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The Performance Management Process: A Hammer vs. A Shovel

Posted by David Wight in Business Management | 1 comments

If someone gave you a hammer to dig a hole, and you didn’t know any better, you’d probably come to the conclusion that the hammer wasn’t a great tool.   Of course, you’d be wrong because it’s the perfect tool for driving nails…it just wasn’t designed for digging holes.

This scenario seems be one of HR’s biggest problems.   We take a perfectly good tool, and try to use it in ways for which it was not designed. In the process we undermine people’s perception of the tool’s value, though no fault of the tool, not to mention HR’s credibility.

This is what has happened to the Performance Management or Appraisal process. Its original purpose was to improve and optimize overall employee performance by giving employees accurate feedback about how they were performing. This information was supposed to guide and motivate employees to improve their performance and sustain positive performance. Hard to argue with the thinking behind that isn’t it?

And then it started

“Hey as long as we’re collecting information about how people are performing, let’s also use this information to identify our best and subpar performers. Is this a legitimate organizational need? ABSOLUTELY. Let’s face it…..not all turnover is created equal. Most organizations have some employees they would like to leave (hopefully it’s a small percentage). Management seldom wants their best performers to leave. These are the people you want to make sure get the best treatment your company has to offer; you want them to know that you recognize and value their capabilities and contribution because you want to make sure that they stay!

Unfortunately using data from the Performance Appraisal process to meet this need while making sense on the surface has turned out to be a big mistake. That’s not what the process it was originally designed to do. It shifted the process away from giving feedback to employees to providing organizations with an evaluation of employee performance.

Then the behaviorists stepped in

“As long as we have this information about how well people are performing, let’s give our employees an incentive to do the best jobs possible by giving our top performers higher monetary increases than the people who aren’t performing as well.” This gave rise to the whole concept of Merit Pay and Pay for Performance which is so deeply rooted in business today particularly in Western culture with its emphasis on the individual. Again, it’s hard to argue with the basic idea…..intuitively it actually makes a lot of sense, and since the purpose is to get the best possible performance from employees, you could make the argument that there’s little conflict between using the process this way and its original purpose.

Unfortunately you’d be wrong because this led the Performance Appraisal process to having the additional purpose of providing organizations with a system for how they would pay and grant increases their employees. Again……..that’s not what it was originally designed to do.

So what?

You’re probably thinking, “So what?….how do these two additional purposes, giving us more performance information about our talent, and providing us with a system to pay employees, conflict with the purpose of optimizing overall employee performance?

Here’s the rub. First, of the three objectives:

  1. Optimizing employee performance thru performance feedback
  2. Providing information about the performance of our employees
  3. Giving employees an incentive to do the best job they’re capable of doing……..

the second two place a premium on our ability to accurately evaluate a person’s performance over an extended period of time. Unfortunately, that’s an exception rather than the rule unless maybe you’re a shortstop for the Cincinnati Reds (my team growing up) and the team has statistics for the entire season for every play you made in the infield, and every at bat on offense. Without those kinds of daily objective measures which roll up into totals and averages for the entire season it’s really hard to come up with an accurate measure of a person’s overall performance. Any one in HR knows that……..this is why so much of our time and energy has been spent in developing new approaches and techniques for measuring performance…..to try and make those evaluations more accurate and valid. That’s why the first question asked so often when someone talks about their performance appraisal process is, “Let me see your form.”…….I want to see if you’ve found a better way of measuring performance than I have.” That’s why so much time and energy has gone into the research of common performance evaluation errors, and training managers so they can hopefully avoid these errors.

And don’t get me wrong, I’d like to think that we have made progress. Today, I see much fewer trait evaluations on performance appraisals where a manager is put into the position of being an amateur psychologist, or where a manager has to evaluate someone on their “attitude.” But let’s be honest, how many of you in HR (or anyone else in management) would really trust the accuracy of your performance appraisal data if your life depended on it. God bless you if you would!…..I’ve never worked in a company where I would!

This doesn’t mean that performance feedback shouldn’t be accurate, but there is a world of difference between me as a manager sitting down with an employee and telling him or her what I would like them person to do differently in the upcoming year to improve his or her performance, versus my telling them that I have evaluated their performance for the year as a 3 on whatever the scale. Not only does this focus on an evaluation interfere with rather than contribute to person receiving effective feedback, it’s also the major factor leading to the single most common performance evaluation error, which is leniency error. This is not the place to go into the reasons for this error, but any organization that keeps track of the percentage of performance evaluations at different rating levels knows that it’s there.   To correct for this error, many companies have gone to a forced distribution of performance errors, but that’s really just a contrivance. You may no longer have to explain the discrepancy between your organization’s business performance results and the fact that 80% of your employee performance evaluations are “above average,” but it doesn’t guarantee that the individual performance evaluations are going to be more accurate.

It’s so easy to slip

But even here, I’m starting to slip into making the same mistake about focusing on the accuracy of the evaluations. If you go back to the original purpose of the Performance Management process;: to optimize employee performance, you don’ even need performance evaluations; all you need is a process that gets your managers to sit down at least once a year, and preferably more often, to discuss with each of their employees three or four basic questions:

  1. What would the manager want the person to continue to do the same way they are doing it now?
  2. What would the manager want the person to start to do or do more frequently?
  3. What would the manager want the person to stop doing or do less frequently?
  4. Anything else that the manager wants the person to do differently.

Notice that each of these questions, like effective feedback, focuses on employees’ actions or behavior. Theoretically, this is the one thing that we as human beings actually have control over, though I know that some would even dispute that.

These same three questions can also focus on the results that the person has achieved. To be most effective here, however, there will then need to be a discussion of the person’s behavior that yielded the current results.   What’s that one definition of insanity: Continue to do the same thing over and over again and expect different results!

And last but not least

This brings us to the final and what will probably be the most controversial of the suggestions I am making. This is whether there should be a formal organizational record of these discussions. My recommendation would be “No.”   As soon as you begin to keep a formal record of these discussions, that managers and employee know may be seen by others in the organizations, that adds a dynamic that typically distorts and detract from the value of those discussions. It’s almost like giving negative feedback to someone in public. We all know how well that works! What I might keep track of however, particularly in the beginning before the process becomes institutionalized as “this is how we do it here,” is how many employees actually have these discussions with their manager, and how valuable do the manager and employees find them to be.

Comments (1)
  1. hkramer.nl says:

    ll also help you identify when you may have to make some pit stops to adjust accordingly.
    Line managers today who are experts in human resource management see that
    appraisals and managing employee performance at regular intervals fits the big picture of the organization – it cannot
    and should not be a one time assessment thing else it would fail its objective of assessing the
    performance accurately. Another benefit is that you can create professional development programs that are better aligned to organizational goals.

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