Performance Management Needs A Makeover

An agile approach to the dreaded performance review

The skills it takes to manage day-to-day operations are different from the skills needed to lead through change and transformation. This can also be said for Performance Management.

What it takes to write the Annual Review is a completely different set of skills needed to motivate and inspire employees. In fact, most reviewers and receivers dread their annual report. In my coaching practice, I have spoken to hundreds of leaders, both responsible for writing the review and on the receiving end, who complain about the arduous process of crafting a review and sitting through them. Most recently a Director told me his company had restructured and the Performance Reviews were now being done by the business office, a department removed from the technical area in which people worked.

This brings up the problems with annual Performance Reviews. First, they do not match the workflow of the digital age. When workplaces are making major efforts to be agile, value driven, flexible and quickly responsive to demands, feedback to employees should match.

Performance Management is in need of a makeover. It is true that the annual review is just one part of a Performance Management system. However, it is usually the main part, and it falls short of motivating and inspiring the workforce. Here are some of the reasons Performance Reviews fail to deliver inspiration to do a better job:

• Bias. The rater is not viewed as a credible judge of that person’s performance.
• Not relevant. The feedback is coming months later and lacks significance
• Unfair. The review is written according to the availability of financial incentives. If only 3% of the staff are eligible for a significant raise, then the reviews have to reflect this same spread.

Performance Management needs to be as fluid and flexible as the workflow; agile in nature. Integrating performance management with quality management makes sense; it is people who contribute the most to error and variation.  Strategic goals, purpose and individual behaviors do not line up. There is often a poor fit with the roles required, and a lack of skills to perform well, contributing to low motivation and performance inconsistencies. 

Most employees want to know how they are doing and desire feedback from their managers, yet, most managers lack the skills for providing feedback. Inspired performance comes when there is a connection to what is being done and why. The once-a-year review does not make the connection for employees about what they are doing and the organizational goals and mission. It falls flat.

Making a shift from a traditional performance-management approach to an agile performance-driven system requires some planning. A performance-management system has to clearly identify performance expectations. These are standards that can be monitored and measured and based on distinguishing competencies. What skills and behaviors distinguish excellent performance from mediocre? What are the valuable contributions that distinguish high performers?

Revamping the performance management approach will help the organization, business unit, and the individual clarify these distinguishing competencies and have a conversation around what a high-performing organization, unit and individual looks like. 

An agile performance-management system would incorporate the same process orientation used in the workflow; assessment, development opportunities, and evaluation. A foundation of this approach would be a coaching model with managers and employees establishing goals aligned with the unit and the organization along with a development plan tied to expected outcomes. The evaluation phase is incremental in nature with feedback provided regularly. This system may include an annual review; however, it will look different.

What if this annual review consisted of the organization’s report card and the cumulative results from each business unit? This offers an opportunity to evaluate how well the processes in place are working, what development opportunities are needed, and revisions are required to meet and exceed goals?

Just as the workflow has changed and hierarchies have flattened, so too must performance management innovate to support organizational growth. It is time to disrupt what has been seen as a “necessary evil,” and develop a process that serves employees and organizations.