Performance Management: Destructive Process, or an Innovation Imperative?

Performance management. What could be more critical to organizational success than guiding, aligning and – yes – assessing the performance of people relative to key goals and priorities?

And yet, look at the levels of debate and angst that continue, both inside as well as outside the HR profession, about how and even whether it should be done – particularly in the Age of Innovation.

Much has been written lately about Microsoft and its “stack ranking” process  — a program that forced every unit of the company to identify a certain percentage of its employees as top, good, average and poor performers.

The Vanity Fair article which broke the story earlier this month notes that every single one of the current and former Microsoft employees interviewed cited ranking as “the most destructive process inside of Microsoft,” and claims that the program “effectively crippled Microsoft’s ability to innovate.” The title of a follow-up Forbes article says it all: The Terrible Management Technique that Cost Microsoft its Creativity.

A destructive workplace process?

Clearly there are some important lessons to be learned from Microsoft’s experience with this particular performance management technique, but they are lessons that must reflect more than the sensational headlines, instead focusing on a deeper understanding of the culture and context in which this practice was able to wreak such havoc on the organization. Hopefully, we will collectively expend the time and effort necessary for this deeper understanding before leaping to simple conclusions.

Unfortunately, the Microsoft story will add fuel to the position that performance management itself  — and the practice of assessing employee performance — is a destructive process that must be eliminated in order for an organization to create and innovate.

I regularly meet HR professionals who are propelling their organizations away from traditional performance management toward a kinder, gentler (and often assessment-free) process built exclusively on feedback and development. Some of these initiatives, and the tools that support them, are very appealing and full of promise. And, they are often pursued under a banner of “fostering creativity.”

My question for these colleagues is always this: Does your process enable you to identify, quickly address and, as necessary, resolutely work to remove an employee whose attitude/behavior/work product is substantially below expectations?

What I often get in response is a furrowed brow, a lot of hemming and hawing, or even a straight-out “no.”

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How peers influence employee performance

Why is this important? An interesting article on motivational synchronicity at Fast Company offers some helpful insights. It explores our powerful and innate tendency to imitate – a bonding instinct that has helped our species survive – and the results of a series of experiments which examined the unconscious ways in which workplace peers influence employee performance.

From the Fast Company article:

Because we are born to emulate the motivation and emotions of those around us, negative colleagues can have a detrimental impact not just on our attitudes — but on our performance as well. In the studies we conducted, participants performed worse when they were seated next to an unmotivated office mate, even when they avoided verbal communication and worked on completely different tasks.

Which brings us to the ripple effect that naturally occurs inside large organizations. Hiring a single person whose motivation detracts from your company culture can have a dramatic impact because of the way our minds are programmed. Within our studies, all it took for motivation to spread between people was 5 minutes of exposure.”

The authors argue that the impact of motivational synchronicity is greatest in idea-driven industries and in organizations that rely on creativity and problem solving to succeed.

My uptake? Simply, that the best answer (as usual) probably lies somewhere between the extreme positions.

While the Microsoft ranking program may endure as an example of an extreme performance management technique that did indeed cost the company its creative edge, we must also keep in mind that building a culture of openness, curiosity and creativity does demand a structure and process for quickly and decisively dealing with employees whose motivation and performance (or lack thereof) threatens to drag down their colleagues.

This was originally published on Ann Bares’ Compensation Force blog.

Ann Bares is the Managing Partner of Altura Consulting Group. She has over 20 years of experience consulting in compensation and performance management and has worked with a variety of organizations in auditing, designing and implementing executive compensation plans, base salary structures, variable and incentive compensation programs, sales compensation programs, and performance management systems.

Her clients have included public and privately held businesses, both for-profit and not-for-profit organizations, early stage entrepreneurial organizations and larger established companies. Ann also teaches at the University of Minnesota and Concordia University.

Contact her at


1 Comment on “Performance Management: Destructive Process, or an Innovation Imperative?

  1. Great post, Ann. I especially like this point: “…we must also keep in mind that building a culture of openness, curiosity and creativity does demand a structure and process for quickly and decisively dealing with employees whose motivation and performance (or lack thereof) threatens to drag down their colleagues.” It only takes one bad egg to really spoil an organization and it’s hard to come back from that. 

    This is why social performance and real-time feedback are critical when managing your employees. It’s how managers can see which employees are doing well, as well as which employees need to work harder. It’s also how you get everyone on the same level by creating a culture of feedback. Further, when a workforce is aligned to the same focus, it’s easier to give credit where credit is due and and create results. In the end, we have to work as a collective whole if performance management is going to work. When we are only after our own agenda, performance, creativity, and organizational loyalty will falter. 

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