Organizations establish goals and objectives to achieve their overall business strategy and build a strong, high-performing workforce. By using an effective performance management approach (PMA), organizations aim to create a common understanding among employees about the firm’s aims. Top executives work to align the organization’s goals with those of the employees, including agreed-upon measures, skills, competency needs, development plans, and results delivery.

Generally, firms implement performance management approaches (PMAs) with emphasis on improvement, learning, and development geared towards the realization of the overall business strategy. However, PMA also serves strategic, administrative, and developmental goals.

There are traditional performance management approaches used by firms around the world. However, a new study suggests that these orthodox approaches to performance management are not yielding the desired and expected outcomes; as such, the need to reinvent performance management is imperative. But is there really a need to reinvent PMA?

Gambits in Today’s Performance Management Approach

Performance management takes on many shapes and guises to suit different organizations’ circumstances, beliefs, requirements and priorities. But for employee development, it answers just three important basic questions:

  1. What am I expected to do?
  2. How well am I doing?
  3. What do I need to develop and improve?

There are various traditional approaches to performance management, and we can sum it up to five types. But we will not be discussing them each. Rather, we’ll talk about the key processes common to these traditional performance management approaches and reason from there.

Types of Traditional Performance Management Approach

  1. Total performance management
  2. Skills or competency-based
  3. Team-driven
  4. Continuous learning and coaching
  5. Project-based

In the traditional performance management approach, the key processes involved are usually the following:

  • Objective-setting at the beginning of each year for each employee;
  • An employee’s manager rates him or her on how well those objectives were met (includes comments on whether the employee did or did not excel);
  • A single year-end rating is produced based on numerous ratings throughout the year

Ideally, when performance management is done right, we can be assured, more or less, that (1) we have clarified job responsibilities and expectations, thus (2) have enhanced individual and group productivity as each individual or unit is expected to deliver what is clearly defined as their responsibilities and what are expected of them. Also, successful performance management in the long term (3) develops employee capabilities because of effective and beneficial feedback and coaching mechanisms we put in place. Clearly identifying the goals of the company and the company’s expectations of their employees also (4) drive behavior to align with the company’s core values, goals, and business strategy. In terms of administrative benefits performance management can offer executives is that most of the time, (5) performance management provides the basis for making operational human capital decisions such as pay and benefits. But more importantly, an effective PM approach improves the communication between employees and managers.

Those are the administrative, strategic, and developmental goals performance management serves. But how are we with our performance management strategies and approaches? Are we getting what we want in terms of employee engagement or high performance? How do we evaluate our way of evaluating our employees’ performance?

Challenges Faced by Traditional Performance Management Approach

In a survey conducted by Deloitte, a professional services company based in the United States (one of the Big Four professional services company in the world), ‘more than half of the executives asked (58%) believe that their current performance management approach drives neither employee engagement nor high performance’.

In Deloitte’s report, Ashley Goodall and Marcus Buckingham noted how traditional approaches to performance management have fallen short in achieving its goals due to its past dependency, and one-size-fits-all format.

There’s much sense to that as traditional performance managements approaches as we know them today are overly simplistic, overly quantitative, rater-biased, and is executed from gestalt perspective.

First published in Sysgen Career Information and Resources. You may view the original post at:  Four Deadly Sins of Performance Management.

Resources:

Scullen, S., Mount, M. and Goff, M. (2000). Understanding the latent structure of job performance ratings. Journal of Applied Psychology, 85(6), pp.956-970. [Accessed through personal subscription]

Harvard Business Review, (2015).Reinventing Performance Management. [online]

Peoplestreme.com, (2015). Explain What is Employee Performance Management ?. [online]

Usfweb2.usf.edu, (2015). [online] 

Sagepub.com, (2015). [online] 

en Hartog, D., Boselie, P. and Paauwe, J. (2004). Performance Management: A Model and Research Agenda. Applied Psychology: An International Review, [online] 4(53), pp.556-569. 

Uminfopoint.umsystem.edu, (2015). [online]