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.

Performance can be defined as the value of employees' contribution to the organisation

Maximise the benefits of evaluating performance requires adept handling of issues around fairness, transparency and development

- fairness (if the process is fair, people are more willing to accept the findings, even undesirable outcomes; not having evaluation can be worse than having one; evaluators need to be credible and motivated; without evaluations, staff are unable to gauge their contribution; need to minimise personal opinion)

- being transparent (help staff understand how their contributions to the organisation are perceived; makes it easier to recognise and reward top performance)

- developing people (focus should be on career and personal development, not accountability; helps people prioritise; staff learn their key strengths and areas that need to be improved; both positive and negative feedback required)

Some examples of performance evaluation

- annual reviews (these focus more on accountability than development)

- real-time feedback systems (it is a good way to help people reinforce their successes and learn from their failures)

NB More than 1/3 of all feedback interventions backfired, decreasing performance instead of increasing it.

"...highly anxious people have more intense neuron reactions to uncertainty than the negative feedback. If you're nervous, you'd rather find out your failings than not know how you are going at all..."

Lori Goler 2016

. 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.

It is important to differentiate between measures which are lead indicators, eg input-orientated or performance drivers like processes, activities, etc and those which are lag indicators, e.g. output-orientated like revenue, profit, loss, customer satisfaction, etc

. 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