Archive for June, 2014

It’s Time for Something New: Transforming Performance Management, Part 1


NUGGET : Performance Management is broken and can’t be fixed with a new appraisal form. It’s time to rethink and innovate based on the needs of today’s Changing World of Work.

Show me how performance management actually works in an organization and, without an employee survey, I will tell you what the real values and relationships are.

Leaders everywhere are pronouncing the “right” values – socially acceptable things like: collaboration, customer-focus, agility, accountability, empowerment, innovation, learning.

The hyped values invite people to unleash energy. But the old back-end (driven by pay, appraisal, and ratings) approach to performance management often has more negative than positive effects. Even though you may say it is really goal- or development focused, managers often see performance management as a way to justify pay and promotion decisions. People involved know this and have developed ways to play the game.

The way performance management actually works is often like this: people work with their managers to set goals in order to ensure a common evaluation reference so that they have a basis for evaluations, pay raises, bonuses and promotions. In addition to this “back end” orientation, formal performance management has become a way to make sure that supervisors and managers really do what they are paid to do: to lead and manage. When performance management doesn’t seem to help leaders to manage better (i.e., there are too many “above average” ratings), then organizations resort to forced rankings, normal distributions, and clumping of the top 10% (for big bonuses) and the bottom 10% (for remedial programs or removal). I’m always surprised that we don’t see these desperate measures for what they are: an admission that managers are failing in their roles and that there is a culture of low trust and win-lose. This is certainly not in harmony with the new values!

The situation with appraisal-oriented performance management has been dire for decades, but organizations continue to patch the broken system by periodically changing the appraisal forms. W Edwards Deming was so frustrated with PM’s negative impact on quality that he wanted it eliminated entirely. I do not agree with throwing out personal feedback mechanisms. But I do believe that a new approach and assumptions are sorely needed to reposition performance management as a strategy implementation and culture-enhancing vehicle. It’s time to STOP doing incremental change to this archaic process. Stop changing the forms and instead develop a way of aligning people that really reflects the values in the first paragraph of this blog.

I will offer specific suggestions on this theme in upcoming blogs. Please do comment or send me an email (pat@patmclagan.com) to launch a conversation, ask a question, or offer a thought.. I’ll respond, interact, and possibly deal with your thought in one of the upcoming pieces.. Please do share these thoughts with others. We have similar goals: to create high performance and high engagement in today’s changing world of work.

NUGGET : Performance Management is broken and can’t be fixed with a new appraisal form. It’s time to rethink and innovate based on the needs of today’s Changing World of Work.