Performance Management Systems – Let’s Not Bother

20151104_145447The last post focused on performance management system design and the one before that focused on doing your best to make a performance management system tolerable if it wasn’t going away any time soon. The ideas put forth in those posts will reduce the OUCH! but they cannot deal with the reality that exists in any of these systems.

The actual numbers of interactions about performance in these systems are so few that the probability of having any real impact on performance is incredibly small.

The logical (heck, even mathematical) choice would be to simply not bother at all!

Unfortunately, these systems have got so entwined with other systems and processes that it’s just not that easy, to not bother at all. However, if you are in a position to actually play with getting rid of your performance management system, get some people together who know what they are doing in this area and ask the following question:

‘What would be the impact if we got rid of our performance management system?’

Don’t be at all surprised if no one says anything about an actual impact on performance! What will get surfaced though will be the other systems and processes that the performance management system does impact. Chances are the biggest one will be compensation. After that will be career/succession. Someone may mention termination/reorganization as well but that will be about it in terms of what really matters.

So if you want to get rid of your performance management system you need find other ways of interacting with people about those things. If you get that same group of people together that you asked the question above, it won’t take long to get some good answers. And those answers will likely produce far more realistic interactions about compensation, career etc. than what is happening now if what is happening now is informed by the performance management system.

As an example let’s look at compensation since often people will say the biggest impact of getting rid of the performance management system will be on the compensation system. And let’s look at this as logically as we can.

First, base salary is not affected by the performance management system, it is informed by pay grades and comparisons. Let’s say someone’s base salary is $50,000.00. Where the performance management system is supposed to kick in is how much of a raise/bonus is someone going to get since most organizations say it is important to ‘pay for performance’. In most organizations today you will be lucky, very lucky to be able to allocate someone a 10% raise (and even that is high). So at its simplest, if you have let’s say 20 people at this pay grade and similar jobs the best performer will get a $5,000.00 raise and the worst performer will get nothing. Everyone else is somewhere between.

The actual money is almost, almost meaningless. And yet many people will say that the very complicated, time consuming performance management system is what justifies and brings equity to this almost meaningless monetary reward. They will say this will be the biggest impact if the performance management system is eliminated.

Do you really need a performance management system to justify and bring equity to a compensation process? Quite simply, NO. The same can be said for career, succession and any other process that might have been identified as being impacted by the elimination of the  performance management system

Keep in mind, whether you have a performance management system or not people are going to get raises or not get raises, they are going to  navigate a career and they are going to ask questions about their performance and people are going to evaluate their performance. So the interactions, the meaningful interactions about these topics are going to occur. You don’t need a performance management system to deliver on this need. In fact it usually gets in the way of effective interactions on these very topics.

Why? Because the idea of a performance management system is founded on the theory that certainty can be delivered by those in power. And our experience everyday tells us this is not our reality. So almost everything that occurs as part of that system is viewed with cynicism and distrust. OUCH! oozes everywhere. It is very difficult to have realistic and effective interactions in that environment.

Solving the problem of finding ways to interact more realistically and effectively without a performance management system about performance, career, succession, evaluation, pay raises is not very complicated. Simply communicate that everyone has the right to have these types of interactions and set a timetable. Provide enough appropriate information to everyone for consistency and understanding parameters and capturing outputs (if needed) and away you go.

Some people will say that their managers won’t have those conversations. Well they’re not having them anyway, even if you do have a performance management system! The system is just hiding this fact and helping everyone to avoid this fact in the first place!

I am quite convinced, if performance management systems were simply eliminated tomorrow, no matter the size of the organization there would be a significant positive effect on accountability in organizations and probably a positive effect in overall performance as well.

However, until we let go of our assumption that certainty can be delivered by those with power, we’ll probably still have them for quite some time.

Next posts will be focusing on strategy!

Comment and discussion points for this post:

  1. What do you think would happen if the performance management system was eliminated in your organization?
  2. Have you worked in an organization that did not have a performance management system? How was performance ‘managed’? Or did it need to be?