Before we hit that reboot button on our performance management programs, let’s get absolutely clear on what performance management actually is... and why we should be doing it. As diverse as organizations are (and as diverse as their PM solutions should be) it is helpful to anchor our thinking with a basic framework. This framework represents the universal outcomes of strong performance programs, outcomes that I’ve come to recognize as indicators of great organizational performance. Think of these three interrelated goals as the essence of all performance programs and the basis from which each organization’s unique differences evolve. More simply, consider them the fundamental building blocks for the design project ahead of you.
In my experience, every high performing organization is ultimately using its performance management program to:
- develop people’s skills and capabilities
- reward all employees equitably
- drive overall organizational performance
How these goals are prioritized or emphasized—what “good” looks like related to each goal—will differ from organization to organization. So, too, will the way in which each organization sets about making those goals a reality. But any high-performing organization will have some combination of these three ingredients in its performance management recipe.
Let’s get familiar with our ingredients.
Goal #1: Develop people
It seems obvious that the development of employees should be a key outcome of any performance solution. After all, isn’t that what performance reviews and career discussions are all about? Well, yes, they should be. But as we discussed earlier, this objective is often the one that loses out. And things get especially muddled when we get hung up on our rewards and ratings processes. As they say, the road to hell is paved with good intentions.
So let’s think about what a strong performance management solution truly focused on developing people might look like. First, it would provide in-the-moment coaching, helping individuals to understand what went well and what could be enhanced the next time around. We all know this intuitively, but many of us are so used to stockpiling this feedback for the annual review that we don’t do this for our employees. Further, they’d receive suggestions to support their growth in an environment that would allow them to absorb the suggestions without feeling threatened or having something at risk (like their pay raise).
Next, individuals would also have information at their disposal that would provide insight into what is expected in their current role and any future roles to which they hope to advance. Resources for development might include mentors or coaches who are their advocates within the organization. There also could be self-assessment and training tools that would link to their development plan, providing ideas and resources to support their unique goals.
Goal #2: Reward Equitably
First, let’s be clear on what the word really means. ‘Equitable’ is defined by the Oxford Dictionary as ‘fair and impartial.’ It’s important to note that ‘equally’ and ‘equitably’ are not the same thing. For example, let’s say you worked for three weeks writing a strategy for a new business unit, and your peer had proofread it and tuned it up for you over the past few days. I’d sure hope you'd want your peer to receive some recognition for her support, but I doubt you’d be happy if her reward and recognition was equal to yours. Instead, you’d want the recognition to be equitable, meaning each of you would get as much credit as you’d deserve.
When organizations speak of differentiated pay and rewards, then, they are looking for those rewards to be distributed in an equitable manner – fairly, unbiased, and consistent with the level of contribution or impact. It’s also important to note that rewarding equitably is not just about pay. We’re talking about total rewards: compensation, formal and informal recognition, benefits, promotions, project assignments, you name it.
From an employee’s perspective, equity is all about fairness. While extrinsic rewards are rarely a driver of human behavior, the belief that a system is unfair or biased is a significant driver in dissatisfaction. In other words, confidence that the system is equitable makes for happy and engaged employees. In order to achieve that sense of fairness, you need to get a clear view of what reward equitably means to your organization and how you can best achieve that goal in your unique environment.
Goal #3: Drive Organizational Performance
There’s been plenty of research that has demonstrated the correlation between an employee’s connectedness to the mission and vision of his or her company and the measurable performance of that organization. We now understand how important it is to assure that teams and individuals are fully aligned to the goals of the company.
I’m talking about individuals and teams feeling an emotional connection to the purpose of the organization. That means they understand the vision, they believe in it, they want to be a part of it, and they see how their work and roles contribute to the broader goal. Remember, however, that this connection also must translate into a framework that helps each employee make good decisions and focus on the right work, day in and day out.
Drive organizational performance might sound like it has more to do with the organization than the employee, but it doesn’t. Sure, organizations want their teams and employees aligned, doing the right work, and not wasting time on efforts that are off-strategy. But we have to recognize that, as humans, we also crave the feeling of being a part of something. Most people want to feel like the work they are doing is important and purposeful. This connectedness is a vital part of an employee’s career satisfaction and overall performance, and considering that career satisfaction is of value to both the organization and the individual, we have to find ways to make it sure it happens.
As I've said, each organization is unique, with different levels of maturity, mixtures of employee demographics, and diverse cultures and values. You will — and should — interpret and emphasize the Three Common Goals in the way that makes the most sense for you and your strategic goals. But make sure you think long and hard about each as you’re building your new solution. Ignore these important building blocks at your peril!
This was an abridged excerpt from my book, How Performance Management is Killing Performance – and What To Do About It. I’ve condensed the content quite a lot in order to keep this post shortish here – check out the book (you can order it from Barnes and Noble.com or Amazon) for the “full meal deal” – MTC
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