategy, here are some things to consider that will help you leverage the opportunity to engage your people with a new approach to performance management.

1. Start with your vision

Recently in a conversation with Michelle, a client and friend, she reminded me of a quote from The Little Prince by Antoine de Saint-Exupery:

“If you want to build a ship, don’t drum up people to collect wood and don’t assign them tasks and work, but rather teach them to long for the endless immensity of the sea.”

Ask yourself: What is our organization’s vision for performance? How will bringing that vision to life deliver on the organization’s mission, vision, purpose, and strategy? When you paint the picture of the future for your team, are your people able to see themselves as a part of it? Are you describing it in a way that your people WANT to be part of it? Can everyone on the team articulate the vision?

Are you focusing solely on the desired outcomes? Are you balancing those outcomes with descriptions of how employees will work to achieve those outcomes? How are you connecting the organization’s larger purpose to the role of the individual to show how they are contributing to something bigger than themselves?

Yes, the existence of an organization depends on the financial health of its balance sheet and income statement, but that isn’t what gets most employees motivated to do the work every day.

2. Conduct administrative cleanup

With a fresh set of eyes, look at your current model and ask yourself: What are you documenting for documentation’s sake? What are you doing because you’ve always done it? How much time are you investing in the current process? What is the risk, really, of refreshing the approach?

One client conducted a global all-employee survey and asked, “Which processes are a time suck and/or are getting in the way of doing your job?” Guess what? Performance management was #1. Together, we started over from scratch and built a model that focused on contribution, growth, and development—rather than documentation and process.

Many organizations believe they need this administration to manage underperformers. Why focus an enterprise process on administrative activities that are only required for the (hopefully) small percent of employees who are underperforming? What unintended cost and burden does that have on the balance of the organization? How much of your performance process is duplicative of your corrective action processes?

If your organization can take a hard look at the current processes, then there may be some easy opportunities to relieve the administrative burden on your people. (Bonus: this will focus time and energy on quality performance and development conversations.)

3. Know your numbers

Before focusing on what to change about your current performance management model, invest time to understand where you are today so you can begin defining the metrics you want to move based on your strategic priorities and outcomes. Start with what you have—even if your talent metrics aren’t mature, you are tracking something.

The outcome of this exercise should be a scorecard of talent metrics that your performance management model should support. For example, based on your strategic priorities, do you want to:

  • Reduce turnover in key roles?
  • Expand the quantity and quality of your current internal talent pools?
  • Improve overall retention and/or retention of top talent?
  • Increase internal mobility to create richer talent pools?
  • Reduce recruiting costs and time to fill the role?
  • Proactively focus on readiness for the next role 12-24 months out?
  • Improve employee engagement overall and/or specific dimensions of engagement?

Clearly aligning your talent metrics with business outcomes should be the foundation of designing your model for performance management.

4. Consider compensation

More and more organizations are shifting the way they think about performance and compensation. They are designing a performance process that aligns with their compensation philosophy and informs (not dictates) compensation decisions.

One of our clients shifted from straight rating/reward correlation to empowering managers to make compensation decisions for their team based on multiple factors:

  • Overall organizational performance
  • Individual performance to aligned contribution
  • Impact on team or organization
  • Demonstration and development of skills
  • State of the market

Other organizations are completely decoupling compensation from the performance process and instituting a more flexible compensation model and cadence that is informed, but not dictated, by performance.

Ask yourself: What is our compensation philosophy? What roles do individual, team, and organizational performance play in the way we reward people? How might you explore alternative compensation strategies to refocus performance on growth and results?

5. Feedback to feed forward

Another staggering statistic from Gallup’s State of the American Workplace is that only 23% of employees strongly agree that their manager provides meaningful feedback to them. If the average team is 8 people, this means that only 2 of them receive meaningful feedback.

Traditional feedback is focused only on past performance as an “end” to a cycle. More and more organizations are shifting to a continuous cycle of conversations that leverages feedback to impact future performance, rather than dissect past mistakes. This requires managers to provide more perspective on a situation and to make a connection to goals and future performance.

This is where the biggest shift comes into play for standing up a more progressive approach to performance. Your managers must be able to create a shared motivation of success with employees that contributes to your organization’s strategy. How are you empowering managers to conduct effective, valuable, and frequent performance conversations that begin and end with future performance in mind?

Reflect on leadership behaviors at all levels of the organization. What is the feedback culture of your organization? Are your leaders really creating cultural permission for open dialogue? What is your cultural tolerance for transparency, failure, and candor? How are managers delivering feedback today? How are your leaders asking for feedback from your team? Do they approach feedback with a desire to help someone improve and grow, or something more negative? (In order to feed future performance, feedback must be rooted in positive intent.)

Taking back performance

This may not be the time, the year, or the cycle for your organization to tackle the entire performance management model, but don’t let that you keep you from making progress.

These ideas can help your organization take back performance by redefining success through the eyes and efforts of your people. By doing so, you will be able to design a model that enables action and contribution toward your strategy, drives results, engages and develops employees, and fosters a culture that reflects your vision, values, and purpose.