It’s not surprising that many organizations are continually updating and revising their performance management systems in an effort to achieve better results and improve fairness and accuracy. However, many of you who work in the public or private sector are most likely painfully aware that these efforts do not have the desired impact.
We’ve identified eight of the most common changes and enhancements and why each may—or may not—add value.
1. Web-Based Systems
Web-based systems facilitate the collection of data which, in turn, facilitates cascading goals. It also provides a common framework for managers and employees and prompts for participating in the various components of performance management, thereby increasing consistency in application.
A well-developed Web-based performance management system will help improve consistency of application across the organization, and it will likely enhance perceptions of fairness and accuracy. However, technology does not address manager skill or commitment to developing people; nor does it help clarify the link between pay and performance.
2. Rating Scales
One of the most common changes organizations make to their performance management systems centers on the rating scale used to evaluate performance.
If you are using a scale as part of your appraisal process (either numeric or descriptive), make sure each rating point is clearly defined and managers have a common understanding of how to apply the scale to differentiate levels of performance. This is critical because it addresses consistency and enables managers to differentiate levels of performance.
If the scale exceeds five points, be sure that the descriptors do, in fact, clearly capture distinctions in ratings. In our experience, clearly defined five-point scales (that include numbers and labels) are easiest for people to interpret and apply.
3. Forced Distribution
A forced distribution requires managers to evaluate a person’s performance relative to other people (rather than against clearly defined individual goals and performance expectations). This can negatively impact teamwork and collaboration if employees know that their performance is being “judged” against their peers.
Furthermore, because it prevents managers who do not want to deliver “bad news” from inflating ratings, we believe a forced distribution is frequently used as a “work around” for managers who are unwilling or unable to address poor performance. The problem is that once poor performance has been addressed, a forced rating may result in an employee with acceptable performance receiving the lowest performance rating.
4. Skill Training
Manager competence across all four elements of performance management—goal setting, coaching, development planning, and performance evaluation—is essential for the success of a performance management system. Without these fundamental skills in place, no form, rating scale, or technology will make the system work.
Training increases consistency, which is one of the key drivers of people’s perceptions of fairness, accuracy and overall value to the business. Training in coaching and development planning also increases the likelihood that managers will provide feedback on performance and work with their direct reports to put development plans in place. This, in turn, has a positive impact on a direct report’s perception that the performance management system helps employees build their skills and competence.
5. Periodic Performance Reviews
Requiring or encouraging managers to conduct periodic check-in meetings ties directly to perception that the system helps employees build their skills and competencies—a key driver of fairness, accuracy and overall value to the business. It also increases the likelihood that the annual performance review discussion will be a productive dialogue (versus a surprise). However, it is important to note that requiring periodic check-in meetings will only be successful if managers recognize the importance of these discussions, make time for them, and have the skills and tools to provide effective coaching and feedback.
6. Multi-Rater Feedback
Multi-rater feedback appears to increase the likelihood that employees will see the overall performance evaluation process as fair and accurate. Although multi-rater feedback has a number of advantages, it will only be effective if it is introduced and integrated properly into the broader performance management system. It is critical that managers and employees have a shared understanding of the purpose of multi-rater feedback and how the data is used.
The use of self-assessments is based on the belief that providing a vehicle for employees to give input into their evaluation, they are more likely to view the process as fair and accurate.
However, simply introducing self-assessments will not have the desired impact. What makes the difference is the extent to which self-assessment data is actually integrated into the performance evaluation process. This requires skill on the part of the manager and cannot be accomplished by a form alone.
Self-assessments are unlikely to make or break your performance management system; they may do more harm than good if they are perceived as another “task” and managers are not skilled in incorporating self-assessment data into the performance discussion.
8. Monitoring the Quality of Performance Evaluations
Human Resources can monitor the quality of completed performance evaluations in an effort to achieve greater consistency across the organization and ensure that assessments are backed with supportive evidence and examples.
Monitoring the quality of completed evaluations is generally a good practice. However, this time-consuming task will have little impact unless managers are held accountable for preparing effective reviews. In addition, monitoring is only useful when follow-up and coaching takes place with managers to confirm “what good looks like” and reinforce appropriate behaviors.
Although any of these changes or enhancements can have a positive effect on the performance management process, caution is advised. Making frequent changes in an attempt to “get it right” undermines its credibility and frustrates managers. When it comes right down to it, we believe that it’s manager skill—not tweaks to forms, updating technology or revising rating scales—that determines whether a performance management system is used effectively. Managers must be competent in identifying and developing leaders to grow their teams. Using objective leadership assessment tools can give them a comprehensive, data-driven view of performance and a better understanding of where further coaching and development is needed.