Four Pitfalls of Performance Management—Don’t Overthink It!

 

Do you despise performance management time?  Do you despair at the thought of performance appraisal season?  Do you ever call in sick when asked to rate someone’s performance? 

Rest easy.  You are among myriad professionals, supervisors, and other stakeholders who all cringe at the mere mention of the words “performance management.”  Like you, I cringe when thinking about performance appraisal and, more importantly, performance management.  The reason is the entire process is wrought with pitfalls. 

No matter what you do, how you do it, and when you do it there are always unintended consequences.  Recent news stories like Deloitte’s switch to a simplified performance evaluation process shed light on the fact that the consequences outweigh the benefits.  Despair, dread, and despise no more.  Let’s identify the most common unintended consequences and avoid them from now on.

Too often we hit the following pitfalls when engaging in performance management:

1)      Fear the process and the people—we’ve all had that knot in our stomach when performance appraisal time comes.  If you’re a rater, you dread the tough conversation.  If you’re being appraised, you dread the evaluation.  The truth is that this doesn’t have to be tough.  We’ve all heard the phrase “Feedback is a gift.”  I used to think it was a gift only in the mind of the giver.  What I’ve learned is that it is a gift as long as it is wrapped properly.  Nobody likes a gift wrapped in newspaper.  It shows lack of effort and no forethought.  However, when wrapped with shiny wrapping paper and a nice bow, the gift is much more thoughtful and pleasant.  With feedback you need to wrap it with one very important bow—“This feedback is given to help us be as effective as possible and achieve success where possible.” 

I’ve had tough feedback conversations on both ends and it always made me feel better when I felt I was part of a team trying to improve rather than manning a lonely boat to improvement.  Wrap the gift properly and you will get better results.

2)      Tying compensation to the result—ultimately, we all know that if you perform better, you are more likely to be compensated well.  The problem is when we tie compensation to a specific performance appraisal process or system.  The minute you tie it to some system people begin gaming the system.  Raise your hand if you have ever slotted employee performance appraisals according to the salary increases seemingly merited by your staff.  Before you know it you are judging a popularity contest.  Next, you find yourself taking bribes from figure skaters who want to ensure that 9.75.  Okay, it probably doesn’t get to that level but you’d be amazed what people will do to earn a higher performance rating.  Take the money component out of it and you’ll find people will rate more freely and honestly.  You’ll also find that performance will go up because people will view performance appraisal a vehicle for one primary cause—professional development.

3)      Give way to the skew—have you ever looked at your performance ratings and wondered why no one is rated a 1 or 2?  The biggest issue with conducting appraisal using a normative approach is that you will create skew in your distribution.  But this reflects a greater issue—people fear pointing out poor performance.  Poor performance is tough.  Sharing feedback like “Your behavior is unprofessional” or “Showing up two hours after you said you would” or “Stealing pens and paper for your daughter’s school project” is not easy. 

These extreme examples are clear 1 or 2 ratings that should lead to a performance improvement plan.  Nonetheless, I’ve heard people rationalize these examples of poor performance out fearing an outlier in their performance distribution will cause HR to question their process. Don’t give in!  Performance is nothing more than the evaluation of behavior that has occurred.  There is nothing wrong with calling a 1 a 1. 

4)      Pass the trash pleaseone of the most interesting side effects of performance management processes is the shifting of poor performers rather than taking them head on.  Have you ever heard someone say, “My Yugo is complete junk and doesn’t run anymore?” Did they follow that question up with “Would you be interested in buying my Yugo?”  Of course not!  The solution to this problem is the same as the solution for poor performance.  Try to make the performance better or cut ties with the poor performer. 

I have seen organizations pass around the marginal 3 (aka the perpetual 2.92 PIP avoider) time and time again without ever doing what is best for the poor performer and the rest of the organization.  I can even think of a personal example where an HR leader insisted that the poor performer must be given another chance in her fifth department in the last four years.  Poor performers deserve chances to improve their performance but short of actual improvement you will find several disastrous effects like diminished engagement among high performers and consistent unnecessary workarounds to achieve success. 

Both of these are examples of waste generated in an effort to pass around the performance problem.  Jack Welch called for the removal of the bottom 10% and so should you.

Performance management doesn’t need to be nerve-wracking.  Can you think of examples where performance management (appraisal and talent management pieces) ended in an unintended side effect?  Have you ever experienced these pitfalls?  What do you recommend as strategies for avoiding the pitfalls of performance management?  To learn more about best practices in performance management visit www.shrm.org.

 

 

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