Performance Management Under the Scope
How effective is your performance management program? Do you even have a formal one in place?
According to a study by Deloitte, the statistics regarding the effectiveness of performance management systems are not strong: “61% of managers and 72% of workers could not say that they trust their organization’s performance management process.” Further, fewer than 33% of workers think performance reviews are “very fair and equitable”; conversely, 61% of managers and 72% of workers “could not say they trust their organization’s performance management process.” The data are even worse for Chief HR Officers. Disconnect: Overall, 65% of organizations think performance management is important; 24% are actually doing something about it; and 6% can actually say they are “making great progress”.
Some problems cited regarding traditional performance management programs include the following:
They do not help employees improve performance and are therefore a waste of time.
They take a lot of time and expense for meager gains. (Estimates of annual value of working hours lost range from $2.4 million to $35 million per year.
Managers’ feedback does not consistently relate to organizational goals and objectives. (Managers also estimate that they spend only 13% of their time developing their employees.
Goals and objectives are not clearly communicated.
Contributions of individual workers are often difficult to measure, making accurate assessment and evaluation all the more difficult.
Effective performance management requires the balance of both human and organizational needs. Previously, more traditional generations understood (or at least tolerated) an imbalance toward the organization; the current generations dominating today’s workforce are not wired that way, perhaps in part due to the ubiquitous, often unfiltered means of communication available to all. There will always be some tension between organizational needs and human needs; the key is to find the optimal balance between them.
According to the Deloitte report, steps that can be taken to improve overall performance include the following:
Define the purpose and scope of performance management for the organization, based upon its specific goals.
Build trust and fairness into designing the program. Involve both supervisors and non-supervisory employees in the design process. Ensure objective measurements are agreed-upon, implemented, and clearly communicated. Train managers in presenting the program, including emphasizing the use of performance data to avoid bias in their assessments.
Remove unnecessary complexity from the process – make it simpler to use and understand, and more transparent. Strive to remove skepticism and potential causes of either fear or apathy regarding the entire process.
Endeavor to create a supportive organizational culture that helps people to want to do their jobs better. Examples are given of the CEOs of Rolls-Royce Holdings and McLaren Racing as driving positive culture changes within their organizations that have produced lasting positive effects.
Consider specialized training for managers and supervisors to enable them to deliver more accurate assessments, coaching and advice. An experiment at the Rotterdam School of Management showed that the presence of one negative team member can reduce effectiveness of the team by 30% to 40%, no matter how good the other team members are. Conversely, enlisting the creative support of employees in designing new processes and solving problems has measurably positive effects. Those effects, however, will persist only as long as the employees’ input remains a valued commodity.
As opposed to an annual or even semi-annual performance assessment schedule, the use of continuous, less-formal, more-feedback-oriented performance assessment (assisted by technology if applicable) has been shown to have positive effects on reduction of stress and absenteeism along with greater involvement and voluntary contribution by employees.
Similarly, increasing interaction among members of different departments can lead to increased synergy, involvement and productivity. Some companies have actually redesigned their layouts to facilitate those kinds of interactions and have seen increased productivity as a direct result.