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Business Think Tank: Does Performance Management Need Fixing?
Little has changed in the last decade in performance management practice, yet the environment that it needs to serve has transformed completely. A few progressive organisations have announced that in future they will do away with PM completely. This was the context of a Business Think Tank dialogue hosted by Synthetron in March this year. Nothing in the online discussion suggests that existing approaches to PM are seriously flawed, but there are opportunities for incremental improvements that could transform how employees and managers view PM in a positive direction.
Note: The italicised statements in parentheses quote statements written by participants during the Synthetron session that received strong support. In some cases, these have been truncated or corrected for spelling or grammar.

Performance management (PM), the activities where organisations set and cascade goals, monitor, appraise and document performance, work on development needs and allocate rewards, is a big beast in corporate life. As an employee, PM is highly consequential, and often emotional or even cathartic. For an organisation, this is one of its most core internal activities; get this wrong and budgets will be blown, capabilities misplaced and staff disengaged.

Yet this big beast seems to have been hibernating for a long time. The acronyms may have changed many times, but the processes still resemble those from the industrial age. They still typically follow a calendar cycle, and centre on defined set-piece discussions between an employee and their line manager. HR maintains issues extensive guidelines, maintains copious records and moderates key aspects such as appraisal ranking sessions.

Little has changed in PM practice, yet the environment that it needs to serve has transformed completely. Two generations ago, most people served out entire careers for just one or two organisations, and usually followed well-trodden development paths. Hierarchical structures and norms demanded reverence to a paternalistic line manager. People did not collaborate much outside their own department, leave alone with departments in other countries. And technology meant getting the typing pool to process a document.

Time for change in PM
There is some evidence that this big beast is emerging from its long sleep. There have been posts in business discussion forums and a flurry of articles in esteemed journals on subjects such as “agile performance management”. A few progressive organisations have announced that in future they will do away with performance management completely. Schumpeter in The Economist weighed in on the side of traditionalism as usual, arguing that some updating of process may be valuable but that the core aspects of PM remain essential. See: http://www.economist.com/news/21693151-employers-are-modifying-not-abolishing-them-performance-reviews-not-dead-yet.  

How should leaders respond to this? Academics have their place, and progressive ideas about bringing in new technology such as a “trip advisor” type of feedback facility clearly have some merit, yet what about the needs for documenting poor performance and cascading goals? And each leader has to find an answer based on their own context of business pace, goals and culture.

This was the context of a Business Think Tank dialogue hosted by Synthetron in March this year, entitled Fixing Performance Management. Synthetron has a unique approach utilising real-time, anonymous, moderated dialogues of one hour, accessed by participants using a simple but secure internet link. By writing participants share their ideas about questions from the moderator, and see a sample of ideas from others, which they must rate. Those ideas that garner sufficient agreement (or disagreement, or both) progress through the discussion to be seen and scored by others, and that way an outcome is a ranked list of the most resonant ideas.

From a simple, low-cost investment of a single hour of the time of these people came a wealth of insight. Imagine alternative ways of achieving this richness, and the time and cost involved.

The PM open discussion attracted 32 participants, from 8 countries on 3 continents, and with roles of corporate management, consultant or HR professional. The intense and lively debate generated over 500 ideas, containing over 11,000 words, all useful data points for analysis by the Synthetron team. 75 ideas progressed beyond their initial group, enabling the team to piece together a summary storyline from the discussion.

 

Much room for improvement
The discussion started with a poll question about recent experiences of PM, and the result was hardly a ringing endorsement for current practice. As many (27%) found the process of little value as found it very valuable. Later, the discussion turned to identifying critical success factors and components of a good PM approach.

info display

Even when asked to think radically and given a zero-based option, the group showed little appetite to be rid of PM completely.

Indeed, many recognised that PM could have benefits (It’s always good to reflect on your own performance, think about the future, set goals linked to the strategic of the company). Forced ranking sessions were the only element to PM that had significant support for being wished away (NOT: numbered ratings based on bell curve).

The most striking thing about the whole conversation was that of the many improvement ideas suggested by the group to gain support, most could be implemented already by lines managers within existing structures, indeed HR would no doubt suggest should be implemented.

Feedback in the moment
The most widely supported such area was the practice of giving and soliciting feedback “in the moment”, rather than waiting for set-piece opportunities (day to day feedback brings more relevant and constructive input than a yearly/bi-annual formal review where you have to note anecdotes or vague overviews.  We have moved to a more weekly connect point). It is significant that when participants were asked what they would like to change in their own practice, this was the leading topic, so many are aware that this area represents an opportunity (Me: I will try to give more feedback “in the moment” rather than rely on performance interviews).

Participants also saw an opportunity to apply PM at times appropriate for their own business needs rather than just at times mandated by the organisation. This applies not only to reviewing performance (I’d allow and encourage input at any time, not just defined points in the year) but also to goal setting (you can define short term goals, long term goals; this will give one focus and one can work step by step to reach them – Elaborates on: Good: define sets of goals at appropriate future points for the job, not just for the end of the year). With people changing role at any time of the year, more frequent reorganisations, greater use of contractors, and a trend towards project-based work, the annual set-piece review seems inadequate to fit the pace of modern business.

Other cited areas for improvement within existing structures are a sufficient focus on personal development during PM (Performance Management should be about development rather than rating), and a wider casting of the net for input for feedback and assessment (ME: Be a bit more proactive in seeking more regular feedback from multiple stakeholders on my performance levels throughout the year).

Execution, execution, execution
So the conversation highlighted improvements that would not require a structural overhaul of PM, but rather improved execution. The key to improving PM becomes understanding what causes these execution failings, and how to address those issues. The dialogue offers some clues, both from the perspective of PM system owners and of individuals.

System owners could start by accepting the scale of the burden on line managers that PM entails. The guidelines become ever longer and the templates ever more complex, as HR tries to force good practice into discussions while also satisfying senior leaders and lawyers. At the same time, hierarchies have become flatter meaning spans of control have widened, and many staff are physically based far away from their line manager and are working in many parallel teams, increasing the need for line managers to gather input from far and wide.

Crammed into a short period around the turn of the year, PM is a daunting prospect for line managers. We should not be surprised if one result is an approach by many of satisfying the minimum requirements, at the expense of the more valuable discretionary elements such as quality discussions about personal development. Calls for simplification during the discussion were supported (Simple, fewer forms, easier to input).

Opportunity for rolling PM
One opportunity for HR would be to embrace the idea of a rolling PM programme, with timing partly at the discretion of line managers. Any job change, line manager change or reassignment to a new project could trigger a simplified review of performance and goals. So long as goals at all stages were confirmed to be in step with corporate direction, and so long as a recent enough review was available, this could remove the obligation of a full PM review around year-end. Further, individual development discussions could be phased through the year. This tailoring would spread out the burden of PM, at the same time potentially making it more relevant to individuals.

However, spreading a burden through the year doesn’t lessen the overall burden, and might even diminish outcomes since HR would lose some of its opportunity for ensuring compliance. Clever technology or flexible timings cannot overcome the challenge of overwhelmed, disengaged or inadequately skilled line managers.

In the discussion, participants often link favourable or unfavourable experiences of PM with the attitude of their line manager at the time (Good: my boss took time to listen to me and think about my future needs) (wrong: just talking not acting). As anyone who has experienced round after round of tough PM interviews will vouch, effective PM requires a major commitment of time and emotion from line managers. Others will vouch that a lack of empathetic skills will doom a PM interview even when the line manager is motivated to do their best.

Who wants to be a line manager?
Yet line management does not seem to be recognised as a competence in many organisations, rather something that arrives as a result of seniority. Training is often perfunctory, and it is not clear that the extensive time commitment is generally considered when defining roles.

Here lies an opportunity for those defining roles, making appointments and designing coaching in many organisations (Wrong: most managers don’t have training in coaching – and this is essentially a coaching opportunity. So they easily get it wrong) (Big efforts to make sure all managers are well trained and good coaches to engage their people, including using the PM system). There is a parallel opportunity for individuals. For people who do not find line management comes easily or offers motivation, they might be better off pursuing career paths that minimises that aspect. Further, anyone deciding whether to accept a job offer would be well advised to consider the quality of the intended line manager, both for PM and other attributes, given the large influence that person has over success and satisfaction.

Many of the recent articles advocating change to PM suggested more radical departures than those raised spontaneously by the Synthetron discussion group. The moderators of the discussion chose to test the appetite for radical change in two ways, with some hypotheses and then with questions about specific possible innovations.

Hypotheses are introduced into Synthetron discussions so that they appear as regular ideas, but they are immediately visible to the whole group rather than initially only to a small subset.

The results of this approach appear as rather less mindblowing. All hypotheses attracted more support than disagreement, but this support was often lukewarm, with as many showing mild agreement as stronger support. One possible interpretation of this finding is that the group as a whole is not calling for a radical overhaul of PM methods, but instead advocating incremental improvements and stronger execution.

Tested hypotheses

It certainly doesn’t support the claim from some articles that PM is fundamentally broken.

Experiment with self-assessment and universal feedback applications
The first potential innovation that was tested in detail was that of a PM approach driven by self-assessment, with the employee considerably more responsible than today for collecting feedback, appraising and defining development needs. The group did not dismiss the idea, but chose to highlight its risks (everybody has blind spots. You need to get feedback about this points otherwise you will not change a hurting point) (I misunderstood – self assessment is extremely important but can’t be on its own).

BTT images 2

In a poll asking about the idea, the most common response from consultants was that it was sometimes good, while the most common response corporate managers and HR professionals was that it would be risky or problematic.

Clearly the group is not ready for such a radical innovation. That suggests an experimental approach, testing it on smaller groups and using it in parallel with established practices before any more widespread adoption.

The second idea was termed by moderators as the “trip advisor” approach, meaning the provision of an application accessible to all to offer feedback and rating to other staff members. The group responded to this idea in a similar way, highlighting challenges rather than showing enthusiasm (it needs an open culture with respect for the individual) (risky in our current culture where people like to blame each other more than give positive feedback: twitter culture!).

BTT images 3

In the poll, the most common response from all segments was that it would be risky or problematic.

Perhaps we should not be surprised by this caution, especially given that few participants were likely to be of the millennial generation. All such innovations have been greeted with caution by society at first – many took a long time before they placed any value in Wikipedia for example. Again, the indicated action would be experimentation, perhaps first in a technologically open part of an organisation, so that issues could be addressed and confidence developed.

This part of the discussion highlighted a wider theme, that of culture. Like every other business activity, success depends on the cultural acceptance of its users, while leaders also have the option of using changes to signal how they wish a prevailing culture to change. PM is so universal and consequential that this cultural risk and opportunity is especially present. This also suggests that major changes should be accompanied by smart communication, training and support, and would benefit from active role modelling by senior leaders.

PM is not broken
All of the indicated recommendations from the discussion for both PM system owners and users can be summarised in a table. Nothing in the discussion suggests that existing approaches to PM are seriously flawed, but there are opportunities for incremental improvements that could transform how employees and managers view PM in a positive direction. Far from the focus being on radical innovation, improving execution seems to be the most promising channel.