The Role Of Sound Performance Management System In Fostering Employee Morale, Engagement And Development

Introduction

Wikipedia describes that in organizational development (OD), performance can be thought of as Actual Results vs Desired Results. Any discrepancy, where Actual is less than Desired, could constitute the performance improvement zone. Performance management and improvement can be thought of as a cycle:

• Performance planning where goals and objectives are established
• Performance coaching where a manager intervenes to give feedback and adjust performance
• Performance appraisal where individual performance is formally documented and feedback delivered

A performance problem is any gap between Desired Results and Actual Results.

Actual Results and Desired Results

The purpose of this essay is to understand why traditional approach to performance management is ineffective in today’s era and discuss some of the engagement strategies that could help organizations adopt the new improved approach to employee development. We will be briefly discussing the problems with the traditional approach to performance management and its impact on employees’ morale, and how we can improve this by shifting from performance management to performance development.

Problems With Traditional Performance Management Systems: Although the traditional performance management system, using 90 degrees, 180 degrees and even 360 degrees have done their job well in past, however with the changing demands of job, they couldn’t catch up. In an HBR article, Professor Cappelli (2014) shares that in 2000’s organizations started getting flatter, dramatically increasing the number of direct reports each manager had, making it harder to invest time in developing them. Some of the shortcomings of the traditional performance management systems are as follows:

1: Learning Strategy VS Execution Gap: Successful organizations are the result of perfect alignment between company’s strategic goals and the human-capital with right competencies to achieve them. As per CIPD (2018) “Employers need to be aware of employee turnover rates in their organisation, and understand how these affect the organisation’s performance and ability to achieve its strategic goals. A survey by PWC in 2015 revealed that only 8% leaders globally were very effective in both strategy development and its execution. Because of this, managers involved in people development fail to design smart goals for their teams that are aligned with organizational vision & values. This results in learning engagements that doesn’t develop competencies. This in long run results in people who aren’t developed in competencies needed to perform at par, hence increasing employee frustration and eventually high turnover.

2: Focus on Individual Performance: Traditional performance management systems tend to focus more on individual performance and this method isn’t aligned with the concepts of teamwork, compassion and shared responsibilities. In an interview to the huffington post, Tamra Chandler (Chandler, 2017) says that ”If you’re talking about the traditional review process, I’d say traditional performance management is focused on the individual. In fact, that’s one of my fatal flaws, which explores the concern that traditional models fail to consider the system as a whole” 3: Autopsy Approach: Traditional performance management systems use autopsy approach to employee development, sharing feedback at the end of year about what the employee did & didn’t do well. These feedbacks at the end of year tend to be biased, and as per Bruce (2015) Managers often mistakenly think that giving a performance review that is better than the employee deserves will be a motivator—but instead it sends the signal that the poor performance is acceptable. It can be a legal nightmare if the employee is later let go for poor performance, and there is no record of performance reviews indicating any problem at all.

4: Role of Line Managers: In traditional performance management, line managers focus least on employee development, since in most cases they are busy with firefighting. As per HBR article (Buckingham, 2005) there are three things you must know about someone to manage her well: her strengths, the triggers that activate those strengths, and how she learns. Because of being busy fire-fighting, managers don’t invest time to identify their team members’ strengths, those triggers that activate those strengths and how they learn.

As a result, employees’ development plans are never made, and when employees don’t perform, managers instead of coaching & counseling them, wait for performance review at the end of the year to just share employee’s areas of weaknesses. As per Tom Peters (The Little Big Things, 2009), “The number one cause of employee dissatisfaction is the quality of the first line supervisor. ” Such behaviors from managers lead to employee dissatisfaction and an increase in employee turnover. When such dis satisfied employee leave organizations, many of the organizations don’t even bother to enquire the reason behind employee quitting. A survey (CIPD, 2018) concluded that about 40% of organizations experienced an increase in employee turnover, and 25% don’t conduct exit interviews.

5: Forced Distribution (Bell Curve): Many times, traditional performance management systems apply forced distribution also known as bell curve to appraisal. This practice was championed by former General Electric CEO Jack Welch, who insisted that GE identify and remove the bottom 10 percent of the workforce every year. Lisa Barry, the global Talent, Performance, and Rewards leader for Deloitte Touche Tohmatsu Ltd. (DTTL), believes forced ranking no longer suits today’s increasingly knowledge-driven workforce. She notes that “forced curve” evaluations were originally conceived at the turn of the 20th century to measure the performance of factory workers and manual laborers This kind of forced distribution results in employee dissatisfaction and questions organization’s intention. An employee, for example, who has achieved their targets, could be forced to an underperforming team member, if majority of team members have achieved or few have over achieved the targets. This kind of exercise replaces employees with numbers, that have to be forced into a certain category, regardless of their skills, abilities or knowledge. All of the above mentioned short-comings of traditional performance management system are inter-linked. Starting from strategy, if it’s not properly made and aligned with company vision & values, will lead to improper goals set for employees.

These in appropriate goals will not help employee gain competencies required to achieve their organizational objectives, hence learning gaps will never fill in. when learning gaps are filled, learning engagements won’t give expected ROI, and employee development objectives won’t be met. When employees aren’t competent, they would struggle with completing their given task in time, resulting in imbalance in work & life. This work-life imbalance will lead to employee frustration and finally resulting in high turn-over for organization. And the loop continues until all the nodes in the process are holistically addressed, structured and aligned with company’s vision. Suggested Solution: The above highlighted short-coming can be addressed effectively by implementing an engaging performance management system that revolves around employee development. A system that believes in appreciative inquiry, the one that talks about continuous engagement and dialogue, instead of following an autopsy approach to development. An effective performance management system must increase employee morale so they may perform their duties most effectively. It must be focused on supervisor & team members’ continuous feedback & engagement, and must have an structured employee growth plan, right from when the employee is hired. 4DX Framework: There are many ways to improve performance management in an organization, and one of the frameworks is defined by Chesney, Covey, & Huling (2014) where they share four steps to translate strategy into effective execution.

These four steps are:

1. Identifying The WIGs (Wildly Important Goals)
2. Acting on the Lead Measures
3. Keeping a compelling Scorecard (Quick weekly meetings)
4. Creating Cadence of Accountability These steps can be replicated in an organization to implement an effective performance management system.

Step 1: Identifying The WIGs (Wildly Important Goals): The first step is identifying the goals, the book defines as WIGs. These are not just any goals, but the one that are most critical to the organization. So the organization must define a set of most important goals that they want to achieve. The same cascades down to divisional, departmental & teams goals. These goals must be from 1 to max 3 goals per team. Sub goals can be more than one, however WIGs must not be more than 3. One of these goals may be linked to employee’s growth in the department. This would keep employee motivated because they would know what they need to achieve to get growth in their department. As per HBR article, (Cable, 2018) Employees feel motivated when they have a sense of purpose. The feeling of purpose also ignites when they see the cause and effect between their inputs and their team’s progress. As per Stephen covey “you have to decide what your highest priorities are and have the courage-pleasently, smilingly, unapologetically – to say no to other things. And the way you do that is by havig a bigger ‘Yes’ burning inside”

Step 2: Acting on the Lead Measures: Next step is identifying & acting on the lead measures, and not the lag measures (traditional approach). While a lag measure tells you if you have achieved a goal, a lead measure tells if you are likely to achieve it. A lag measure focuses on autopsy approach, while the lead measure is within employee’s control and requires continuous focus on objectives. Hence employees are required to define daily & weekly measures, the achievement of which will lead to the goal. This ensures a continuous discussion & feedback from managers and employee can take necessary measures to course correct instead of waiting for yearly or quarterly performance review exercises.

Step 3: Keeping a compelling Scorecard (Quick weekly meetings): Once WIGs are defined and Lead measures are identified, it’s time to create a compelling scoreboard. This is done to make sure that everyone in the teams knows the score at all times so they can tell whether or not they are winning. To make it simple, a physical scorecard/scoreboard must be:

• Simple
• Visible to all players, at all times
• Contain WIGs and Lead measures
• Showing the current status of team, if its winning or not

This not only keeps employees engaged, but also instills transparency & meritocracy, since the scoreboard shows tangible KPIs (lead measures), hence a culture of trust & fairness in developed in the team.

Step 4: Creating Cadence of Accountability: The last but critical step is accountability. All of the above steps depend of effective execution of this step. This is done by meeting weekly for short span of time with the entire team to discuss very briefly team progress.

• Team’s WIGs & lead measures show if team is winning or losing
• Each team member shares if s/he achieved their last week lead measures
• Each team member commits to an individual lead measure which s/he commits to complete in next one week

The difference between a conventional accountability and the 4DX is visible in the following example:

Conclusion: Performance management has dramatically evolved over the last decade or so and what used to be best practices of past are no longer fit for execution today. As HR professionals, we need to keep sharpening our saw and keep asking if the tools and techniques we are using today help us derive results or hindering our progress as an organization. There will be newer trends in HR, and performance management might take a very unique turn in the future, since the definition of performance itself is evolving. Our best strategies of the day may not always work, and therefore, we must never stop asking questions, challenging the current practices and weaving the path for better future.