Performance Management? Everyone Wins When It Is Managed Effectively

When employee performance is managed effectively, it drives higher performance, produces higher levels of engagement, and reduces turnover among the better performers.

It also provides information needed for staffing, career management, individual development plans, and reward management. Research studies have confirmed effective performance management is instrumental in building and sustaining a high performance culture.

But despite its proven value, many employers allow managers to downplay their responsibility, treating it as an “HR requirement” that has to be tolerated.

This is not a “system” problem

Surveys consistently show high levels of dissatisfaction among managers and employees. Critics argue the practice does more harm than good, all of which suggests employers are failing to take advantage of a proven strategy to improve company performance.

This is not a simple problem. A central and all too obvious issue is that many managers are ineffective in supervising their people. In some cases they were promoted to a supervisory role because of their technical skills and have poor people skills.

Another aspect is that there continue to be leaders who fail to champion human capital management. It’s compounded by HR’s failure to convince top management that the management of performance should be a priority.

Where there is a history of ineffective performance management, adopting a new performance system will not solve the problems.

This is not a “system” problem. Technology is no solution either; this is not like installing a new accounting system. Employers need to acknowledge that the dissatisfaction reflects ineffective behavior that has become the norm. That behavior has been reinforced by advancing the careers and rewarding poor managers.

Frequent communication is key

At its core, effective performance management depends on communication between managers and their people. They can be brief informal coaching sessions, more formal discussions at the completion of a project, or extended teaching sessions to develop new skills.

The contacts do not have to be face to face but the purpose is always the same — to help the employee grow and improve performance. The performance system should be seen as a tool that helps managers provide guidance to employees.

Frequent communication can solve one of the common problems – year-end rating surprises and disappointment.

Performance reviewsA useful analogy is the role of coaches in sports. Along the sidelines at football games it is common to see coaches in discussions with players. Throughout the season, coaches work to improve player performance.

Everyone with children has experience as a coach. It’s how we work them to develop their skills in sports, ride a bike, and develop life skills like making their beds. We enjoy watching them demonstrate new skills.

Lessons from coaching sports

Actually there is solid evidence the model of coaching from sports would be a good fit in today’s dynamic organizations.

In 2011, The New York Times reported on a project at Google to “build a better boss.” A group studied recent performance reviews, feedback surveys and nominations for top manager awards. They learned that technical expertise “ranked dead last” among the “Eight Habits of Highly Effective Google Managers.”

Employees valued most the supervisors who “made time for one-on-one meetings, who helped people puzzle through problems by asking questions, not dictating answers, and who took an interest in employees’ lives and careers.” In other words, they wanted good coaches.

The Google approach would be a great starting point for any employer that wants to improve its performance management process — that is, to ask managers and employees what’s working and what’s not.

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Teams of the more effective managers are fully capable of deciding where change is needed. They should have the lead in rethinking the system as well as defining training needs. Their co-workers are far more likely to accept their conclusions than HR’s.

A focus on job-specific criteria

There is a more or less standard list of questions that have to be answered in planning a new system. With guidance, teams of managers are fully capable of evaluating alternatives and reaching agreement on a system that satisfies their needs. That creates ownership.

Teams of the best performers can also be tasked with determining the criteria for assessing employee performance. They qualify as subject matter experts (SMEs) and with guidance can develop job-focused performance criteria that will facilitate the coaching discussions so important to improving performance.

The common practice of relying on vague, generic criteria like “Interpersonal Savvy” and “Dealing with Ambiguity” makes those discussions much more difficult. High performers tend to set high standards.

Focusing on job-specific criteria also addresses the deadly cancer of performance management – inflated ratings.

Rewarding the best people managers

Forced ranking is a not solution, as Microsoft and other companies have learned. If anything, it’s worse than the disease. There is no theoretical or practical reason to expect a normal distribution of ratings – none. A viable and far more positive alternative is to rely on what Ed Lawler called  “calibration committees’” where managers have to explain and defend ratings.

Everyone should understand that when a new system is implemented, there will be glitches. The answer is to commit to assess experience and commit to address any problems. It’s like an annual health exam.

Finally, the best people managers should be recognized and rewarded. And the worst moved back to non-supervisory roles. That sends an important message.

Managers and employees both benefit when performance is effectively managed. Employees are more likely to be engaged, realize greater job satisfaction, and perform at higher levels.

Everyone wins. This is an opportunity to highlight the value of human capital management.

Howard Risher is a private consultant who focuses on pay and performance. His career extends over 40 years and includes years managing consulting practices for two national firms. He recently became the editor of the journal Compensation and Benefits Review. He also has an MBA and Ph.D from the Wharton School of the University of Pennsylvania. Contact him at


5 Comments on “Performance Management? Everyone Wins When It Is Managed Effectively

  1. Agree 110% on calibration meetings. Worked with a company that started that by
    1)getting top management together to rigorously define the various performance categories — great, good, etc.
    2)Their reports then get all their managers together and defend who their people are that meet at least the top 2 categories.
    3) Proceeds down the chain. Must have managers meet that at least know a good portion of the employees that work for all the managers in the group they are calibrating on. That may mean more manager groups required — especially in large companies.

    The process works great.

  2. Surprised to see no mention of goal setting – the place where all performance mgmt errors begin. If managers set a few big challenging goals at the beginning of the year, most of the other things HR pros worry about (distribution, etc.) take care of themselves. Agree also with the other comment – the right process (not technology) can make a world of difference.

  3. Great article, thank you, Howard. Depending on how you define ‘a system problem’ it does come down to the culture, strategy and processes in place. It starts with helping managers become better leaders, facilitating an environment that supports open and continuous communication and focusing on the individual with their job specific objectives. You are right, technology is not the solution and is often just used to automise putting employees into boxes. However, when chosen appropriately for a coaching style work environment, technology can encourage, capture and support a feedback rich culture.

  4. How refreshing to read a balanced discussion of what is wrong with traditional performance review processes. I particularly like this statement: “A central and all too obvious issue is that many managers are ineffective in supervising their people. In some cases they were promoted to a supervisory role because of their technical skills and have poor people skills.”

    One of the differentiators of our customers who get the most value from our performance management technology is the amount of training they provide to managers around how to have the conversations supported by the technology. These customers do not use technology to decrease the amount of time spent managing performance. Instead they use the systems to a) re-direct manager time from doing administrative tasks to creating better conversations and decisions about talent, b) provide managers with information to enable better conversations and decisions, and c) track whether managers are effectively talking with employees about their careers.
    The best in class companies provide managers with ongoing training on how to be better managers. They approach manager training the way many companies approach sales training – as a recurring annual event. Its something you never master, you can always get better at it, and you need to update the methods you use to reflect changes in the company’s culture, workforce and business strategies.
    Great article!

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