Organisational Change Management Volume 2

Performance Management

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Introduction

. Performance management can be defined as proactive management of the factors that are important to an organisation's performance to ensure it consistently and effectively achieves what is desired.

. There are 2 elements in measurement that need to be identified, ie

i) what to measure

ii) how to measure, ie collect the information

"...methods an organisation decides to use to measure its own activities and accomplishments - the criteria it chooses and the information system it develops to measure itself - become central elements of its culture as consensus develops around these issues. If consensus fails to develop and strong subcultures form around different assumptions, the organisation will find itself in serious conflict that can potentially undermine its ability to cope with its external environment..."

Edgar Schein, 2004

Remember: different sections of an organisation have different assumptions about what should be measured, ie accountants (financial measurement), sales and marketing (sales and marketing measurement), production (production measurement), etc. There needs to be consensus on the criteria for measurement

. Remember: what gets measured/rewarded/recognised, gets done. Some similar examples

i) editors claimed that free-lance journalist wrote articles that were too long, and valuable time was spent "cutting the copy". Yet these journalists were paid on number of words they produced which encouraged them to write long articles!!!!!!!

ii) writers of software code are generally paid on lines of code written. This encourages programmers to over-write rather than to focus on what outcomes are wanted and managers need to design incentives around the outcomes

. Performance management is more than performance appraisal. At its worst, performance appraisal is nothing more than a report card given by a boss to a subordinate, a verdict on professional adequacy or the lack of it. It boils down to "here's what is wrong with you". In other words, it is a onetime, one-way report card. In contrast, performance management integrates appraisal of the staff performance with a two-way, continuous process of observation, conversation, thinking, planning and coaching that improves staff performance - hence corporate performance. Performance management saves managers considerable time and angst

. Performance management systems should tie appraisal with development and goal setting to the financial and strategic goals of the organisation. Furthermore, it should be linked with specific behaviours that embody the organisational goals and values so that staff performance is evaluated on those desirable behaviours as well as achievement of numerical targets. Thus staff and management work together to identify those skills and behaviours required to achieve the organisational objectives, and plan personal development based on this

. Performance management is driven by performance measurement, ie indicators. There are 2 types of indicators:

- lag (what has happened in the past)

- lead (what is happening now) which have a predictive capability.

. Some examples of performance measurement include KPIs, KRAs and Balanced Scorecard and associated techniques (see Volume 5)

. There are 9 elements in developing a performance management system

i) conduct continuous conversations

ii) communicate expectations

iii) provide positive feedback first

iv) link past performance to future goals

v) develop coaching skills

vi) focus on behaviours, not personality

vii) focus on consequences of behaviours

viii) separate personal development from career development

ix) eliminate your own biases from performance conversations

. Continuous conversations

There should be at least 3 or 4 performance-related conversations with direct reports during the year. Ideally, performance appraisal involves the review of progress via previously defined and measurable goals, and should be part of each of these discussions, rather than being accumulated for one dreaded session at year-end.

Continuous feedback gives staff the opportunity to adjust their behaviours as they go along. In other words, performance appraisal is not an event as the real work is what occurs in between

. Communicate expectations

One of the main roles of a manager is to communicate to his/her staff the expectations and the reasons for them. Understand the important difference between feedback and real communications. Feedback is usually practised as a one-way data dump andthus will likely engender defensiveness. Furthermore, feedback communicates information on past performance and does not traditionally include information about expectations

Communicating expectations is most important to somebody whose role is changing, such as a production manager becoming a general manager, a salesperson becoming a manager, etc

. Give positive feedback first

People handle criticism best when it is delivered in a ratio of 1 to 3, ie one criticism for every three compliments. Link past performance to future goals

Make sure the feedback is relevant as everyone sees the world from a different frame of reference. Also, allow the recipient to explain "their side of the story"as there maybe a different explanation.

People cannot change the past, but they can influence what they do from now on. Thus the need to concentrate on constructive action that can be taken in the future

. Develop coaching skills

Stop being the boss. The best way to ensure all that an employee will not be defensive and resistant to your comments is to forge a partnership that makes coaching an unremarkable element of the manager's workshop with his employee

Be alert to the "coachable moments", ie events that give the manager an opportunity to lay a little wisdom on the employee

Thus performance management is more than a conversation as it includes the manager's attitude and stance

Remember: performance management is an art, not a science

. Focus on behaviours, not personality

It is important to focus on the behaviours that need improving, rather than making your comments personal

. Focus on consequences of behaviours

Managers need to help the employee focus on the desirable, or undesirable, results of a set behaviour. Continuous feedback includes reinforcing appropriate behaviours and discouraging inappropriate behaviours.

Use open-ended questions that will help with self-diagnosis and encourage participation in conversation, eg

- what do you think the implications of your continued behaviour will be?

- what are 3 specific things that you need to do?

Or use a counter-intuitive approach (no negative feedback) by asking

- what have you done well in the last month and what can you do better in the next month?

Need to focus on what you want them to do, rather than focusing on what they stop doing.

Separate personal development from career development

Managers need to separate conversations about personal development, ie relevance of your behaviours to organisational goals, etc from conversations about compensation, ie financial rewards, etc

. Eliminate your own biases from performance conversations

The expectations of performance have to be based on the organisation's business needs and the scope of the job description

The most common negative aspects that can destroy performance reviews

Introduction

Generally managers and workers dislike performance reviews, despite the amount of time and resources allocated to them. If the reviews are conducted badly, damage can be considerable. On the other hand, performance reviews are effective in setting goals, then applying and rewarding appropriate performance and giving feedback. There is a high level of correlation between employee engagement (morale) and the level of satisfaction with performance management systems.

i) talk money

Any discussion about remuneration (pay, rewards, etc) should be separate from performance reviews. If people feel that their remuneration is linked with the performance review, they are less likely to be open and honest when discussing their performance.

ii) inappropriate job descriptions

Sometimes the written job descriptions and goals do not reflect the work that is actually done and the value a staff member is providing. There is no one-size-fits-all approach. For example, questions about performing their job in a timely fashion, generating new business, getting to work on time, etc may be suitable for sales staff but not necessarily for knowledge workers. Thus the need to check each job description and determine its appropriateness.

iii) ranking

Sometimes management personnel are asked to rank their staff by numbers or description (excellent, satisfactory, unsatisfactory, etc). This forces management to identify high and low performers; the ranking can be used to allocate rewards and identify those that need encouragement, coaching or sacking. Remember: high performers need recognition, otherwise they will move on. On the other hand, it can encourage members of a team to work against each other as they compete for higher rankings. Thus arbitrary rankings can create a great deal of destructive disharmony.

Another form of ranking involves the bell shaped curve (see Volume 5).This involves managing out those staff members who are in the "tail of the curve"and hiring new talent

iv) unachievable goals

One of the most common complaints is that the goals are unrealistic, as changes outside people's control can occur, such as legislative changes, etc and these need to be reflected in the targets, goals, etc. Otherwise people will feel powerless to impact the outcomes and the goals become meaningless.

Remember: high-performers are most vulnerable as they are strongly performance and results-driven; thus a failure to match up to objectives, through no fault of their own, leaves them deflated and even more prone to changing jobs.

v) personality clashes

Despite systems being designed to take the subjectivity out of the process, there are occasions when managers and staff do not like each other, and this can be reflected in the content of the review.

vi) lip service

Management needs to deal on a regular basis with the real performance issues, including having the difficult conversations and encouraging people on their performance. It is more than just filling in forms and having a once-a-year conversation.

vii) no praise

Most staff members expect to receive some praise during their performance review, other wise they will feel disenchanted.

viii) bias

There are many biases that can sabotage a review including

- confirmation bias (where managers ignore behaviours that do not confirm their original views);

- recency errors (judging someone on their recent performance and ignoring what happened before);

- halo impact (where a person's performance is judged on one characteristic);

- horn impact (where a person's whole performance is poisoned by one element that they are not good at)

Part of this involves the bias of stereotyping. Remember: everyone is unique, for example

"...many of these high achievers demonstrate daily extreme traits in...... the situation they experience. They are motivated, shaped and influenced by unique drivers and conditions......think of high achievers in 2 categories. The first type......are passionate high performers who feel a powerful sense of engagement and adsorption in their work. They do not feel the need to align with the norms of their society, but are usually quite comfortable trusting their intuition......are honest about their successes and achievements..... on the other hand, driven high performers did not feel as engaged, but instead almost feel an obligation to succeed. They are very sensitive to praise and criticism. They can be defensive and moody......sometimes inflate their abilities......more likely to demonstrate burnout and exhaustion..."

Christopher Shen as quoted by Catherine Fox, 2007k

Passionate high performers need a sense of autonomy and to be granted independence; imposing deadlines, constraints, offering rewards or threats can be counterproductive. In contrast, driven high performers desire excitement and enthusiasm and perform best with structure and with clear expectations

To reduce burnout, staff members need too be offered opportunities to express their feelings and be given advice on how to improve the situation

ix) rewarding wrong behaviours

Some organisations look only at the results without considering how they were achieved. Performance reviews need to build in the whole range of measures based on behaviours, including whether they are a team player, whether they share information, offer constructive suggestions and feedback.

x) enormous expense for doubtful benefit

Bad handling of performance reviews can result in temporary reductions in productivity that can last from days to months.

xi) performance management is only performance appraisal

Many people see performance appraisal and performance management being synonymous. Yet performance appraisal (assessing how the staff member has, or has not achieved the said objective) is just one part of performance management. Performance management is about developing a staff member.

xii) failure to link human resource management to strategy

This runs the risk of wasting time and staff goodwill on systems and procedures that do not deliver. Strategic HR practices, such as appraisals, need to be used to make decisions about training and identifying and retaining talent

xiii) poor feedback

This is a sign of inadequate communications

Thus, this means that organisations achieve results not by studying numbers alone but by focusing more on people who do things that achieve the numbers. Translating the organisational goals into desired human behaviours is a core job of the manager

Feedback needs to be frequent and immediate if it is to be effective. Remember: most people have a natural lack of confidence and fear criticism as we feel vulnerable and threatened by negative feedback, such as criticism. Giving and receiving feedback should be a constant event, part of the daily routine, so that it is an element of the organisation's culture rather than an infrequent, potentially traumatic event, such as once a year. It should be the basis for increasing performance and not about to the boss reinforcing his/her position. The "Annual Review"encourages improved behaviour just before the review, as staff members aim to impress prior to the big event and maybe slack off for the following months. Furthermore, people are better able to recall recent events than those in the "distant past".

. Mismanaged performance management, including reviews, is directly or indirectly responsible for damaging relationships, reducing otherness, instilling mistrust and increasing staff turnover

. In summary, performance management is about developing the staff involves

- defining performance (use measurement such as KPIs, including expectations, etc)

- providing support (such as skills development; coaching or mentoring; ensuring that adequate resources are available)

- judgement and measuring (assisting how staff had done in achieving the said objectives, including performance appraisals)

- feeding back performance information (feedback on staff's work and whether their objectives have been met)

(sources: Monji Williams, 1997; Edgar Schein, 2004; Mike Hanley, 2006; Fiona Smith, 2007c; Catherine Fox, 2007k; Fiona Smith, 2010p)

 

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