If you are a manager, how can you help your team members achieve higher performance? And if you are a staffer, what should you expect from your boss? If you understand the differences between performance management and performance development, you can get better results. For decades the concept of performance management has been largely based on a single annual performance appraisal conducted in a formal process by an employee’s manager. But traditional approaches to performance management have consistently failed to address the needs of today’s complex, evolving workplaces. On the other hand, “Organizations that have made a strategic investment in employee development report 11% greater profitability, and are twice as likely to retain their employees.” Read here to find out how to best manage the performance development of your team members.
Image: Gallup report, 2017. [Grey font, unfortunately].
When employees see their work minimized to a single number that summarizes their performance over the previous 12 months, whether it is a rating or a ranking, their focus shifts from how to improve their performance to whether their manager is qualified to judge their performance. The performance reviews of around 74% of employees are conducted annually or even less often, as shown in the diagram above. After an annual performance review, employees then consider the accuracy and fairness of the judgment, they discount constructive feedback and coaching, and stop listening to their manager’s feedback. These perceptions leave many employees feeling upset with their manager and company, which gives them a negative outlook on their career, according to Gallup experts.
To the contrary, a finding in Gallup’s first article for 2022, “How fast feedback fuels performance,” is that “frequent and meaningful feedback in the past week is critical to engaging employees during COVID-19”, as in the image below. Gallup says:
A more meaningful — and approachable — way to give feedback is quickly and frequently, which is why organizations might find it helpful to rebrand their approach to “Fast Feedback.”
The Fast Feedback approach makes giving feedback easier and more straightforward for managers, who often find the activity intimidating and overwhelming. When feedback is easy and commonplace, everyone can feel at ease and walk away knowing what and how to improve. And as Fast Feedback becomes part of the norm, a culture of meaningful feedback — the ultimate goal — will emerge.
Image: In Gallup article, “How fast feedback fuels performance,” on 1 January 2022.
Gallup estimated in a 2017 report that the cost of poor management and lost productivity from US employees who were not engaged or were actively disengaged was between $960 billion and $1.2 trillion per year. The cost of lost time spent on traditional approaches to performance evaluations alone was estimated to range from $2.4 million to $35 million per year for a company with 10,000 employees.
An example: In 2016, when Accenture employed 384,000 staff, the firm estimated spending over 2 million hours on performance evaluations alone. Imagine the cost of this in 2020 when the firm employed almost 500,000 workers (subject to COVID-19)! Conservative estimates tend to exclude lost productivity costs and overhead costs, such as the cost of employee benefits, and technology or human resources staff time spent on performance reviews.
The traditional annual review, which occurs far too seldom to provide timely feedback, prevents managers from accurately recalling details of an entire year’s worth of performance. This results in an over-reliance on more recent actions. The problem worsens as performance demands or goals change throughout the year. When performance evaluations do not capture the changing demands placed on employees, annual reviews can’t accurately reflect employees’ day-to-day performance. So organizations need to manage the performance development of their employees much more effectively.
Employees think that traditional reviews are inaccurate and unfair – because most are. Managers tend to be ineffective at subjectively evaluating performance because human biases distort people’s capability to objectively evaluate other people. Additionally, employees tend to doubt whether their manager fully understands what they are required to do to fulfill their responsibilities and whether their manager can accurately evaluate performance with minimal awareness of employees’ daily actions and accomplishments. Managers need to better manage the performance development of their team.
General Electric tries to reduce the problems around a single annual review by getting supervisors and managers to have frequent conversations with employees (calling these ‘touchpoints’), as reported in a 2016 Harvard Business Review article by Cappelli & Tavis. GE at that time used two basic questions as a guide to keep focus: “What am I doing that I should keep doing?” and “What am I doing that I should change?” Annual goals have been replaced by shorter-term ‘priorities.’
Also, to help overcome the problems created by a single annual performance review, apps have been produced to enable supervisors and managers give feedback at any time and to record it if needed. At General Electric, the PD@GE app (‘PD’ stands for ‘performance development’) allows notes and materials from previous conversations to be accessed and summarized. Employees can use the app to ask for direction when they need it. IBM has a similar app that enables employees to give feedback to peers and choose whether the recipient’s boss gets a copy. Amazon’s Anytime Feedback tool does much the same thing. The great advantage of these apps is that supervisors can easily review all the discussion text when it is time to take decisions and actions such as award merit pay or consider promotions and job reassignments.
No wonder the above feedback from employees about their managers is disappointing. However, it’s not surprising in view of the terrible results of a survey featured in a 2016 Harvard Business Review article, which showed 69% of managers were uncomfortable “communicating in general” with employees, as in the image below. These findings reflect how difficult it has been for managers to manage the performance development of their team.
Image: From the article, “Two-Thirds of Managers Are Uncomfortable Communicating with Employees,” Harvard Business Review, March 2016.
Performance management is defined by Gallup consultants as:
…a process that contributes to the effective management of individuals and teams in order to achieve high levels of organizational performance. As such, [performance management] establishes a shared understanding about what is to be achieved and an approach to leading and developing people which will ensure that it is achieved.
The aim of performance development is to develop, maintain and improve employee skills, knowledge and job performance in order to achieve individual career goals and contribute to the achievement of team and organizational business goals. There’s little difference between the principles involved in the two descriptions of performance management and performance development, but there are major differences in how they are planned and implemented. Therefore, performance development is the direction where you should be headed. This is how you should manage the performance development of your team members.
The purpose of performance management is to improve performance, but traditional approaches have consistently fallen short of this goal. Unfortunately, many employers are not fulfilling their employees’ most basic performance management needs – from knowing how their job description connects to the work they do, to having control over the metrics used to measure their performance. Employees go to work every day facing unclear job expectations, little coaching from their manager, unfair accountability practices and a lack of opportunities for development. Importantly, annual performance reviews tend hold people accountable for past behavior rather than improving current and future performance and grooming talent for the future, which are critical for organizations’ long-term survival.
Quantum Workplace basically states in a 2019 report:
1. The workplace has changed.
2. There’s a new reliance on data and technology.
3. Team results matter.
4. Managers want (and need) to be more personal.
5. Employees want (and need) more feedback.
These combined pressures have reshaped the way organizations approach performance management today and in the future. You can download several useful papers/reports from links in Quantum Workplace’s above report, which provides valuable insights into how to handle the 5 points above. Links to these papers and reports are provided at the end of this article.
Unfortunately, research finds that the shifts in the global workforce have created a significant split between how organizations manage employee performance, and the actions employees say are essential to their individual development, which are:
Gallup experts say in their 2017 research:
“Though efforts to improve performance start with the individual, you must align performance development approaches with team and organizational goals. Doing this will then help you effectively reach and exceed those objectives by boosting the effect of individual development across the workforce.”
Only 41% of employees strongly agree that their job description aligns well with the work they do. Those who strongly agree with this statement are
2.5 times more likely than other employees to be engaged. Employees greatly benefit from having a distinct path to follow, and without one, they can feel aimless.
In addition to needing an applicable job description, employees benefit from having goals that both the manager and employee agree on before
performance occurs. Performance management conversations have a history of being one-sided and one-dimensional. Too often, managers set the same expectations for all employees, forcing people into the same model or peer-to-peer comparison group. And they tend to do so without having a full grasp on what employees actually do day to day. Only 34% of employees strongly agree their manager knows what projects or tasks they’re currently working on.
People tend to find goals to be more fair and motivating when they have a voice in setting them, yet a low 26% of employees strongly agree their manager is good at helping them set work priorities. Collaborative goal setting also ensures that performance expectations are fair, relevant and challenging. Therefore, managers and employees should work together to set expectations. This sets a better foundation to manage performance development.
Employees also feel frustrated when managers fail to help them connect their role to the bigger picture. The modern workforce wants a job that feels meaningful. They need to be able to clearly see how their role contributes to the success of their team and organization. When employees have this sense of purpose, their engagement soars. Employees who strongly agree they can link their goals to the organization’s goals are 3.5 times more likely to be engaged. Unfortunately, only 44% of employees strongly agree they can see this connection. It is logical to manage performance development based on this understanding.
Successful performance development is about creating a cultural shift in how people work and how they work together. Moving from performance management to performance development requires managers to think of themselves in a new way – as a coach, not a boss.
Image: Gallup Re-engineering Performance Management report, 2017 [Grey font, unfortunately].
Although the level of feedback employees need varies by person and task, Gallup recommends that employees experience some form of coaching at least once per week, whether that is recognition, constructive feedback or encouragement. When employees don’t have contact with their manager at least once a week, engagement tends to fall substantially. I have written an article, “Coaching your team will produce better results,” which explains how you can initiate and manage performance development by coaching employees rather than managing them in the old way.
Organizations can transform their managers into coaches by teaching them to effectively and consistently:
When performance becomes focused on these core principles, manager-employee interactions and discussions feel encouraging, purposeful and rewarding in ways that annual reviews don’t. This is central to manage the performance development of team members.
When coaching is engagement-focused, the manager ensures performance expectations can be achieved and employees give their best effort because they feel that their performance needs are supported. Engaging employees takes work and commitment. Gallup’s employee engagement approach organizes the 12 elements into 4 types, or levels, of performance development needs:
The most recent Gallup meta-analytic study of employee engagement analyzed 82,000 business units and found that teams scoring in the top quartile (quarter) of engagement tend to outperform teams scoring in the bottom quartile by:
21% higher profitability
20% higher sales
17% higher productivity
10% higher customer metrics
24% lower turnover in high-turnover organizations
59% lower turnover in low-turnover organizations
40% fewer defects
41% less absenteeism
58% fewer patient safety incidents
70% fewer employee safety incidents.
Managers must become coaches, according to Gallup in its 2017 State of the American Workplace report. Managers must take ownership of their employees’ development and think of themselves in a new way – as a coach, not a boss. They need to create an ongoing dialogue about performance that is individualized to the needs and unique talents of each employee, according to Gallup experts:
Employees used to expect to work for a boss. Now, they’re looking for a coach. Because they don’t just want to be satisfied with their role or their job. Your employees want personal and professional development, immediately and for the future.
Research by McKinsey consultants found that many managers traditionally spent only 10-40% of their time actively supervising their employees, with the rest of their time spent on administration and meetings: “At best-practice companies, managers allocate 60-70% of their time to frontline activities, much of it in high-quality individual coaching. The bottom-line benefit is significant…” At these companies, administration activities are streamlined to make time for coaching. This is the way to manage performance development effectively.
The most important priority for leaders is to start by equipping their managers to become coaches, according to Gallup (2018). But only 56% of HR leaders said that their organization had a system to train and prompt managers to coach employees, according to a 2016 SHRM/Globoforce survey. This points to a big need for organizational leaders to take ownership of manager development to teach them how to be effective coaches. McKinsey consultants agree:
The soft skills needed to conduct meaningful performance conversations don’t come naturally to many managers, who often perform poorly in uncomfortable situations. Building their confidence and ability to evaluate performance fairly and to nudge employees to higher levels of achievement are both musts. While the frequency of performance conversations matters, our research emphasizes that their quality has the greatest impact.
Preparing managers to coach goes beyond “telling” managers to coach. Preparation requires leaders to redefine the roles and expectations of managers; to provide the tools, resources and development necessary to meet those expectations; and to create evaluation practices that help managers accurately depict performance, hold employees accountable and coach moving forward.
Most companies don’t require managers to provide frequent, ongoing performance coaching for their direct reports. Instead, managers’ responsibilities – including budgeting, strategic planning and administrative duties – make it difficult to prioritize employee contact. This must change. If leaders want to begin re-engineering their performance management approach, managers must be given the resources and training they need to meet the new requirements for employee development and improved performance. This is the way to manage the performance development of your managers.
Gallup recommends focusing on three key principles that define effective coaching conversations: frequent, focused and future-oriented. Coaching conversations need to be clear and specific for employees. A best practice for keeping coaching conversations focused is to start the conversation by stating its purpose and expected outcome, and end the conversation with ensuring next steps are understood. However, when performance conversations only cover the manager’s expectations, they are merely an imposed process rather than collaborative and developmental. Coaching conversations will be more productive if the examples below are followed:
Image: From the article, “The Feedback Fallacy,” in the Harvard Business Review, April-May 2019.
The boss is essentially the person’s performance coach. The broad thrust of the performance review meeting should be along the lines of the boss asking, “How can I help you to do your job more effectively?” as the two parties work through their discussion agenda. The coaching should focus on employee needs, and not just task expectations. For example, in the spirit of ensuring coaching conversations are developmental, managers might ask what the employee wants to discuss, review the employee’s recent successes or identify barriers to future expectations.
While there is no perfect approach for keeping coaching conversations focused, it is important for managers to be intentional about what and how much they are trying to achieve during each conversation — from addressing performance progress to better understanding employee needs, to discussing a learning opportunity. To manage performance development in this way is to set the process in place more effectively.
Image: Gallup report, 2017.
It is difficult for many PR managers to find out the most effective ways of managing the performance of their staff because it is difficult to find satisfactory KPIs to use. KPIs are repeated activities that can be measured from one period to the next. Many PR activities have intangible or complex outcomes or are not repeated actions that can be compared from one period to the next, which is the fundamental requirement for KPIs.
In view of all this, most PR KPIs tend to relate to stakeholder opinions canvassed from one period to the next. Other KPIs tend to relate to inputs and outputs rather than outcomes, unfortunately. This makes PR value difficult to demonstrate to senior leaders.
Research shows that the best supervisors informally monitor the performance of their staff during their daily duties and give 50% more feedback about their work than poor supervisors do. The worst supervisors tend not to give feedback to the individual until they are obliged to in an uncomfortable formal review. So the lesson is there – give frequent feedback!
A key performance indicator is an outcome. It describes what would happen if the staff member succeeded in fulfilling that particular role. A KPI is not merely a PR activity. It is an outcome for the business that having you on staff is supposed to deliver.
Each person should have up to 5 KPIs of repeated, measurable activities that support the goals of their workplace. It is virtually impossible to accomplish more than 5 well-constructed KPIs. If more than 5 can be found for an individual then they are most likely to be subsets of larger KPIs. An individual’s KPIs could stem from the PR branch’s KPIs.
Key performance indicators can be best reached by asking questions like:
Individuals’ KPIs are measurable either by report or survey. A measure must indicate how, how often and to what level an activity has been performed. For example:
A key issue to understand is that performance reviews and pay reviews should be mutually exclusive. Unfortunately, in many organizations the employee’s performance review and pay review are conducted in the same meeting. This is completely counter-productive because it creates an adversarial environment – with the employee trying to convince the boss that he or she performs miracles and deserves a maximum rise while the boss tries to find arguments, such as finding fault with the employee’s performance, to minimize a pay increase.
Performance reviews should be conducted independently of pay reviews. They should be held at quarterly intervals at the start and could extend to every six months if both parties consider this to be appropriate later. Set the next review date during the previous review and never change it. Performance reviews are supremely important to employees. If the boss changes the date – invariably a delay – it sends a dreadful signal to the employee. Employees will agonize in a paranoid state over the many possible reasons for the delay of a review and will usually fear the worst. Don’t let them down!
The boss is essentially the person’s performance coach. The broad thrust of the performance review meeting should be along the lines of the boss asking, “How can I help you to do your job more effectively?” as the two parties work through their discussion agenda.
The discussion agenda at a formal performance review should:
The staff member should always be involved in the construction and regular updating of their job description – it gives them a greater sense of ‘ownership’ of their job. The person’s review would also include several short-to-medium-term objectives of activities that are significant but not repeated, eg ‘Complete the promotional plan for the new plant by 10 June’ and ‘Learn how to operate Microsoft Access to a competent level by 30 September’. Professional development activities would be included here, eg ‘Attend PRSA issue management workshop’.
Quantum Workplace produced a useful template for one-on-one meetings between managers and their direct reports. These meetings are intended be held on a regular basis each financial year. Even if you also hold annual performance reviews, this template is valuable as a record of your progress meetings, rather than you trying to remember what matters were discussed during the previous 12 months. You can download a PDF of the template from QW, but you will be required to fill in an online form with your name and email address details, etc. Content of the template is shown below. You can modify it to suit your own purposes:
Poor performers are not nearly as prevalent as mythology may make out. Actual numbers of poor performers are well below the levels perceived by other employees. A poor performer has a greater nuisance and irritant effect on other employees, which tends to magnify perceptions of the extent of the problem.
How can a poor performer be best managed? In a consistent and firm way. Their manager needs to show commitment to due process that all employees can perceive. This is when it pays to bring coaching into the picture. Performance management should really be more of an ongoing dialogue in the form of performance development rather than merely a formal review. With such a dialogue, it is likely that the problem will be addressed early rather than being allowed to fester. All employees must be made aware of the processes in place to address poor performance, not just poor performers themselves. The more that employees understand these processes, the more confidence they will have in their manager to deal with any problems. I give details of the kinds of questions to ask in a one-on-one meeting with an under-performing employee in my article, “Coaching your team will produce better results.”
Quantum Workplace has posted a report, “Moving Beyond Performance Management is Broken,” which provides valuable insights into how to handle aspects of performance development. Links to these papers and reports are below:
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