Sep 4, 2013

I think it’s time for HR to take off the hair shirt. We have no reason for penance.

For decades HR has been admonished for the problems with performance management (PM) when in reality HR has virtually no direct involvement in the day-to-day management of performance. It’s a system or tool that is used by managers and supervisors.

The problems are largely the ineffectiveness of managers in their role as supervisors. HR’s role in performance management is limited; it keeps the personnel records, provides training, keeps track of scheduled reviews, and when problems arise, looks at the pattern of ratings and the documentation.

It’s similar to the role of budget director – but a difference is that when PM problems surface it’s the system and HR, far more than the managers, that are somehow responsible.

More critics of performance management

I have managed the performance system in two large companies, most recently in 2006. Both companies had performance management systems that were typical for the time.

A few managers took their responsibility seriously and were known as good managers. Some spent minimal time. One CEO declined to evaluate his reports – that made my job more difficult. From almost any perspective, our PM systems have improved significantly over the years but the critics are even more vocal today.

As recent as last week, a consulting group was promoting a series of webinars entitled, “Abolishing Performance Reviews” The fact is, all employers need to identify their star performers as well as the few whose performance is unacceptable.

They also need a credible, defensible basis for managing rewards and careers. Plus, whenever someone is trying to improve their performance, they need feedback and coaching. They also need to know what’s expected and how their performance will be evaluated.

Problems are well documented

We know what the core problems are – inadequate feedback and inflated ratings.

My experience tells me it’s a vicious cycle; manager’s know there is a problem, are uncomfortable with what’s expected of them, and opt to spend their time on tasks/roles they find more satisfying. The pattern starts.

But, this is part of a broader problem. Too many managers and supervisors were promoted to supervisory roles because of their technical skills or seniority.

Their training is inadequate and they have not developed the people skills to be effective as supervisors. It’s exacerbated when managers at higher levels – presumably the role models – fail to demonstrate effective supervisory behaviors. Furthermore, reward systems rarely reinforce the behaviors known to be important.

Generalized criteria are also hard to measure

The PM system contributes to the problem when the focus is on generalized performance criteria that are not directly relevant to the job.

“Business acumen” or “perseverance,” for example, may be politically correct but are not keys to success in every job. Poorly defined or loosely relevant criteria make conversations between managers and their people more difficult. Experts on providing feedback argue that it should be specific to the job and the employee’s behavior.

If the PM system fails to focus on job-relevant issues, it’s part of the problem. Generalized criteria also are difficult to validate and “measure” – and that makes it difficult to justify or explain ratings. Inflated ratings make the discussions easier but add to the problems.

If Gallup’s research is valid, the most costly problem is that ineffective performance management undermines employee engagement.

The solutions are also known

The solution starts with leaders who make human capital management a priority. Research has confirmed focusing on human capital management is a competitive advantage. The stories of the “Best Places to Work” also highlight its importance.

Training is of course important but the behaviors have to be reinforced, and that makes the reward system a core consideration. The best managers need to be recognized and rewarded. The least effective need to be moved to non-supervisory roles. That sends a powerful message.

Multi-rater feedback is potentially valuable but can be problematic. Inviting employees to discuss the PM system in focus groups is a proven strategy to identify problems as well as possible solutions. They want to know problems will be addressed. The problems caused by generalized criteria can be readily solved.

Groups of high performers in any occupation can easily identify and define the competencies important to their success. In that role they are Subject Matter Experts (SMEs). Accountants, for example, would identify a different competency profile than compensation specialists.

A good analogy is a football team. No one would consider using the same criteria for every position.

Employing “calibration committees”

Technology is not going to solve the problems. It neither increases the prospect for accurate ratings nor insures adequate feedback.

Technology is important of course; it reduces the time managers devote to PM although good coaching requires time. Technology is most useful when the system allows both managers and employees to record comments or events as they occur. Having that information readily available to support year-end assessments helps both managers and employees.

Forced distribution policies are also not a solution. The practice is a simplistic response to rating inflation but has no theoretical support. It’s actually contrary to effective PM since it undermines the prospect for constructive feedback and cannot possibly be validated.

A better strategy is to rely on what Ed Lawler called “calibration committees.” Managers are asked to explain and defend ratings before a group of peers. It reduces inflated ratings and heightens the recognition for the true star performers.

Effective performance management is not dependent on the “system.” The problems cited by the critics are best understood as cumulative across managers and supervisors. The solution requires a commitment to improve the quality of management.