Rethink Performance Management!


Reading that 86 percent of companies are unhappy with performance management (David Rock, Josh Davis and Elizabeth Jones, 2013), I found this to be very revealing and was concerned about this remarkable number. In various discussions, I recognized that enterprises are investing a lot of money in order to find a way to manage their performance. In the end, they come up with highly-sophisticated HR systems which fail. I believe it’s time to look a little bit deeper into the topic, to find out why traditional performance management systems are not effective anymore and why employers are increasingly rethinking their approach to performance management.


The vast majority of our management systems are still following the old traditional logic and so do our performance management systems: On an annual basis, we set our goals and, at the end of the year, we assess our employees’ past performance. Business dynamics have dramatically increased, processes turn to more agility and technology has opened doors to a new dimension of collaboration–but the annual performance review process remains. Today’s work requires goal cycles as short as a month or even shorter. How can we then think that an annual management system can accurately assess our performance? Times are changing and so are their employees. Today’s employees are demanding from their managers that they talk to them regularly, giving them feedback on short notice and discussing with them their development and performance more than just once a year. Millennials pay a great deal of attention to the right communication while continuing their learning and their individual career planning. If we want to keep these people in our organization, we have to abandon the traditional performance management approaches. 


The Way to Get Performance Management Wrong …


It is fairly easy to continue the old way: First of all, do not respect personal feedback. Managers accurately predict it is better not to give feedback. Tweaking the system is easier than to have effective conversations. Focus on rating systems as this brings competition amongst your lazy employees. Above all, which manager is really getting paid for giving good feedback to his employees? Thus, we pay them instead to control the people, improve processes and analyze throughput rates as we can much easier count them–thus, place all of your focus on the process instead of on the conversation. In general, avoid talking about the efficiency of our performance management as the “branding” of performance management creates a threat. And, if this is not enough, regard rewarding people with suspicion as extrinsic rewards can be a big trap.


The Alternative Way of Performance Management …


David Rock, Josh Davis and Elizabeth Jones have looked at performance management from neuroscientific and psychological research points of view. According to their findings, we should instead have a closer look at our motivational factors. Our drive to take action, achieve goals and exert effort emanates from some of our deepest and oldest brain regions. Motivation is a survival necessity; thus, the neural circuitry developed for it is both extensive and heavily-interconnected.


Recently, I was listening to a discussion regarding whether we should skip goal-setting for our employees and empower them to run the business. Apart from the basic management question of how you can run a business without goal-setting, we should not forget that goals also motivate work performance. Neuroscience research proves that we gain more satisfaction from reviewing attained goals (compared to those yet to be attained), but we are more motivated by what still needs to be attained. Thus, when we start rethinking performance management, goals are fundamental to any discussion on performance.


The business case for an efficient performance management approach is clear: If we do not pay enough attention to our performance management process, we will lose our talent within the organization. It appears that, despite the common consensus that setting goals and measuring their attainment are critical management functions, we still need to use this feedback in order to satisfactorily implement our organizational activities. Sylvia Vorhauser-Smith (Senior Vice President of Research at PageUp) stated clearly in her performance equation that “the combination of developing both capability and capacity is seen as the next level of performance enhancement”.


No two workplaces are exactly alike and therefore we have to work on individual solutions. However, there are certain elements associated with highly-productive work environments that consistently appear in the research: When the challenge we have in our focus taps our skills and thus further develops them, we experience flow and high performance results. Most of us do this better and with more satisfaction on a team and we need to feel safe, encouraged and guided by the organizational system. Autonomy recognizes expertise as well as demonstrates trust and belief in one’s other abilities.


Our human satisfaction is what we achieve, individually and together. Performance management has to reflect these achievements as it occurs through intrinsic motivation. Because people are changing, our performance management approach has to change, too–and this has to be done at the same speed. We can ignore that demand and will be surprised when we lose our talents within our organizations. Thus, it appears to me that it’s high time to rethink our performance management approach before it’s too late.

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