Performance Management: Every Interaction Matters

20151104_145447Quite a number of years ago I became very interested in complexity science as it applies to understanding organizations. I had worked with systems thinking principles for quite some time before that and it seemed like complexity science was another important step forward.

For me the beauty of systems thinking was that it emphasized that the connections between things were as important, or more important than those things themselves. One of the ways these connections are represented in systems thinking is causal loop diagrams. If you’ve ever experienced systems thinking you most likely have experienced or drawn a causal loop diagram.

One of the things that for me always seemed to be somewhat of a mystery with a causal loop diagram was what was actually happening ‘within’ the connecting line in the diagram. Complexity science seemed to focus on that very thing!

Unbeknownst to me at the time however, was that this focus would eventually lead me away from systems thinking and even away from complexity science in some ways, but more on that later…

Enough theory for now; how does any of this have anything to do with performance management?

Of the many things we have learned from complexity science, two are important here:

  1. Small disturbances in a complex system MAY produce significant changes.
  2. It is not possible to predict which disturbances may produce these changes or what these change will actually be. The changes are not unrecognizable, but they are unpredictable.

Performance in organizations is very, very complex so those two lessons above should be taken seriously.

If we look at typical performance management systems, the system is considered to be designed well, and a manager is considered to be doing really good work if they have two or three formal interactions on the subject of performance with each of their managees each year. Most performance management systems are designed for one formal interaction; more is simply inefficient.

Of the actual number of interactions a manager has about performance, the formal performance management ‘meeting’ will represent a tiny percentage, probably less than 5%.

So if you were a gambler and you were betting on which interactions might actually affect performance, would you bet on the 5% from the performance management system or the 95% which make up all the other interactions about performance? Keep in mind those lessons above!

Seems simple doesn’t it?

So why do we bet on the 5%? Let’s not kid ourselves, the outputs of the performance management system defines our performance, defines elements of our compensation, dramatically influences our career opportunities and provides everyone that has access to those outputs, a picture of present and possible future performance. We are betting on the 5%.

We’re betting on the 5% because we want certainty and we want people with power to deliver it. At least that is what organization theory says. Our experience says


I often ask managers if their interactions about performance in the performance management meeting are different than what they have day to day about performance. Almost all of the time the answer is ‘Yes’. And because of this the managee wonders what the heck is going on.  95% of the time the manager interacts about performance in one way and then in 5% they interact differently. And that 5% is deemed as really important! We all know it’s a dance to check boxes, important boxes, but not boxes about performance.

The reason this post talks about complexity science is that we have good, hard science telling us that what we do in a performance management system has a very low probability of impact on actual performance. We have very good, logical, and defensible reasons to dislike our performance management systems.

When it comes to performance in organizations, every interaction matters. For all of us, how we talk about performance at 10:00am on a Tuesday morning or 10:00pm on a Thursday night, or in the middle of a crisis defines our perspective on performance far more than a performance management system ever will. Yet what is described above says the interactions in the performance management system matter more. Because of this, our day to day interactions about performance tend to become invisible, often we don’t even think of them as interactions about performance!

These two lessons from complexity science add back the lower arrow in the right loop and the left facing loop in the gesture and response. The two key elements that are eliminated by a formal performance management system.

Interaction Model

When those are added back, the true complexity and dynamic of interactions about performance become important and real. And that is what we all experience when we deal with performance in our organizations. It is hard, messy, inspiring, depressing and uplifting. It is not a box to be checked.

The next post will focus on what can be done. What can be done in our organizations when we know the performance management system is likely not going to disappear any time soon. The post after that will focus on performance management system design and the one following that on getting rid of the system altogether.

Discussion and comment points for this post:

  1. If you are familiar with complexity science do you have anything to add in terms of what it might say about performance management systems in organizations?
  2. What do you think is the most important output of the performance management system in your organization?
  3. What is the best, logical and defensible reason for the existence of a performance management system that you have, or have heard?