Reducing OUCH! in Performance Management Design

20151104_145447If you have enough power, or perhaps enough bad luck you might be charged with designing a performance management system. Hopefully it’s because you have enough power because the design of a performance management system that actually adds value has two very problematic elements:

  1. The design will be contrary to established patterns of formal interaction so you will have a significant change process you will need to navigate. This is why you will need power.
  2. Once the design is working well you won’t need the performance management system any more. This however is why the system adds value; to performance!

In the last post I mentioned that I had the opportunity to design a performance management system some years ago. At the time I was the junior person in the HR/OD function and this was a task no one wanted, so being junior I got it. It felt at the time like I had a big dose of bad luck because I didn’t want the task either and I certainly didn’t have the power.

The wonderful good luck I had was that the company had no history with performance management systems. I had no clue what they ‘should’ be like and as mentioned in the last post I was working in parallel with Dr. Edmund J. Freedberg in the area of Self Management. Back then I didn’t know how lucky I was.

What Feedburg’s work focused on was taking self accountability for our performance.

Sounds simple but I would say it terms of organizational performance it is as radical a concept now as it was 20 + years ago. As I thought about the real purpose of a performance management system it seemed to make perfect sense that the purpose of the entire thing should be about driving self accountability for our performance. When this becomes the purpose of your performance management system a lot of things happen design wise, the most important being (and as noted in the last post):

  • You drive this system!

A few other key points that this purpose creates in terms of design:

  • The link between the performance management system and the compensation and succession/career systems is decoupled.
  • The planning and goal setting of performance is separated, time wise from the evaluation of performance.

These last two points are not all that radical and some companies do this now. It’s the You drive this system that is very different.

If your purpose of the performance management system is to drive self accountability of performance then the performance management system needs to be designed so the individual, not the individual’s manager, drives the system.

In the system I designed, everyone, including the CEO had one identical performance objective:

  • Use of the performance management system

Of course there were other objectives related to their specific work but we all shared this one. In order to use the system, you, as an individual were accountable for the following:

  • Scheduling your formal meetings with your manager (there were three of these each year, one for planning, one for a check in and one for evaluation).
  • Setting your own goals and measurement process to track progress.
  • Evaluation of your own performance and proof of the rigor of that evaluation by using the measurements established.

The idea was that if you were required to use the system then that system was going to make you accountable for your own performance. After all, whose performance is it anyway! If you are responsible for the design of a performance management system and make this one design change you will have a system that adds value; to performance. As you can imagine, you also have a big change ahead of you and your organization. This is why you need power since self accountability of performance is not a typical pattern of interaction in organizations, let alone designing it into systems and processes.

Let’s take a look at the interaction model and see what happens with a design like this.

Interaction Model

Keep in mind, the model above is not an ‘answer’; it is simply a model that reflects the reality of our experience in organizations. As noted in previous posts the primary compromise of this model in typical performance management  systems is the virtual elimination of the lower arrow in the right loop and the left facing arrowhead in the gesture response. If you design a performance management system with the purpose of driving accountability for our own performance not only are the arrow and arrowhead added back in, the formal interactions in the system change significantly as well.

  • The individual’s intentions for their performance are the start point for the formal interaction.
  • The manager is now the primary driver (if needed) of the bottom arrow in the right loop.
  • The individual provides the initial and primary gestures and the manager’s responses restore the left facing arrowhead.

What this means is that the formal interactions within a performance management system designed this way more closely match our real experience. It does not necessarily make the experience any easier or magically better, but it does make it much more real.

There is less OUCH!

You may now have a very important question; ‘Did this performance management system actually work?’

Where it was used in the organization it worked very, very well. It did add value to performance. It was not however used globally, throughout the organization primarily because people in power did not want to use it and I did not have the power to change that.

Where it was used we discovered that as the formal interactions changed, the day to day interactions focusing on performance changed as well, they became more intentional and conscious and eventually the formal interactions became more day to day. In our own department the actual ‘system’ began to seem irrelevant and because we had decoupled compensation, succession and career there really weren’t many boxes to check that so often are part of a performance management system. Our department itself however had become different. Our interactions about performance were much more obvious and just like the manager in the last post’s scenario, for us that was a good thing.

The point above about people in power not wanting to use the system will be looked at in future posts as it is a much broader topic than performance management systems.

One short story is relevant here though. As we tested out this new system within our HR function I went to my boss for one of our formal interactions with my list of goals and objectives; two of which were:

  • To design the performance management system for the organization.
  • To educate people how to use this system.

As part of our discussion he said I think you need a goal to be accountable for the implementation of this system as well. We talked a little and I said ‘If you can give me the legitimate power to fire the CEO if he doesn’t use the system I will add that goal’. He thought for a bit and then smiled and said, ‘I don’t think you need that goal’.

I’ve never forgotten that interaction. It was a real discussion about performance, about realistic goals and about power in an organization. It was hard but there was no OUCH! If you are designing a performance management system, it needs to produce such discussions.

Discussion and comment points for this post:

  1. What do you think is the real purpose of your performance management system?
  2. What types of interactions does the formal performance management system in your organization create?
  3. Who is accountable for performance in your organization? Does your performance management system model that?

2 Responses

  1. Tom, what a powerful example of self-directed performance management. My experience has been with PM systems that either drive for specific results (like KPIs in Operations on OEE or increasing product turns) and don’t measure HOW one got to the target, or were more of a once a year manager-driven conversation on results, behaviors, and next year’s goals. (I agree such a co-mingled discussion is a bad practice! Marathon formal meetings!) Linking to corporate objectives was not part of the discussion. Linking to political agendas was.

    The overarching purpose for the reviews? To document performance for legal protection in case of promotion, discipline or termination. Not a win-win to be company self interest focused, don’t you think? And self defeating with the breakdown in the interaction model, as you pointed out.

    I would think that part of the transformation to self accountability PM systems requires the organization (or at least the function) to clearly communicate its objectives to employees? That would provide a context for setting their own objectives and measures. Such a practice would certainly engage Millennials more effectively.

    • Thanks for another excellent comment Kristen!

      I actually think most PM systems drive accountability down or out of organizations primarily because the accountability for performance is placed with the wrong person; the manager rather than the actual individual. When this happens, no matter how progressive or innovative the design of the PM system is, it is basically saying someone other than ‘you’ is accountable for your performance. At that point all kinds of wasted activity starts to happen such as courses on motivation, understanding employee drivers and on and on it goes.

      Your last paragraph is interesting. I actually find many, many organizations, leaders, managers do not REALLY want people in their organization to be self managed and self accountable. They will always SAY they do but when it happens they often ‘take it back’ because it exposes how much is done in organizations simply because of power rather than rationale. This is very uncomfortable for leaders or managers since they are supposed to the most competent people around. Highly self managed employees erode this sense of competence so it becomes just easier to avoid all the discomfort and conflict by burying the accountability for performance in the power of the organization and keeping the manager accountable for performance through the PM system.

      So a transition to a self managed PM system requires a different perspective on how an organization actually operates. Paradoxically organizations actually DO operate from a self managed perspective, this is unavoidable. Unfortunately, things like typical PM systems tend to create really bad self management practices or the effort to do it well at an individual level is so hard that you just have an awful lot of OUCH!

      The example I gave in this post about the interaction my boss and I had about my objectives I think is a good example of how challenging the conversations can be in a self managed PM system. I was basically able to tell my boss it was not appropriate for me to have an objective he thought I should have. I had a better rationale for not having it than he had for my having it, and we agreed on that. This requires a lot of interactions and experience in the organization where this pattern is accepted as typical and we were at that point. This is why I say you need enough power to implement such a PM system; because there is a significant change happening.

      In some ways it is simply easier to just scrap the entire PM system which is the focus of the next post.

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