Human Resources managers don’t really know how to design performance management systems. They know their organizations need performance management, and they know their organizations don’t do it well. They know managers and employees alike hate it. Yet recognizing performance is a critical engagement and retention factor. Despite being critical to an organization’s success, performance management is often barely breathing.
HR managers wrestle with the following issues:
- Were the objectives set at the beginning of the year meaningful? If not, why should they be the basis of performance ratings?
- Should HR force managers to grade on the curve? Should they force a distribution into superior, average and below average employees?
- Should pay increases be tied to performance? How does that work when salary increase budgets are no more than two percent?
- How does the organization determine which adequately performing employee should get no increase, so that a strong performer can get four percent? And how motivating is a four percent increase?
Despite these serious questions about performance management, most organizations continue to use annual performance reviews. Most also tie pay to performance.
It’s important to keep the focus on what the purpose behind performance management is. The purpose is to align the work that employees do with the organization’s mission and goals.
So managers and HR employees need to ask themselves:
- Does each employee’s performance objectives relate to the quality and quantity of output the organization needs to be successful? If not, why do I care whether that employee meets that objective?
- If all employees meet their performance objectives, will the organization exceed its goals for the year? If not, where are the gaps? Which objectives are most critical to success?
- How will we measure success on objectives? If we can’t measure it, how can it be an objective?
There are many resources available to managers and Human Resources experts which purport to help answer these questions. Government and educational employers often post their practices on the web, and other organizations can adopt similar policies and procedures. For example, the Office of Personnel Management posts its process online for managing federal government employees. That process is no better and no worse than many others that for profit and not-for-profit employers use.
There are books available for managers to use that rant about the problems of performance management and purport to offer simpler processes. See Performance Reviews: Why We Hate Them and What You Can Do About It, by Tim Moran, for a short overview of what is wrong with performance management in many organizations and the author’s suggested improvements.
At the end of the day, what matters is that a manager and the employee sit down to discuss the employee’s past performance and expectations for the future. Ideally, this is not a once-a-year event, but is a regular part of manager/employee interactions.
It is the attitude of caring that the manager exhibits that motivates and engages the employee for better or for worse. Some managers do it well. Some do not.
Most managers could use improvement in some respect, just like their employees.
What are your performance management best practices?