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Re-Thinking Performance Management

You may have seen headlines like ‘Performance Management is Broken’. Don’t believe them – Performance Management is alive and well and remains a critically important capability for human resources professionals.

We’re blowing up performance management,” says Deloitte Australia’s head of people and performance, as reported in the Australian Financial Review recently. Other articles have said something similar. You may think they mean that the days of Performance Management are over, or at least coming to an end.

Think again.

Digging deeper than the headlines and the dramatic quotes, you’ll find that they are not throwing out Performance Management at all. Rather, they are taking pause to assess evidence regarding how effective their current process is, and then refining.

Reports to date have focused on large organisations whose approach has been the traditional yearly or bi-yearly performance review, most likely with a rating system linked to remuneration outcomes. While the accepted practice in large corporations, (shout out to my IBM colleagues of the 90s and the infamous bell curve discussions!) this approach may not reflect your approach and so to that extent, the current debate may be less relevant to your circumstances.

These articles questioning the validity of Performance Management are a sign of the times. With any significant organisational process, the contextual environment is central. In refining their approaches, they are moving to providing more ongoing, forward-looking feedback – weekly, monthly quarterly. It’s essentially a response to emerging research on the psychology of performance and to changes in workplace environments.

The emerging research includes increasing diversity, the different needs of millennials and generation Ys, and changing work practices such as working from home etc. Also, and very importantly, with cost effective and accessible collaborative HR systems now available, organisational goals can be efficiently cascaded and multiple quality interactions can be recorded in an effective and engaging manner – without hours spent filling in the dreaded forms.

As an HR professional working in both large corporates and SMEs, I have reviewed a range of different Performance Management processes and systems and “rethought” the approach for a number of clients.

So if you are on the starting line reviewing your Performance Management process, here are four things to keep in mind:

  1. Performance Management is a key – if not the key – driver of organisational culture. If you undertake a Performance Management exercise. it will impact your culture. If you don’t do it, that will also impact your culture. Whether you do it well or do it poorly, it will have an effect. So understanding how crucial Performance Management is to the effectiveness, health and harmony of your organisation is a very good starting point for any review of the process.
  2. Research suggests that people respond best to regular feedback where specific details can be used to recognise and encourage, coach and guide. So a Performance Management process that supports regular well-conducted conversations, such that work is aligned to organisational goals and people know where they stand, is gaining traction and will over time, be an expectation of current employees and prospective employees. In the absence of quality regular conversations (and we’ve all experienced this), is a vacuum that quickly fills with misunderstandings, accusations, and very possibly dysfunctional behaviours.
  3. To rate or not rate, to link or not link … that is the question! Whether or not to include rating systems and direct links to rewards in the way of bonuses, recognition programs or salary review decisions is a design consideration. When asked, my answer is a definitive ”it depends”. I’ll loop back here to my first point on culture – what you choose to do here will drive culture. So a commercial finance organisation may have a different view on this to a not for profit primary health care organisation, or they may have the same view but with a different recognition/reward framework. Assess your current culture, identify your desired culture and progress your performance management rethink accordingly.
  4. Paperwork is not appreciated. Indeed, it is a hindrance. In my experience, any business initiative is at risk of being challenged, ignored or undermined if it relies on time-consuming paperwork to implement. It could be the best solution in the world, but will not be embraced because it takes too much time to address the governance. Fortunately, these days we have a large range of productivity tools that can help. The larger corporates are early adopters but even the smallest of my current clients (30 employees) can access very cost effective cloud-based productivity tools. There is even a new model emerging where access to sophisticated cloud-based systems are free. They are funded by advertising and potentially provide sophisticated infrastructure to very small organisations that were previously not cost effective for them.

So Performance Management is not dead. In fact, it is very much alive. But, like most things in business, it is evolving and will remain a crucial practice driving culture and organisational outcomes.

Vanessa Rowland is an independent HR consultant who works with a large range of Australian SMEs and corporates (www.emergenthr.com.au).

au.linkedin.com/in/vanessarowland/

First published September 2016

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