Performance Management and Goal Setting: 2 Truths — and 2 Bad Ideas

© Marek - Fotolia.com
© Marek - Fotolia.com

I hold these truths to be self-evident (well hey, it is my blog):

  • Truth #1: Performance management is with us for the long term. And the reason for this is that people need clear information about what is expected from their work and how they are doing at meeting those expectations. They need it regularly, no matter how busy and overwhelmed their bosses may be. Could we improve how we do performance management? No question. And hopefully we will.
  • Truth #2: Performance management will never be easy, comfortable or routine. Important things – raising children and governing nations are examples that come to mind – never are. Anyone who says differently has something to sell you’d ultimately be better off without.

Performance management demands the most from those with direct responsibility for pulling it off – not HR, but the prototypical line manager who must do her/his best with a process/form/timeline not of her/his own design. However, help may be on its way.

2 examples of bad ideas

Dick Grote, to my mind, is the preeminent guru on performance management, and one of the subjects of my recent Thought Leader interview series. His new book How to be Good at Performance Appraisals is aimed at the audience of supervisors and managers, helping them to most effectively use whatever performance management system their organization has in place.

While it is not written with HR professionals and program designers in mind, I found it to be full of pragmatic and straightforward “real world” advice – something we can benefit from … and perhaps a great resource for that next manager training session.

One of my favorite chapters was the one on goal setting: arguably the place where many performance management processes stumble and fail. In particular, Dick calls out a number of popular goal setting techniques that are generally unproductive in actual practice. A few examples and excerpts below:

  • Bad Idea #1 – SMART Goals. As Dick points out, the overused and hackneyed SMART test is merely a mechanism for making sure that a goal statement has been phrased correctly. But it is often fed to managers as the be-all and end-all of goal setting advice – in lieu of providing important guidance on the places they should look for goals, how to determine whether they reflect genuinely important accomplishments or how to make sure they are congruous with overall business strategy.

For example, consider the goal statement announced by President John F. Kennedy on May 25, 1961:

I believe that this nation should commit itself to achieving the goal, before this decade is out, of landing a man on the moon and returning him safely to the Earth.”

How does Kennedy’s goal statement stack up against the SMART test? Remarkably well…

Kennedy’s goal was clearly SMART. But was it wise?

The man-on-the-moon program provided great benefits: a huge psychological boost in the race for space with the Russians, the creation of lots of jobs, an increased focus on science and technology, a couple of moon rocks, and the development of Velcro fasteners and Tang powdered orange juice substitute. But it also cost a huge amount – the best estimate is about $170 billion. For that amount of money we could have built several universities the size of the University of Illinois, or provided a 1,200-square-foot house for every American living under the poverty line. Would these have been better investments than shoveling $170 billion into a rocket ship and blasting it into outer space?

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  • Bad Idea #2 – Requiring percentage weights for goals. Letting people know that some goals are more important than others, as Dick notes, is a good idea – but assigning percentage weights to goals tends to be less so, for a number of reasons.

First, it’s impossible to accurately identify the relative importance of goals at a 5 percent level of granularity. Should one particular goal be assessed as reflecting 20 percent of the total weight for all goals, or should it be 25 percent? And from which other goal should the additional 5 percent be taken? This argument isn’t productive.

The use of percentage weights causes even bigger problems later, as it inclines the appraiser to turn the assessment of human performance in what is likely a dynamic and complex environment into an arithmetic problem rather than a matter of managerial judgment.

Thanks, Dick, for a book that looks beyond the HR crowd and provides expert guidance to the real owners and drivers of the performance management process.

(In the interest of full disclosure, I should reveal that I did receive a complimentary copy of Dick’s book because he was kind enough to mention me in the Acknowledgments section. But I would have purchased it anyway…)

This was originally published on Ann Bares’ Compensation Force blog.

Ann Bares is the Managing Partner of Altura Consulting Group. She has over 20 years of experience consulting in compensation and performance management and has worked with a variety of organizations in auditing, designing and implementing executive compensation plans, base salary structures, variable and incentive compensation programs, sales compensation programs, and performance management systems.

Her clients have included public and privately held businesses, both for-profit and not-for-profit organizations, early stage entrepreneurial organizations and larger established companies. Ann also teaches at the University of Minnesota and Concordia University.

Contact her at abares@alturaconsultinggroup.com.

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