Performance Management: It Really Does Work, But Managers Are the Key

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123RF Stock Photo

Employee performance is not HR’s responsibility.

We should be able to agree that the management of employee performance is a day-to-day responsibility of managers and supervisors.

Extensive research has confirmed that effective managers trigger better results; they are instrumental in creating a high performance culture where people have a palpable commitment to the success of their organization. Ineffective managers have been the subject of endless Dilbert comic strips.

The frequent articles and blogs criticizing performance management practices ignore or are silent on what research has shown is central to the effective management of performance.

People are the source of sustainable advantage

We know that with the “right” management people are capable of performing at significantly higher levels. Hospitals illustrate the point. They all have the same equipment, rely on the same technology, and rely on the same protocols but our great hospitals stand out because of the performance of their people.

To restate a popular argument, “People are the only sustainable source of competitive advantage.

The goal should be to fully utilize the capabilities of our people. As several research studies show, that rides on the effectiveness of managers and supervisors.

The most recent study was by a Wharton professor, Ethan Mollick, and reported in the paper, People and Process, Suits and Innovators: The Role of Individuals in Firm Performance. He concluded, “They may have a greater impact on company performance than almost any other part of the organization.” He found that is particularly true in knowledge organizations.

I would broaden that to virtually every situation where individual capabilities are the key to organizational achievements. That’s true in sports as well as in research and the arts. The common thread is the succession of teachers and/or coaches who guide the development of individual skills and abilities.

A different type of supervision needed

Companies that operate in stable markets can succeed through efficiency, strict controls and standardized procedures. In that “machine” model, employees are managed as “cogs in the wheel” and expected only to satisfy performance expectations. Close supervision is common. Performance appraisal systems were conceived to fit that environment.

But with the rapid growth of organizations where employee expertise is a key success, including government agencies, a different style of supervision is essential. Decisions are delegated to those individuals with relevant expertise. New projects have employees transitioning to form ad hoc teams.

Managers at times go for weeks or longer with no face-to-face contact. Technology is essential to monitor results. Trying to force fit a traditional performance management system into that environment is doomed to fail.

However – and this is fundamental – in a dynamic operating environment, the basic requirements for a performance system are unchanged.

Employers need to be able to explain and defend decisions based on performance – promotions, pay increases, terminations, etc. The law is always a consideration. Employees of course need constructive feedback and coaching to improve performance and for individual development planning.

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The importance of managers

The current media attention to employee engagement is another selling point for performance management. Gallup’s research highlights the role of managers in strengthening employee commitment as a strategy to improve performance. Nine or 10 of their Q12 survey questions focus on issues relevant to performance management, starting with, “Do I know what is expected of me at work?”

Gallup was among the first to emphasize the importance of managers. Their research shows the best managers “are the decisive factor in winning the hearts and minds of employees.”

At the same time, the HR community has allowed the critics to dominate the argument and broadly condemn performance management practices. If one were to ask both executives and managers if they believe the management of performance is important, their responses would no doubt be universally affirmative. But many would also be quick to criticize their firm’s performance management system.

Corporate leaders are clearly looking for better answers. As this was drafted another article was posted on Businessweek.com, Yahoo’s Latest HR Disaster: Ranking Workers on a Curve. A similar article on Microsoft’s disastrous experience with a forced ranking policy was published a few months ago.

This is a test for HR. We have the knowledge to develop performance systems that avoid or minimize the problems highlighted by the critics.

Making sure everyone gets the message

However, at this point top management may need to be convinced that a more effective approach to performance management will pay off. Leaders need to understand how the planned initiative will unfold along with the costs and anticipated benefits.

It’s likely to necessitate changes in the organization’s performance management systems, starting with the one used with managers. It would also be advantageous to reward the best managers and also to move those who are ineffective back to non-supervisory roles. Everyone needs to get the message.

The best strategy to get everyone on board is to involve managers and supervisors in defining the goals and the steps to finalize the changes in the way performance is managed. Involving respected managers in the planning will be important to gaining acceptance for new policies, system and practices. They will also be instrumental in selling the change to their colleagues.

With guidance on a few technical issues, they are fully capable of developing an approach that meets their needs.

Howard Risher is a private consultant who focuses on pay and performance. His career extends over 40 years and includes years managing consulting practices for two national firms. He recently became the editor of the journal Compensation and Benefits Review. He also has an MBA and Ph.D from the Wharton School of the University of Pennsylvania. Contact him at h.risher@verizon.net.

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