10 key considerations when developing an effective Performance Management approach

Our last article on Performance Management highlighted that there is no such thing as a ‘one-size-fits-all golden-bullet’ Performance Management solution.

With that in mind, it’s not appropriate or possible to provide clear recommendations on approaches that would work for every business. It is possible, however, to look at some key elements and considerations for employers to work through to help them increase the potential success of any approach that they deploy within their business.

With all this in mind, the list below represents some of the key learning points that I have picked up when working in this space over the last 25 years or so:

Key considerations

• There is no ‘right’ solution that works for everyone. Organisations need to consider the relative merits and issues of different approaches to ensure alignment with their organisation’s wider cultural aspirations in addition to its performance objectives.
• Any solution will be time-limited. What is right for your business today may not be right in five years’ time and organisations need to ensure they are continually monitoring their performance approach. In addition, they need to be ready to evolve to ensure that the solution continues to be relevant and adds value to the business and its people.
• Ensure that Performance Management is not your organisation’s answer to the question of ‘how do we drive a performance culture?’ It needs to be one tool in a much larger ‘tool-kit’.
• Related to the above point, ensure that the role and desired impact of your Performance Management approach is clear and focused. Too many organisations continue to expect too much from a single process and see it as their primary means of justifying pay and bonus, managing poor performance, recognising excellence, delivering coaching and identifying development and training needs, etc. Ensure that Performance Management has a clear role and purpose to play in the wider toolkit.
• Do not under-estimate the importance of transparency. Employees enjoy the clarity and simplicity of ratings and if you are going to take that away from them, it needs to be replaced with something that is as easily understood. In addition, regulations are going to be creating more pressure on transparency over the next couple of years so do build this into your thought process.
• If you have feedback from the business/ employees saying that the performance conversation is not something that people look forward to then look more widely at your culture and the relationships that you have established with your people.
• Performance Management is a year-round activity for Managers and the cadence of employee conversations should reflect this. The idea of a single annual performance conversation does not appear to work for anyone in today’s world of work.
• Keep performance and pay conversations separate. All too often performance, development and pay conversations take place at the same time which leads to a conversation which lacks focus and which often fails to deliver under any of those headings. It is far more effective to build separate pay and performance/ development conversation cycles for a better quality discussion.
• Focus on management capability. Managers hold the key to the success or otherwise of any Performance Management approach. Ensure that they understand the process but, more importantly, ensure that they have the skills needed to deliver it effectively to their people.
• It should be remembered that nearly all total reward models include growth, development and/or Performance Management and define it as part of an organisations reward package. However, there is then a clear disconnect with reality as this is largely forgotten when schemes are designed and implemented. Remembering this point can help to ensure that an approach is designed and delivered with employees at its heart.

Many organisations fail to see Performance Management as an opportunity to make a real difference to their employees or as something which should be valued. Instead, they regard it as something that is painful, damaging and just a necessary part of doing business. As a result, we should perhaps not be surprised that in those environments, this is exactly what it feels like to employees and this is exactly the impact it has on the business.

The reality here is fairly simple. There have been some poor practices that have contributed to the negativity surrounding Performance Management (e.g., so called ‘rank and yank’ schemes of the 1980’s/ 1990’s) but the intention behind performance schemes today are generally more positive. Thinking of Performance Management in a more positive way and thinking about it as a part of a wider toolkit and a part of an employee’s reward package can change perceptions of the approach and what it needs to achieve.

With a clearer and more positive mindset, it is entirely fair to expect clearer and more positive impacts on the organisation and employees.

Would you like to know more?

If you have any questions about the above and how it applies to your business, please get in touch with your usual Blick Rothenberg contact or Stuart Hyland using the details on this page.