Table of Contents
1 A Few Cynical Remarks To Kick Off With…
Why is Performance Management For Millennials a ’thing’ in organisations at all? The textbook and international codes of good practice tell us that a responsible company has a way of assessing and rewarding the contributions of its people. Driven by an obsession with order and predictability we see that when a business grows beyond a certain size and the founder-owner realizes that she can no longer control everything, policies (such as performance management) are introduced to simplify matters, manage risk and standardize responses. And, of course, a multi-billion dollar accreditation and consulting industry have grown to assist businesses to get this right.
But, as many employees will tell you, performance management is a dreaded part of their work-life that adds little value. Only 14% of employees strongly agree that their performance reviews inspire them to improve, and only one in two clearly know what is expected of them when they go to work every day!
“Traditional performance management systems are broken. Companies, leaders, managers and employees have long participated in time-consuming, frustrating performance reviews that have not yielded clear improvements in individual and organizational performance. Many industry leaders, such as Accenture, Adobe, Cargill, General Electric, Google, Microsoft and Netflix, have made headlines for pioneering large-scale changes to their traditional performance evaluation systems, and many more are considering reinventing their approach to performance management.” – Gallup, 2017
The performance appraisal meeting is said to be that event about which most employees get no sleep the night before, and most managers get no sleep the night after. It has become a once- or twice-a-year paper exercise to generate inputs for salary reviews and HR development plans. Between appraisal sessions, not much happens and the session is often a subjective, one-sided affair in which the manager does all the talking, wanting to get one more irritating administrative formality out of the way as quickly as possible.
In this article, we are going to check the assumptions that gave rise to this ‘thing’, why it went wrong and what can be done to get it right if indeed there is a need for it at all.
2 The Conventional Wisdom
The management philosophy that still dominates organisational thinking today, with its roots in the early 20th century, is attributed to Frederick Winslow Taylor – often called the Father of Management Science. It created a model of the organisation as a big machine that can be made more efficient if we organise the component parts properly. It stems from the industrial age during which most workers’ jobs could be described as a series of repetitive tasks such as assembling a gearbox or sowing a garment.
You do not have to think too deeply to realise that today’s jobs and organisations are not like that at all, and will never be again. Work content changes too fast, challenges are unpredictable, customers are more demanding, projects come and go. New jobs that did not exist yesterday are invented continuously. A young engineer in a consulting practice is called upon to design a pump station today, a pipe support system tomorrow, produce design reports and respond to technical queries in between. How do you possibly standardize this job content?
The ‘Management by Objectives’ or ‘Management by Results’ movement (attributed to management guru Peter Drucker) is a philosophy that found great appeal with the managers of the time and is still popular today. It helps managers to define objectives, reduce work to discrete steps, and provides the tools to measure and compare every employee’s actual performance with the standards set. If we could all agree to a set of objectives and organise our work accordingly, the organization would do just fine. We see this thinking clearly when managers compile their strategy documents. They contain 12-month, 3-year and 5-year objectives, goals and action plans. These plans are then cascaded down in decreasing complexity until everyone can see his or her part in the scheme. A manager is in charge and oversees the execution of work within the framework of the strategy and operational plans.
The difficulty is that projects often develop in dramatic and unpredictable ways, new shareholders and management shift the business model, customers change their minds, new opportunities emerge unannounced, markets don’t develop as we assumed they might, the exchange rate turns against you, competitors make unexpected moves, and things go wrong in spectacular fashion. And so, your strategy assumptions, objectives and goals can be rendered invalid and irrelevant overnight.
The conventional performance model compels us to measure people, identify shortcomings and put remedial actions in place. The performance appraisal event helps us to do this – the manager discusses the last three months’ outputs with the employee, provides a score in each of the performance dimensions, identifies areas that must be improved and draw up a list of actions (such as training courses), that will address the person’s development needs. It is hard to fault the logic – pinpoint where the athlete’s technique is weak, work on improving it and all will be better.
The world of work moves fast, though. If the performance review takes a historic view, it could miss important opportunities for improvement and changes in direction. Also, focusing on what went poorly or not so well, and on what that says about a person’s competencies, seems out of sorts with wanting to propel the organization forward, and keeps us stuck in reverse.
To achieve a balanced view of people’s contributions and lend more credibility to the performance appraisal, some organisations employ a 360-degree assessment approach. Peers, supervisors, direct reports and even customers and suppliers are asked to contribute to the appraisal of an individual. This has merit – the mature worker will invite and welcome opinions from multiple sources to learn and grow.
Our criticism of this practice is that it takes a historic view, and perhaps a context-less view at that (inasmuch as we want to get customers’ and suppliers’ feedback, how can they know the context and make a useful appraisal of the person?). Mostly the feedback is anonymous, which robs you of the opportunity to discover why a peer scored you only 5 out of 10 for communication skills against the 360 average of 8.5.
3 Why Did It Go Wrong?
It is interesting that some of the largest corporations on the planet (Adobe, General Electric, Microsoft, to list a few) have decided to significantly re-engineer, if not abandon, their performance management systems. Their stories make for interesting reading.
Perhaps the most important realisation that contemporary management philosophers and leaders have come to is that the modern organization is a more complex organism (yes, it is living and breathing!) than we ever understood. While it may have a visible structure with job profiles and carefully crafted policies and processes, an evolving system of dynamic and informal networks of people, complicated interactions and inter-dependencies are often underpinning, overriding and confusing the formalities. In such a multi-faceted, intricately connected context it is a flawed logic that one could solve the whole simply by fixing the parts.
The human contribution to organisational performance does not happen in isolation. People are affected and influenced by how others behave, the space afforded to operate, the constraints of policies, and extraneous factors over which we do not have control; the customer cancelled the order, the supplier went out of business, the exchange rate tanked, the star performer in our team resigned, and so on. It is, of course, true that we expect employees to own their patch, seek a way out despite the obstacles, find a new solution, not be put off by the supervisor’s bad attitude, and all that. But performance appraisal systems mostly fail to consider these complexities and leaves the appraised worker feeling disappointed and subjectively unappreciated. The situation gets worse when the supervising manager is under pressure about her unit’s underperformance and seeking to fix the blame. It must be someone’s fault, right?
Our performance-obsessed world wants to reduce everything to a metric that we can evaluate, compare and pass judgment on. As engineers we easily fall into this trap: we are taught that you can only manage that which you can measure, right? It is a fatal flaw of many performance management systems that they produce a number by which people are ranked, such as “you are in the bottom 10% of performers” or “your overall performance score is 6.34 out of 10” – to more than one decimal if you want! How is it possible to reduce the multi-dimensional world of work and the dynamic context of my job to a number that is then connected to a scale of salary adjustments? Who determines what constitutes a 10 anyway? And why is 6.34 not good enough?
Jack Welch, a 20-year chairman and CEO of GE, made stack ranking a widespread people management policy. During this time, several other companies followed suit and applied similar systems within their organizations. However, 30 years into its inception, GE admits that the old system is not functioning very well anymore. With the move, GE is dumping annual performance reviews and performance management systems over the next couple of years. It will implement more frequent feedback via an app, and an experimental group will pilot feedback without any numerical rankings. https://www.impraise.com/blog/how-ge-renews-performance-management-from-stack-ranking-to-continuous-feedback
To remain competitive, the modern organization has to move a lot quicker and be far more agile than its counterpart of the early 20th century. Technology is moving at break-neck speed, your competitors are plotting new ways to eat your lunch and your customers are changing their models to stay in business. If a performance management system has two annual appraisal events, and in each, the view is the previous six months, you are probably too late to fix anything, let alone help your employee to adapt and grow.
The subjectivity of appraisals is often a source of disenchantment and demotivation, says Gallup. Who says that the manager knows better? If not properly communicated, made transparent and discussed, assessments can be perceived as inaccurate and unfair, and this produces the one outcome you were not hoping for – people who are disengaged and uninterested.
4 Is There Still A Place For Performance Management?
The Gallup Organisation reported from an international research study that the level of global engagement in the workplace is only at 15%. This means that fewer than one in six employees feel the degree of emotional and intellectual alignment and attachment that we are hoping for. If we want to be cynical, the other 5 out of six people are neutral at best, if not apathetic, and perhaps even destructive. Of course, it is wrong to generalize and this statistic may not be true for your business. But think about this – how many salary dollars are you paying for the benefit of having only one-third or half of your people truly engaged and actively pushing to achieve your goals? If Gallup is only half right, the greater part of your salary bill is like a tax for having a few good people fighting on your side.
Millennials and the generations following them are not of a mindset that tolerates or appreciates what conventional performance management is doing or trying to achieve – for many of the reasons discussed above. They value meaningful work content and a rich purpose, they want flexibility and an opportunity to learn, they are looking for a coach and not a boss, loyalty is not a big thing, and you had better get your act together or they will up and leave. They engage on their terms, not yours.
What does this have to do with performance management? Everything, we think. The realities of what the modern organization has become, the dynamic world of business and its people, the challenges we face to stay in business and grow, all say that we have to engage with our people in completely different and more meaningful ways.
5 How To Make It Better
5.1 Understand how leadership plays out
Leadership and performance cannot be separated. They are joined at the hip, so to speak. It matters not if the leader runs a not-for-profit community outreach project or a multi-national pharmaceutical company, a sports team or a municipal finance department – leaders are expected to produce results. When the team does not perform, the coach will be pointed to the door.
A consistent track record of sound results is the best indicator of leadership potential and capacity. Top-rated leaders are those with a history of repeated high-impact results across a variety of contexts and complexities. Helping people achieve the best results possible is a primary challenge for every leader and lies at the heart of effective performance contracting, reviews, correction and reward.
Is business failure the result of leadership failure? There are influences that determine business performance and over which business leaders have little control – political instability, and economic melt-down or ecological disaster. Short of such extreme events, even subtle shifts in competition or regulatory frameworks can seriously affect sales results and profitability and do so unexpectedly and unpredictably. So, the answer is no – business non-performance is not uniquely caused by leader incompetence or failure. However, with any leadership role comes responsibility and a need to take ownership. Leaders create the structures that drive human behaviour and business performance, and how we do performance management is an example of just such a structure. So, leadership is in many ways the catalyst for performance because of the way in which leaders set up the systems and structures through which they guide and direct the human effort.
5.2 Performance Management For Millennials: Reframe the purpose
Performance management should be aimed at the continuous development of people’s competencies. It should yield alignment and enrollment so that people are enabled, empowered and encouraged to be the best they can be. Reframe the link to remuneration and reward. Good results should be recognised and rewarded, but guess what predispositions and attitudes are invited if the annual appraisal happens in the week before salary increments are handed down!
5.3 Performance Management For Millennials: Reframe the label
Perhaps your performance programme should be called “Performance Development”, and you should drop the term “management” which, frankly, is the wrong connotation. Performance management should not be a thing that leaders do to their people. It should be a process of collaboration to create new insights, build learning opportunities and forge agreements about how to become better.
5.4 Performance Management For Millennials: Reframe the timing
Performance management is not an annual event. It should happen all the time. Everything you do as a leader is about ensuring understanding and acceptance of what needs to be done, and how you can support people to deliver great results. Every opportunity to connect with your people is an opportunity to ask “How is it going with the ACME project?” and “How can I help you succeed?” But you also need more formal sessions to review, reflect and recalibrate.
5.5 Performance Management For Millennials: Reframe the model
If your people are going to own their performance, they have to own the plan. People’s ownership and motivation go up when they participate in decisions that affect their jobs, careers and ability to perform, and can collaborate in goalsetting. Make sure your people can see how the next period’s work fits into the strategy, and how their contribution will promote the cause. If I do not see the connection between what I do and the purpose, I will lose interest – what am I even doing here?
5.6 Performance Management For Millennials: Reframe your role
You don’t always know better, and the further you are removed from the customer, the less you will. If you manage a multi-disciplinary team, chances are you will get lost in the detail. Your role in performance management is more about coaching, consulting and collaboration than about telling. Of course, you will have firm views about direction, purpose and objectives, and you must display resolve about the results you want. But in between, performance management events are about discovery, reflection, learning and planning together.
6 In Summary…
What we have stressed in this article about performance management does not negate your responsibility to deal with underperformance and incompetence. Your organisation has policies about disciplining and sanctioning destructive and dysfunctional behaviour, and labour legislation provide the tools to handle that. The point is, when do you want to discover that your most promising new recruit turned to be a problem – early on, or late in the second half? It is better to support a person’s development at the start than to punish her at the end of the year.
Each person carries the responsibility to manage her own motivation and performance. Effective performance management is a partnership between the leader and the members of her team. You will be in a far better position to influence outcomes if you position and contract about the rules of engagement correctly from the start.
Performance management should not be the paper war and administrative slog that so many organisations have made it. It presents a magical opportunity to bring out the best in people as your contract for challenging objectives that will deliver meaningful results.
Leaders deliver results – period! And they deliver them consistently – period! Irrespective of title and rank, age or service, those individuals who deliver good results through the efforts of others are the people who are leading. Anything else is just make-believe.
7 Performance Management For Millennials: Insights That Are Helpful
The Clifton StrengthsFinder model of human performance makes a profound statement about people and their work roles. Gallup’s research has shown that innate human talents can be reliably modelled across 34 themes that naturally fall into 4 domains – Executing, Influencing, Relationship Building and Strategic Thinking. We are all differently wired, my top 5 talent themes are different from yours, and my strong domain is not necessarily yours. At the core of the findings is a tenet that rings true for all of us when we think about it – the magic that happens when you experience a high, a feeling of upliftment, a sense of fulfilment, is when your most prominent talents are gainfully applied. Developing talents into strengths must be a better investment than spending time in training workshops to improve my weaknesses.
In an ideal world, we would all be ecstatic if our talents could be matched perfectly to the requirements of the job. This is not possible, and there are aspects of every job that we avoid or postpone simply because we don’t enjoy them. A deeper understanding of one’s Strengths Profile will help – not only to find a better talent-job match but also how to combine and coordinate our strengths and collaborate with others to tackle the variety of challenges that fill our workday. Your performance management system will benefit from this perspective – instead of focusing on your people’s development needs (their weaknesses), why not spend time discovering their talents and figuring out how to build these?
Marcus Buckingham, a well-published advocate of the Clifton StrengthsFinder approach, offers a really simple solution for the performance management conundrum – the weekly check-in. It means that the manager deliberately makes time for a weekly discussion with each person, framed by this one question: “So what are your priorities for the next week? How can I help?” Just that. It focuses on near-term work, and the challenges it brings. It creates an opportunity for meaningful engagement and compels the leader to think like a coach, not a manager. This is what managers should be doing. Yes, there are budget meetings and reports to write, and you have to do the admin, visit the customer and negotiate with a strategic supplier, but in between all that, your job is primarily to guide, assist and coach. Can you think of more important work to be done?
Yes, performance management as it was conceived is broken and in disrepair. But it isn’t dead – it needs a new way of thinking and a new mindset because the world and your people are moving on. Your organisation’s growth and performance depend on your people’s growth, engagement and meaningful contribution.
About EPCM Culture
The authors recognise the work of Mr Ian Dean, an independent consultant and a scholar of leadership. He works internationally to help organizations improve the performance of their leaders and businesses.
8 References
Gallup, Washington DC, 2017 – “Re-Engineering Performance Management”
Impraise.com, White Paper: “Why Deloitte, Adobe, and Others Replaced the Annual Performance Review”
Doerr, J: “Measure what Matters – How Google, Bono, and the Gates Foundation Rock the World with OKRs”, Ninjareads, Henrae LLC, 2019
Drucker, Peter F: “The Practice of Management”, Harper Collins, New York, 1954
Buckingham, M and Clifton, DO: “Now, Discover Your Strengths”, The Free Press, New York, 2001
Rath, T: “StrengthsFinder 2.0”, Gallup Press, New York, 2007
https://www.gallup.com/cliftonstrengths/en/home.aspx “Transform Great Potential Into Greater Performance”
