The paradigm shift in performance management

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The paradigm shift in performance management

First published on LinkedIn, 13 Aug. 2015

In recent weeks Accenture announced that it was following other Fortune 500 companies in getting rid of annual performance rankings. Their final realisation was inescapable. The system was not driving better performance. There had to be a better way.

I shared their predicament with other HR professionals online by starting a discussion with the AHRI interest group. I asked how they would advise Accenture and other companies on what should follow. The response was comprehensive and spirited. Post after post told a similar story, their conclusions unanimous. The old system was broken in so many ways. A new way of engaging employees was needed.

In reviewing the many comments I was struck by the degree of regret, frustration and even anger behind them. Many contributors highlighted the differences between performance management, as it is commonly practised now, and how it could be in a better world.

Performance management was described as a ‘negative control mechanism’ where employees are ‘lambasted’ and ‘demotivated’ at the annual appraisal meeting. As a system is it typically ‘lose-lose’, ‘short sighted’ and ‘artificial’.

I agree.

The same HR professionals eloquently described how performance should be supported and encouraged. They wanted a system where ‘constant feedback’ and ‘healthy discussions’ were used to ‘unleash potential and energy’ and encourage employees to ‘give their best’. This required a ‘coaching culture’ of continuous people management activity to ‘enable’, ‘support’ and ‘free up workers’.

I agree.

But I detected a note of despair in these same posts. The gap between the desired state and current approaches is of Grand Canyon proportions. Bridging it would require a shift in the thinking of most managers. The ‘command and control’ mindset would have to go. So would the ‘carrot and stick’, the ‘tick and flick mentality’ and the focus on ‘individual success’ through rankings. Managers would need the ‘maturity’ to listen and ‘receive feedback’ on their own performance.

A big ask.

The HR function did not escape scrutiny. Many commenters were quite unflattering about their role in designing and implementing performance systems. Their process-driven agenda was failing to support front line managers who drive business results. Despite the espoused role of HRD they had not done enough to educate managers in new ways of thinking and leading. In short, the HR function was stuck in the past.

Clearly, this issue has hit a very raw nerve. HR professionals are dissatisfied with the current state and are impatient for change. Their views expose a system that is rife with contradictions. It is meant to support better performance but has the effect of alienating people.

The current debate takes me back to around 1980, when I designed my first performance appraisal process for the Joint Services Staff College in Canberra. At that time the thinking in HRD was about helping managers communicate more collaboratively with their teams.

It was the start of a new era. Employees used to be treated as children who needed to be controlled and regulated. Now they were valuable assets and relationships were the fine oil that drove performance. Performance appraisal was to become a platform for regular feedback and coaching conversations. We knew that these conversations were hard for managers unused to talking openly with others. In all the systems I designed or worked with, we were clear that training for managers was critical, the paperwork secondary. Organisations did not always get it right but the underlying values were sound.

I wonder when and how the wheels fell off. At some point the relationship stuff was sidelined in favour of rankings and other measurements. It was a case of Theory X thinking reasserting itself. Strangely enough, the new rhetoric of engagement, teamwork and building capability remained. Then, years later, Accenture made its announcement on the international stage. Suddenly, the emperor was wearing no clothes.

What should replace current approaches to performance management? Do we even need it anymore? The ground has shifted. Agility and responsiveness to rapidly changing circumstances are now critical. The flow between strategy and operations has to be seamless. Leaders, front-line managers and employees are linked through joint enterprise. It is hard to reconcile current performance management systems with these realities.

A paradigm shift is on our doorstep. The HR professionals who participated in this discussion know it and the CEOs of many Fortune 500 companies know it too. This is the time to revisit a fundamental truth. Organisations in most industries are relationship driven. Until we grasp this idea and do a better job of building the relationship capability of managers, employees will disengage and underperform.

Paradoxically, the good leaders out there engage their teams by making people feel included, valued, in control and optimistic. They don’t need performance management systems to prove their worth and deliver results. But the HR function does. Perhaps that is the problem.

I would like to thank the members of the AHRI Linked In discussion group who contributed to the conversation and provided many of the comments and ideas in this post.