Do You Know What Your Performance Management Program Is Supposed To Do?

Which meeting would you want to attend — a “new” take on traditional performance management or a briefing on how to replace traditional performance management? It’s a discussion we had recently among Board members of my local professional organization and it got me thinking. I know how I would choose between the two. But if I were the Human Resource leader for a company, how helpful would either presentation be . . .  other than for news value?

I wonder, for instance, why it always has to be either/or? Either you keep rolling the traditional performance management program boulder up the mountain (trying not to get flattened as you do), or try the most recent, freshest version say by hiring yourself a few drones with artificial intelligence to drop in whenever an employee feedback opportunity occurs? And how did we get to this ridiculous either/or in the first place? Why do we all need to copy each other? If we need the security of the herd where, exactly, is our sense of terror coming from?

For there to be any value in the process, each company needs to identify the purpose of performance management for its own business goals. But how many have tried? The toughest conclusion that many companies have come to is that transactional paperwork is demotivating for managers and employees. So what do we do? We put it all online. Sure, that will solve the problem.

Really? Or did it just make a poorly designed process less obviously irritating?

Gallup, at least, is modelling some clear logic on the “failed” performance management topic. As they point out, “Organizations have discovered that their current performance management systems aren’t yielding the ROI they assumed.” I’ll leave the first part of the sentence alone, except to point out that few organizations have ever been satisfied with their performance management systems. Instead, I’ll talk about their ROI reference because it’s right on the money.

Performance management is a business process, after all. In the financial arena, you use ROI to guage an investment’s profitability. Can you explain the investment and return properties for performance management? (In other words, can you explain the return on each employee’s work — to the employee?) Can you define/provide a measurement to senior management of how your performance management program profits your organization?

What SHOULD your performance management process return if it were effective? Do you know? Can it influence sales, revenue or productivity? If not, why not? Have you done anything to determine the return that your company earns from cascading objectives, or have you assumed that it just earns a ROI and then complained about the quality of MBOs that managers approve. And, by the way, do you know if the process is really doing anything positive for the relationship between manager and employee?

Based on its research, Gallup encourages us to, ” . . . blend performance measurement and accountability with individual development — and to turn activities perceived as threatening into something more positive and constructive . . .” Why not imagine all the different ways you could do this, and strive for something really purposeful?

Here’s the real point, “The future of work is being shaped by extraordinary changes in technology, globalization and overwhelming information flow.” (Which, of course, includes all those performance management ratings and forms.) What is it that your company needs your employees to accomplish in this extraordinary business environment? What and who do employees need to make that happen? How should employees contribute and how should they feel about it? What outcomes should employees expect to see and how should they judge their quality? Do they really need managers’ help to answer those questions? How does manager involvement help?

In other words, instead of asking, “Form or no form?” “Ratings or no ratings?” “Annual, quarterly or as needed discussions?’ — the questions to ask are, “Why?” “What is the future of our work?” “What specifically can each employee do about it and why should they?” And, “What’s the ROI when they do?”

Margaret O’Hanlon, CCP brings deep expertise to discussions on employee pay, performance management, career development and communications at the Café. Her firm, re:Think Consulting, provides market pay information and designs base salary structures, incentive plans, career paths and their implementation plans. Earlier, she was a Principal at Willis Towers Watson. Margaret is a Board member of the Bay Area Compensation Association (BACA). She coauthored the popular eBook, Everything You Do (in Compensation) Is Communications, a toolkit that all practitioners can find at

This post originally appeared on Compensation Cafe
Author: Margaret O’Hanlon