HR Insights, Talent Management

Want Better Results? Then You Need to Quit Focusing on Them

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The state of performance management sucks.

I wrote as much in a recent cover story for The Conference Board Review. Not that you need to read my article to tell you what you already know. In fact, criticizing the way we fail to help people succeed at work has become one of corporate America’s favorite sports — in which everyone ends up losing.

Worse, companies continually reach into a bloated box of Band-Aids to fix a system that isn’t actually broken — because it never worked to begin with.

Managing by objective, or by results?

To a large extent, organizations still manage by objectives. Sure, it’s a 1990s concept, but businesses continue to base their performance-management systems on it.

Sort of.

Actually, few companies manage by objectives. Rather, they manage by results; that is, evaluating people against goals meant to yield all kinds of easily countable digits.

So, what’s wrong with creating a results-oriented culture?

For starters, by basing ratings, compensation, rewards, and recognition on results, you may suffer something like what happened at Sears some years back. When it was discovered that the company’s auto-repair workers were overcharging for (sometimes unnecessary) work to meet targets, then-chairman Edward Brennan apologized that a “goal-setting process for service advisers created an environment where mistakes did occur.”

Ain’t that some crafty PR flack’s definition of “mistakes?”

Focus on input rather than output

Nonetheless, it can really hit fan when you tell people to aim at targets without considering where their arrows might land.

Ethical infractions aside, the more pervasive problem is that the worst way to achieve results may be to assess people based on whether they achieve results. Instead, you ought to concentrate on one’s input, or how one works, rather than output, or what one produces. In other words, assess employees based on behaviors.

Take sales, a field defined by results. Instead of tracking performance against goals, you’re better off reviewing role-relevant traits and activities — pursuing leads, crafting pitches, etc. — typically necessary to achieve objectives. Obviously, many of these are measureable, but the point is not to affix numerical targets a year in advance and then base performance on meeting them.

Admittedly, in my article, I really struggled with how to make behavior management measureable (on second thought, you really do need to read it!). I’m still not entirely sure, but I’m sure of this: Setting goals is not the problem. Judging people against them is. It’s OK for managers and subordinates to set objectives, but in doing so, it’s crucial to assess the objectives themselves, not people based on meeting them.

Are accomplishments and failures beyond a person’s control?

I’m sure of something else: In his book Drive, author Dan Pink writes about the difficulties involved in drawing cause-and-effect links to meet objectives in most white-collar work. Similarly, Michael Mauboussin, author of The Success Equation, told me:

There’s a continuum of things that are pure luck on one end and pure skill on the other. When your outcomes are truly a reflection of the work that you’re doing, a results-oriented evaluation is not unreasonable, like in manufacturing, which is very skills-oriented. But things like launching a successful R&D project are inherently probabilistic, with a lot of randomness and luck to them. There are profound influences that are hard to anticipate, so you have to move the orientation away from outcome and more toward evaluating process, not because you want to dodge the outcome but because that’s the ultimate way to get it.”

Wait, there’s more. Mauboussin points out that the higher up you are in an organization, the greater the likelihood that luck, not skills, will influence outcomes.

Quite simply, it’s illogical to base performance management on results when you can’t establish causal relationships between input and output. Worse, by concentrating on meeting objectives, you may be rewarding or punishing people for accomplishments and failures beyond their control.

So focus on what employees actually can control — their behaviors. Sure, results matter, but you won’t get them until you stop obsessing over them.

Vadim Liberman is senior editor and devil’s advocate at TCB Review, the thought-leader magazine of The Conference Board. (Any bizarre or otherwise opinions he expresses here do not necessarily reflect those of The Conference Board.) He frequently explores ideas and opinions related to business management, and the myriad ways that leaders fail their organizations. Contact him at vadimsviews@gmail.com.
  • http://www.achievers.com/ Elyssa Thome

    Huge insight, but we do need to find a better way to evaluate behaviors. This has been a perennial problem for creative roles, where the tasks support revenue generating campaigns, but you may not have control over what happens to the final result, and goals like “X number of infographics” don’t speak to actual company value. Goals need to be measurable to be relevant, but they also need to be in an employees control to be anything but demoralizing. Anyone else have some good ideas here?

    • Vadim Liberman

      I think when it comes to behaviors and actions, particularly in creative roles, there’s really no way around the notion that judgments will have to be subjective. Measurements, then, will essentially be opinions. To some extent, that’s true in many evaluations that don’t involve behaviors, but subjectivity is more pronounced when judging behaviors rather than outcomes.

      There’s really no way around this issue of subjectivity. If I can offer one idea, one approach, it would be to move toward a system of peer management—that is, performance appraisals based on colleagues’ assessments, rather than a single manager’s perspective. That seems the most viable way to compensate for the problem of subjectivity. It is perfect? No. Is is better than the current status quo? Maybe.