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Effectiveness of Performance Management
Human Resources » Performance Management

Chrm Message From: marcus_seattle Total Posts: 16 Join Date: 23/02/2007
Rank: Executive Post Date: 28/02/2007 12:38:35 Points: 80 Location: United States

Hi Friends,

This write-up explores why existing formal and informal approaches to employee performance management and appraisal (EPMA) tend to work well enough in theory, but fail to meet expectations in practice.

It is split into two parts. Part 1 identifies the root cause of the problem and presents a solution for how it can be eliminated, or at least minimized. explains in more detail how this solution works. Various suggestions for how it can be applied to meet differing individual or corporate needs are also outlined.

Part 1: Cause and SolutionCurrent Situation: There is a huge amount of frustration and dissatisfaction with existing methods of formal employee performance management and appraisal (EPMA). Regardless of whether the approach is based on rating scales, competency assessments, objectives, key performance indicators, or other performance
standards, rankings, 360-degree feedback, or the balanced scorecard, the problem appears to be the same. While they all appear to work well enough in theory, to a greater or lesser extent they all tend to fail in practice. They just don't seem to measure up to the expectations that managers, employees, and organizations alike have for them. This appears to be the case even when the implementation of a given method is well managed and accompanied by proper training on how it should be used The problem is not limited to formal EPMA systems. Organizations encourage, even urge, their managers to talk informally with their employees about their performance on an ongoing basis. However, this rarely happens. Moreover, even if it does occur, the discussion itself and the results it achieves are often less than ideal. Despite our best efforts to date, managers still report that they are uncomfortable giving feedback and discussing performance with their employees, especially if poor performance is a factor. Consequently, they avoid the situation, or fudge the facts, whenever possible. The reasoning behind formal or informal EPMA is laudable; however, the methods we currently use do not achieve the results we want. The bottom line is that "open and honest" communication (the Holy Grail of appraisal generally) remains elusive. The problem is real and pervasive and every organization seems to be struggling with it. While it is difficult to quantify the negative effect that such a problem must have within an organization, we know (at least intuitively) that it is probably staggering. For example, my estimates indicate that, regardless of whether it is done formally or informally, only about 10 per cent of the managerial population have a natural ability to discuss performance with their employees in an effective way. Since it is likely that this population follows a normal statistical distribution it means that, for the remaining 90 per cent of managers, giving feedback and discussing performance with employees remains a task that is easier said than done. This appears to be the case regardless of whether or not they have previously received any training in how to do it properly. Aside from the obvious negative consequences that a problem of this magnitude has on an organization's productivity, the costs on a human level in terms of low morale and demotivation may be equally devastating. While this cost is not necessarily quantifiable, it is definitely reflected in the bottom line. Not being "open and honest" with employees about their performance, how they are perceived by management and what such a perception means for the future, raises some important moral and ethical questions around an organization's responsibility for, and often-stated commitment to, developing its employees. For example, is it right for managers to give acceptable formal appraisals in order to avoid bringing up poor performance issues and then to subsequently deal with them by ignoring, sidelining, downsizing, "promoting", or transferring, employees without telling them why? Is it fair to expect any employee (including managers) to resort to guesswork
to find out how they are perceived and what this means for their career?

Ultimately, is it a smart (or even an acceptable) organizational strategy to leave employee success to chance? To expect employees to succeed not as a result of clear information about how well they are they are doing, but rather in spite of it? Most books on management (including the recent bestseller, First, Break All the Rules: What the World's Greatest Managers Do Differently by Marcus Buckingham and Curt Coffman, 1999) advocate the importance and intrinsic value - at both an organizational and individual level - of helping employees to reach their full potential by assisting them to find their right "fit" in (or out) of the organization. However, as these books point out, this is a managerial task, not an organizational one. Unfortunately, it is this basic inability of most managers to sit down and talk to employees honestly and effectively about their performance and potential that prevents them from following such advice. The process is stopped before it even starts. The Root Cause of the Problem In my view, the root cause of the problem does not appear to lie in a lack of ability within the managerial population to honestly and accurately assess and evaluate an employee's performance and potential. The root cause of the problem is that, to a greater or lesser extent, the vast majority of managers cannot actually translate what they know about that performance into useful information and then communicate it to the employee in an effective and practical way regardless of the method they are asked to use. This is a fundamental problem because the success of any formal or informal approach to EPMA is ultimately dependent on the honesty and caliber of the information the employee receives in combination with the quality of the face-to-face discussion that should accompany it. Why does this problem exist?

The cause of the problem seems to lie in the way in which managers, being human, form their opinions about their employees. This is how I believe that it happens: when managers form opinions about employee performance, they instinctively analyze both objective and subjective data collected from observing and interacting with them over time and in a wide variety of circumstances and situations. Objective data obviously include any measurable results produced by the employee that can be related to previously defined objectives or performance standards. Subjective data, on the other hand, include a myriad of less tangible, and therefore less measurable factors. Examples of these factors include perceptions around employee:

"Attitudes" (to anything and everything).
* Intelligence.
* Initiative.
* Political astuteness
* Interpersonal skills (how confident, comfortable, and tactful they are in dealing with peers, customers,
senior managers, etc.).
* Personal grooming and attire.
* Ability to think and work independently. * Communication skills (express ideas, persuade others both verbally and on paper).
* Way of dealing with issues such as conflicts, disagreements, ambiguity.
* Ability to make people feel good and look good in front of others.
* Ability to work well in a team.
* Leadership ability.

It is the interpretation of this combined objective and subjective data that managers use to form the opinions, judgements and conclusions upon which they base their impressions about an employee's overall performance - i.e. how the employee is "doing". Examples include things like, "good worker," "good interpersonal skills," "politically naive," "no leadership ability," "not a team player," "too edgy," "no credibility with subordinates," etc. From this mental impression, the manager also draws conclusions about this employee's "fit" in the organization, as well as what it might mean for his or her future potential. What does a mental impression look like? If you ask managers to tell you what they really think about how a given employee is doing (and if they feel comfortable and safe enough to tell you the truth) they would probably express it along these lines: Sam is a pretty good supervisor. He runs a tight ship and I can rely on him to get the job done - he generally meets the production targets etc. Even though he can't really see the big picture, he has a lot of initiative when troubleshooting the inevitable problems that come up every day - probably because he has been in the position a long time and knows the operation inside out and backwards. The problem with Sam is that he has no leadership ability. He's from the old school of management you know and his employees resent it a bit. I think he manages to get okay results because he can be pretty intimidating and hard-nosed sometimes ("my way or the highway" type of guy). He's dropped hints about promotion but this just simply isn't in the cards. We need managers who have good people skills and he just doesn't fit the bill. On top of that he resists change, he's so cynical about new initiatives ..." On the surface, these mental assessments appear to be relatively unambiguous but upon closer inspection, they are actually rather "fuzzy."

Positive fuzzies, such as "You have good communication skills," are easy for managers to talk about even if they don't do a technically good job of it. However, bringing up the negative ones can be brutal. For example take: "You have no credibility with your subordinates," or, "You have no leadership ability," or "You're politically naive". How do managers go about bringing up these kinds of issues? Assuming they could muster enough courage to do so , the first response from the employee would inevitably be something like: "What do you mean by that?" This is the crux of the problem. Managers cannot answer this question effectively because, while they may know what they mean, generally they cannot articulate, explain, justify, or communicate it without the risk of opening a Pandora's box of possible anxiety, resentment, demotivation, and strained relationships! Implications of the Problem for Existing EPMA ApproachesIf the root cause of the problem is that the majority of managers lack the basic ability to explain and discuss their appraisal of an employee's performance in an honest and effective way, then simply providing an avenue for such a discussion to happen within a formal system is obviously not the solution to the problem. The following examples show how the root cause of the problem manifests itself within the most popular approaches to EPMA. Rating Approaches Take the example of Sam presented earlier. For the conclusion that "Sam has no leadership ability," his manager (Fred) has to find the closest heading on the form that pertains to the opinion (assuming it appears on the form and/or is good fit) and then, presumably, give it a low rating. If he does this, he knows that he will have to explain what he means by the low rating. This means he has to define what improvement looks like as well as provide help and guidance concerning how the employee could achieve it. In addition, he also has to get the employee to agree to improve, and to accept any salary implications that might result. How can he do this? Answer: he can't, so he avoids it. He ticks the "average" column, perhaps drops a few hints that he hopes the employee will pick up on, and prays that it is the end of the matter. Even though Sam might receive an "above average" score for some other areas related to how he does the job, the inevitable result is an average appraisal that does not give him any real idea of exactly what he is doing well (i.e. what he should continue doing) and how he needs to improve (i.e. what he should start or, more perhaps more importantly, stop doing). Sam still doesn't know the consequences of his performance and Fred, the organization, and Sam's employees continue to live with the status quo. Consequently, none of the kinds of technical tweaking aimed at improving ratings approaches, e.g. customizing the categories, standardizing the process, choosing an appropriate scale (five or seven?) and teaching managers how to use the form relates to solving the initial problem. Managers still cannot communicate honest information or talk to the employee any more effectively than they could do before. Competency-based approaches These suffer from a somewhat similar problem as that described above for rating scales. A manager who identifies a gap in a given competency, say "communication," still runs up against the same problem. Namely, he or she has to be prepared to explain why the gap has been identified and how the employee can close that gap. The definitions that competency-frameworks provide are supposed to help managers by essentially doing their thinking for them. However, these definitions are still generic. Consequently, they can end up complicating the problem because they are rarely specific enough to be of any real help in getting to the heart of any issue. Because of the complex nature of human performance, it is rare that any given situation will fit cleanly into a competency-based form. For example, given a standard definition of communication, where would the following kinds of problem communication behaviours fit? "Comes across as a know it all" or, "has a tendency to roll his eyes and look disgusted when he thinks that others' ideas are stupid". 360-degree based approaches Because of the anonymity of these approaches, there is a lesser chance of avoidance being an issue. However,the opposite situation can be just as problematic. The process allows for an information dump of positive and negative fuzzies without any requirement to justify or explain them in an effective way. For example, if I'm a manager and I think that you are not a good team player, I might write something like, "You could improve the way you work in teams, perhaps become a better team player".

The whole process also assumes that the employee will understand the feedback, agree with it, and in the case of negative fuzzies, know what to do to make the necessary changes. This is rarely the case. For example, if I were the employee in the case above, I still wouldn't necessarily know exactly what "become a better team player" means in my case, or how I could achieve it. While such an approach may have some benefit when it comes to soliciting feedback from customers (and perhaps peers if they are given some training in how to structure and explain their feedback), it is totally inappropriate for direct managers because they should never give feedback anonymously. It amounts to a cowardly way out when, by virtue of their position over the employee, they have an organizational, moral, and ethical responsibility to talk to him or her face-to-face, explain their feedback, and help the employee figure out how to achieve desired performance. Therefore, this system doesn't solve the initial problem - namely, the inability to explain, justify, and communicate the feedback effectively. Ranking systems Ranking systems are simply a quantification of managers' intuitive assessment of an employee's performance and potential. In fact, subjective forms of ranking have always existed because they reflect how managers really think employees are doing. Regardless of whether the implementation of such a system is perceived as being inherently good or bad, once such previously confidential rankings become "official" and public, it is even more necessary for management to defend them.

Moreover, it is equally important for employees to understand the assessment that placed them in a given ranking. Again, the problem does not lie necessarily with the technical elements of how the process works, or even with the managers' ability to honestly identify which category a given employee falls into. While managers can usually explain their reasoning behind for their conclusion in a "safe" environment, the problem still comes back to their inability to choose words that can convey the same information to the actual employee in an appropriate and effective way. Objectives or KPI-based approaches When employees are appraised on pre-defined results, a different manifestation of the problem arises. For example: "I managed a team that was given the task of developing the corporate website. Joan was the graphic designer and she had an objective that related to creating a look for the site that projected the company's image. At the end of the project, it was determined that the team had "exceeded expectations" and all the individuals received the appropriate bonus. Congratulations all round!"

However, the less tangible side of this result that was never talked about (not to Joan, anyway) was:

"On the other hand, I would rather not have Joan work on a project for me again because I don't think that she is a team player. She had a tendency to get very defensive about her work. She did take feedback from other members and made the suggested changes, but she did it grudgingly and took an "I'll do it, but I don't have to agree with it" attitude. I didn't know how to confront her with this at the time, but I know that I don't need the headache of dealing with it again."You can see how bringing in such feedback could confuse the whole issue of results because there is no real place for it within the process.Yet, the fact of the matter is that this behaviour is a critical part of the overall performance and it is therefore very important feedback. Even if the manager could somehow figure out how to bring the subject up within the context of the positive results, he or she still usually doesn't feel confident in doing so for the reasons already discussed. Proposed SolutionThe answer to improving the quality of both formal appraisal and informal performance-related feedback does not lie in trying to improve the technical elements of any given approach. Rather, it lies in helping managers to overcome the difficulties that they face when trying to articulate what they know about how an employee is (really) doing into individualized quality information. The method outlined in this article shows managers a simple and logical way that they can analyze and validate both the positive and negative aspects of their fuzzy mental impressions. It then shows them how to communicate the information in a way that builds the employee's self-esteem, confidence, and desire to do well.

It can be used in several different ways depending on the organization's vision for improving performance-related information and communication.

1. Show managers how to have discussions with employees about their overall performance and potential (formal or informal, mandatory or voluntary) and what this realistically means for their "fit" and future in the organization. This approach can be used wit all employees for developmental purposes or for specific groups of employees - e.g. probationary employees.

2. Help managers to give feedback to employees on any aspect of performance as it happens.

3. Augment any existing formal approach to EMPA in order to increase its effectiveness. The method works in this context by helping managers to build their confidence to explain any evaluation that they want and need to give and to increase the quantity and quality of the discussion that is, or should be, part of the process.

4. For organizations that don't have a formal approach to EPMA, or for organizations that are considering scrapping or revamping their current formal method, the most exciting application could be as the basis for an alternative way to formally manage and assess performance. By combining the more subjective discussion concerning "How am I (really) doing?" with an objective process to manage and measure specific results, it can provide a balanced approach that has the potential to be more effective than anything else that has been tried so far.

Before moving into the details of how this method works, it is perhaps important to address the issue of subjectivity in performance appraisal. It is a contentious issue because we have been repeatedly warned to avoid subjectivity at all costs. The main argument has been that subjectivity does not belong in the appraisal process because it lacks validity and it is not consistent from employee to employee. I do not agree with this for the following reasons

* As we have seen, existing approaches present only an illusion of objectivity since they are based upon managers' mental assessments anyway. When they are totally objective (such as objective-based systems) they do not cover the non-quantifiable aspects of performance that are equally important to an employee's successful performance and that are usually unique to that individual.

* If subjectivity is so terrible why are managers encouraged to use it everyday (i.e. to give informal feedback to employees without the benefit of an "approved" process/form)? * Appraisal feedback is valid if the manager can justify and explain it in a way that describes desired performance and can justify this conclusion with facts when necessary.

* We already know that existing approaches that supposedly meet objective equirements in theory do not work as well in practice.. Over and above those facts, and regardless of any rhetoric to the contrary, these mental assessments (that combine both objective and subjective data) carry more weight than any official formal appraisal ever does. This is because they are communicated confidentially between managers as the "real deal" and most managers trust in the validity of each other's perceptions. Therefore, if other "people that matter" agree with these perceptions, or are otherwise convinced that they are true, then such perceptions will undoubtedly end up determining the outcome of the employee's career.

This is the way that employees have always been evaluated in organizations and it is probably the way that they will continue to be evaluated. Furthermore, I would argue that the only thing wrong with this situation is that the employee is generally not privy to the same information! Why can't we just accept the reality of this situation and work with, rather than against, the manager's intuitive and natural way of evaluating employees by helping him or her to validate, structure, and communicate real and honest information, especially about problems, in an effective way? After all, we trust managers to combine their subjective judgement with objective information to make decisions all the time. That's why we pay them the big bucks! If we can trust them to do it in every other facet of their jobs why do we assume that they can't be trusted to do the same thing when assessing their employees' performance and potential? It doesn't make sense. Moreover, employees are desperate for honest, quality feedback that helps them to achieve their potential.

In its absence, they have to resort to guesswork to figure how they are really doing. Since they know that their formal appraisal doesn't provide them with the full story, employees try to interpret clues from management's actions and verbal/non-verbal behaviour in order to augment this information. Since it is notoriously difficult to accurately interpret such data - let alone read minds - employees end up doing their jobs the way they have always done them because they don't have any reason to think the approach is not working. However, the old adage, "no news is good news" is misleading because, as often as not, it indicates the opposite situation.



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