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?
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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?

Reducing the OUCH! in Performance Management

20151104_145447There’s a lot to be said here and tried here and I would guess that a lot of the things put forth in this post you may already do, or have considered doing. I hope so. Since a lot of what OUCH! is about is recognizing that we put a lot of effort into trying to make sense of the formal things we do in organizations when our actual experience says they make very little sense at all! That effort IS our actual experience of being in an organization.

This means part of this post is not about things that are new but legitimizing things we do now but more or less think we shouldn’t or have been told we shouldn’t.

As an example of this, some time ago I was working with an experienced middle manager who had just been to a fairly extensive course to help him be a better ‘coach’ in his role. A significant part of this course focused on performance coaching and how to conduct a good performance coaching session as part of the formal performance management system in the organization.

He was a good manager. He hated the performance management system (not sure if there is a significant correlation here or not!) so he was struggling to see the relevance of what he had just learned at the course, which he had enjoyed overall. He simply asked me ‘What do you think of performance management systems?’ After some discussion about where this question might be coming from and all that we got to the heart of the matter.

The performance management system was not going to go away so he had to do something with it even though he knew it was more about checking boxes than performance. What we landed on that he could work with and made sense to him are listed below:

  • The actual outputs of the performance management system were most important to the compensation system and the career/succession process. These things were important so for him to position his work in the performance management system as contributing to these two other things made that work much less onerous.
  • There should be very little difference between the interactions he had daily about performance and the interaction he had in the formal system. What this meant to him was that what he was doing anyway, day to day about performance, was of primary importance and the actual formal meeting was nothing more than a confirmation of this. This consistency also dramatically shortened the formal ‘meeting’.
  • He could be open with his direct reports about what the real importance of the performance management system was (compensation, career/succession) so they could see the relevance of it as well. For him, he said this was quite freeing since he didn’t feel like he, or his direct reports had to play some role that made no sense to them.
  • In his case (and in many others) the goal setting part of performance and the performance evaluation part were supposed to occur at the same time (if there was such a thing as ‘worst’ practices this would be one!) so he split them up and did the performance evaluation part a couple of weeks before the formal meeting schedule and then just filled in the necessary boxes like the meetings had occurred at the same time. Again, the importance of no difference in this type of meeting and what happened day to day was critical.

At one point in our conversation he asked me ‘Do you think it’s ok to be doing this?’ That question is at the heart of OUCH! He was concerned if it was ok to make a system we all know is deeply flawed, work better. What would happen if he was ‘caught’?

My response to him was ‘Well you know better than I do what will happen to you if you’re caught so you have to determine that risk, but my guess is that this is pretty much what you do anyway.’ He thought about that for a bit and said ‘Yeah, pretty much, but this makes it more obvious’. I said to him ‘Well in this case I think more obvious is likely better, don’t you?’ He agreed.

Over 20 years ago I had the task of designing the performance management system for the organization I was working in. In parallel I was also working with Dr. Edmund J. Freedberg around the concept of Self Management (more on this in later posts).

When people came into the training for the performance management system the first thing they saw were two really big signs:

  • NO SURPRISES!
  • YOU DRIVE THIS SYSTEM!

For this post it’s the NO SURPRISES that is relevant. The manager in the story above was different than many of the managers I experience in that he did, consciously and intentionally interact daily about performance with the people he worked with. It was not a shift for him to have NO SURPRISES in his day to day interactions and his formal one(s).

Before we had such a thing as a performance management system this was the norm. Now, the norm is that we are unconscious and unintentional about our day to day interactions about performance. We forget that we are interacting about performance all the time and then are surprised, shocked, angry, scared, confused when what we say about performance in the formal meeting is met with those very same responses!

So if your performance management system is not going away any time soon, and is one of the vast majority that has been described in the last few posts then perhaps a few of the points above can help. But the one key mantra you should repeat to yourself every day is:

NO SURPRISES!

It will make your day to day interactions about performance much more obvious whether that be good, bad or ugly!) and will make the formal performance management system work much better for you.

The next post will focus on performance management system design and the one after that on getting rid of it completely.

Comment and discussion points for this post:

  1. How conscious are you of your interactions about performance?
  2. How have you secretly ‘tweaked’ the performance management system to make it work better for you?

 

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

OUCH!

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?

OUCH! Performance Management

20151104_145447Hey, why not start with the ‘low hanging fruit’!

Is there anyone out there that just loves the performance management system in their organization? Is there anyone out there that even likes it? No one that I’ve heard from in the past few decades!

I’m quite convinced that if every performance management system in existence simply stopped being used tomorrow there would be next to no impact on the performance of organizations. My guess is that most people reading this would agree. I would also guess that most people reading this will still actively participate in some kind of performance management system in the next year.

It’s very important to ask the question why we have performance management systems if there is more or less general agreement that they do very little to actually ‘manage’ performance. We’ll look at perhaps the bigger question of whether or not managing performance is even possible at all in a later post…

If we go back to the premise upon which most organization theory is built – We want certainty in our organizations, and we want individuals with power to deliver this certainty – then the idea of a performance management system makes all kinds of sense. Especially if you also do two things to the interaction model:

  1. Ignore the lower arrow in the right loop
  2. Ignore the left facing arrow in the gesture and response dynamic

Note that doing these two things is almost mandatory in order for the statement in bold above to hold up.

Interaction Model

If you want certainty and think someone in power can deliver that certainty then having some kind of system with the intention of managing performance to deliver on that certainty not only makes sense, it is a REQUIREMENT in organizations.

In terms of the interaction model the person in power (let’s say a manager) has the intention of helping (causing, creating, motivating, demanding, coaching…) their managee’s to higher levels of performance. Those higher levels of performance will increase the certainty that the manager’s area of responsibility (let’s say department) meet the goals of this department. The manager needs to and should be able to deliver on these higher levels of certainty (i.e. meet the departments performance requirements) because the manager has legitimate power and this power should deliver certainty.

So the manager needs to interact with their managee’s in order to accomplish this.  The lower arrow in the right loop (which represents adaptation) does not exist since the manager’s intention of creating higher performance levels is the only way certainty can be delivered. This intention should not and cannot change. No matter what happens in the interactions with managee’s this intention should and cannot change so the lower arrow does not exist in any meaningful sense.

With this level of clarity of intention the formal interaction between the manager and the managee begins. If the manager’s gesture is ‘good’ enough the managee’s response will be to act to increase their performance and certainty is delivered in the form of the department reaching performance requirements. The outputs of this interaction are captured in some kind of accessible file for others to review, verify etc.

Everyone is very busy so the fewer of these formal interactions needed the more efficient the performance management system is. This means the manager’s gesture needs to be really good in the formal performance management interaction.

The reason the left facing arrowhead in the gesture and response does not exist is that the response of the managee is irrelevant in any meaningful way with regard to delivering on the intention. The response is simply another ‘thing’ that has to be managed by the manager so the managee understands the gesture ‘correctly’.

This is why there is almost an endless amount of content and training dealing with managing performance, and specifically managing the performance management ‘meeting’. When you critically look at this content and training; the vast majority of it is focused on helping the manager be so good with their gestures in the meeting that the managee responds just how the manager wants them to.

When the foundation of understanding organizations is that certainty is deliverable by those with power then what is outlined above makes perfect sense.

OUCH!

And while we may more or less chuckle with this OUCH! there is a real dark side to this other than just the time we feel we waste in these meetings. When you look at what happens in this dynamic, if things do not go as planned, someone has failed, at a very real and personal level. Performance management systems are a breeding ground for blame, guilt and shame.

This is primarily because the expectations of a performance management system are based on our belief that certainty can be produced by those in power.

It’s a good time to review a point made in the first post; the flaw here is in expectation and intent, not one of content. This is very important.

When I interact with people on the concepts of OUCH! and on the topic of performance management it is not uncommon that my gestures produce a response something like – ‘So you’re saying we shouldn’t try and manage performance or just scrap our performance management system?’ When someone responds like this and we dig a little deeper we often find that they think by questioning the expectation and intent of a performance management system, it also means you should question or scrap the content as well.

The content of these interactions may be very important and the idea of interacting about performance is critical, it is the expectations and intentions of the performance management system and the assumptions on which those lay which need serious questioning and yes, perhaps even to the point of scrapping them!

The pattern we will now follow is that the next post will focus a little bit on the theoretical ideology from which I question these formal organization processes and the posts after that will focus on what can we actually do about these misfits, these OUCH’s!

Discussion and comment points for this post:

  1. What do you really think would happen if the performance management system in your organization stopped being used tomorrow?
  2. Would your performance be compromised?
  3. What are your general thoughts on the post above?