The Power of Performance Management

Many organisations are questioning whether their PM programmes are contributing fully to their business goals. Often PM programmes were designed some years ago and are underperforming and no longer seem appropriate to today’s environment.

There are a host of reasons and organisations are littered with failing schemes. Sometimes PM:-

• is old and tired and the reasons for doing it have been lost;
• was introduced as a fad without integrating with other HR processes;
• fizzled out in Year 2;
• did not cover the right groups;
• wasn't communicated and sold properly

So ask, the question - is PM contributing as it should and is it worth the effort?

The conventional wisdom has always been to start PM from top down - to embrace corporate objectives, gain top team commitment, and then move it down through the organisation. The reality is that senior managers are generally already highly motivated, but not necessarily good at performance managing their people. We believe that the payoff from PM is by inducing the whole organisation to raise the game.

WORKING MODEL

Our model is to see individuals in one of four quadrants. The low performance/low potential quadrant we name as “iceberg” - where performance and potential seem frozen. At the extreme will be the “deadwood” in the organisation. At the other extreme are the “superstars” in the “fast track” quadrant - for high potential/high performance individuals. These are people who are already displaying high levels of motivation, and where it can be argued that the PM processes are working well. Maybe the reality is that they don’t need PM as much as conventional wisdom suggests.

The “under-achievers” quadrant contains the real problem children, the enigmas, the infuriators, they could do it but they won’t. They should be a prime focus for PM processes because they are capable of moving into the fast track quadrant. In the “backbone” quadrant are the high performance/low potential people working well within their capabilities. These are the silent majority who are traditionally difficult to fit into PM processes because conversations around their annual performance are inevitable samey “well done John, another decent year”. You know and they know that everyone is reasonably happy, and they are indeed the backbone of the organisation. There is no need to burden them with unnecessary targets, pressures, etc. which may adversely affect their performance. So, the focus of good PM practice should be on un-freezing the icebergs and motivating the under-achievers by re-focusing and re-enthusing.

USING THE MODEL

Good PM processes will enable you to recognise where your people are and point the way as to what to do next. The diagram below offers a simplistic action plan.

Our message is that people cannot stay in the “iceberg” quadrant in an organisation that is looking for perform-ance gains. There is a question of “shape up or ship out”. Nor do you want people in the “under-achiever” quadrant; it is a management responsibility to move their performance to the right.

INFRASTRUCTURE FOR SUCCESSFUL PM

Strong PM gives essential support to business change processes, but requires an infrastructure for success through leadership and linkage through other processes. There is no doubt that PM must be driven from the top of the organization where the board is able to define and communicate clear corporate objectives. The senior team needs to understand the contribution of PM processes to improved business performance and to fully support an integrated talent management programme, which crosses conventional boundaries.

New processes need energetic re-launch and PM is no different. People must understand that it is for real and that the PM process is about changing individual and corporate behaviour. They must recognize an intrinsic fairness in the system if they are going to co-operate fully. Part of the deal is that the organization provides the means to allow individuals to move to the right through the provision of well thought through and comprehensive learning and development programmes.

INTEGRATION

All our experience suggests that PM schemes introduced in isolation from other people initiatives are doomed to failure. Most people link PM with pay and indeed this is the driving force in many organisations for introducing PM. But PM is about leveraging the performance of the organisation, and pay is only one tool in the tool kit. More enlightened organisations align PM closely with learning and development, and this must be central to modern thinking around talent management. There is no reason why pay management and talent management cannot go hand in hand enabled by a PM process. Traditional pay driven PM processes focus heavily on achievement of quantified performance targets. Talent management driven PM leans heavily on behaviours. The two approaches are compatible - the mixed model being chosen by progressive organizations, whereby hard achievement and soft skills are recognized.

SUMMARY

Our approach is to help organisations to design PM processes which totally support their change agenda and which integrate well with other initiatives and processes. We see PM as an essential business process. The prize of well designed, well-communicated PM processes can be:

• Aligned business objectives.
• Clarity for staff in knowing what they have to do to achieve success, how to get support, and how they will be recognized and rewarded.
• More open, honest culture where managers are more comfortable in dealing with performance issues.
• A quantum leap in business performance.