The Case for Performance Management

By Florence Stone

When we talk about performance management, invariably, the subject of performance appraisals arises. But appraisals—the annual assessments of employee job performance—are only one segment of performance management, which is a process for establishing a shared understanding about what is to be accomplished and rewarding people in a manner that increases the probability of their achieving success.

That process also includes coaching, in which training and ongoing feedback are provided to sustain good performance, and counseling, in which troubled or troublesome employees are advised, with the goal of turning around sub-par performance.

Performance management is critical for it monitors efforts to reach business goals, including job behaviors, providing ongoing feedback to employees.

Opponents of performance appraisals—busy managers—point to the difficulty of setting measurable goals and the problems with appraisals in measuring the wrong aspects of performance and creating conflicts among employees, but studies of companies with appraisal programs show that they outperform companies without such programs on a wide range of financial and productivity measures.

The Need for Assessments

Why this emphasis on performance management systems? Solid management of employee performance is critical in today's competitive, global marketplace. Organizations don't act—people do. Your responsibility as a manager is to ensure that employees complete effectively and efficiently those tasks critical to the organization's goals. When you fail to do this, you don't fulfill your own responsibilities as a manager and as their supervisor. The human resources division creates a performance management system that is designed to achieve strategic and business goals. It works to avoid the frequency of criticism given: lenient ratings, sugar-coated feedback, ambivalent standards that don't reflect the need for greater productivity and profitability and pay-for-performance plans that don't provide for incentives for increased performance.

As managers undertake performance management, many ask the question: “Why?” After all, the process is time-consuming. Not only the one-on-one meetings with employees during which goals are set but also the follow-up progress sessions and end-of-year appraisal interview during which the employee's work over the 12-month period is assessed based on documentation, like information contained in “critical incident reports” or appraisal journals.

The Benefits of Performance Management

• Improved performance. When performance is managed, it tends to be better. Why? Employees work harder when they know their manager is interested in them and what they are doing.
  
  
• Improved communication. A proactive partnership with employees requires ongoing communication, critical to effective performance.
  
  
• Organization alignment. When individual goals relate to organizational objectives, there is alignment up and down the line, thereby increasing the odds of achievement of organization objectives. People and/or departments aren't working at cross-purposes. Employees are focused on the same major priorities and all have a clear understanding of how they can support the organization's overall success.
  
  
• Organizational capability. More can be accomplished by the organization as a whole when everyone within is pulling in the same direction via the performance management system.
  
  
• Increased employee self-management. Employees know their manager's expectations and are in a position to take responsibility for their work hours. For one, they can set priorities for themselves rather than depend on their manager to do so. They know which tasks are most critical.
  
  
• Increased employee satisfaction. Employees like to have clear expectations and get feedback about how well they are doing. That's what the performance management system does. Also, the more responsible employees are in planning and carrying out their goals, the more satisfaction they will have in their jobs.

Execution—Seven Common Errors

There are numerous corporate programs, but success still depends on execution, whatever the system in effect.

Managers commonly make seven errors in putting an appraisal program to work:

1. They set poor standards of performance.
2. They fall prey to rating biases.
3. They don't allow sufficient time for the appraisal process.
4. They spend more time talking than listening to the employees they are appraising.
5. They don't document employee performance. Or they do keep records, but they aren't valid for fair and accurate appraisals.
6. They rate everyone's work as satisfactory.
7. They don't include an employee development or follow-up plan.

Most of us are familiar with these mistakes by managers—we may even be guilty or one or another. But let's look here at just one, since it is often the one with a big cost on performance—a repetition of employee shortcomings year after year. I'm referring to the last item on the list, and the failure of managers to follow up appraisals with employee development efforts to eliminate the weaknesses that the evaluations identified.

The development effort could be remedial, or it could be designed to move a superstar off a plateau and enable him or her to advance within the organization. Discussing the development effort with an employee also lays the foundation for discussing the next year's standards.

Training is critical in this, but so is coaching and counseling. Few managers are skilled at doing them well. Most managers, for instance, are uncertain of the various roles involved in each process, the best way of proceeding and how to avoid problems that may arise.

Coaching and Counseling

Coaching and counseling may seem very simple. Not so. Problems can arise with either. And because failing to coach or counsel adequately can add to managers' challenges and ultimately make the appraisal process more difficult, it's important that organizations support their executives and managers with training in coaching and counseling.

For instance, coaching should be ongoing. In the context of performance management, it means bringing the right people onto the team and developing them continually so that they do their jobs better all the time. Think in terms of baseball, football or volleyball coaches. They first recruit the right people, then assess training and development needs and finally work to improve the skills of all. A manager is a coach in just the same way.

Counseling is different from coaching in that its goal is to deal with budding problems as soon as possible to salvage an employee's career with the organization if it is possible. It's a four-step process in which a manager:

1. Alerts the employee about problems in his or her work.
2. Makes the individual understand that poor performance cannot be tolerated.
3. Develops an action plan to turn poor performance around.
4. Documents discussion to ensure—and to prove—that the manager made a reasonable effort to help the employee perform well.

How Do You Rate?

How would you measure your manager's skills in performance management? How about your own? For instance:

1. Do you make allowances for poor performer's work? Consequently, is performance within the department slipping?
2. Are you using your busy schedule as an excuse to avoid confronting the performance problem?
3. When you meet with an employee to discuss her poor performance, are you clear about the purpose of the meeting?
4. Do you describe clearly the performance that troubles you, pointing to documentation you've maintained?
5. Do you plan the one-on-one meeting in advance, even preparing a list of questions you might be asked—and your answers—to ensure you maintain the focus of the meeting?
6. Do you give an employee in counseling the opportunity to tell his story without interruption?
7. Do you allow the employee to identify several alternative solutions to the problem and to share his feelings about each of the alternatives before settling on a single solution to the problem?
8. Do you demonstrate to the employee that you are truly listening to her explanation by paraphrasing what she has said?
9. Do you use open-ended questions to stimulate the discussion?
10. Do you keep from making judgments about the employee, like calling him “lazy,” “difficult to work with,” or a “loser”?
11. Do you refer employees with personal problems to the employee assistance program or HR department or some community program to help address the non-work-related part of the problem? At the same time, do you make clear to the employee that having a personal problem is no excuse for failure to do her job well?
12. Are you clear about the specific work that must be improved?
13. Do you offer to help ensure the change?
14. Are you ready to meet with the employee as agreed in the improvement plan?

A “no” to one or more of the questions here could create problems in counseling. And it may be time to examine your organization's performance management system and your contribution to it.

You can learn more about coaching and counseling at these AMA seminars:

• Coaching and Counseling for Outstanding Job Performance
• Coaching: A Strategic Tool for Effective Leadership
• Coaching Your Sales Team

AMA On-site: Every one of AMA's 170+ public seminars can be delivered on-site. This flexible, money-saving option allows you to train ten or more people, when and where you choose, at a low cost per participant.

Author Bio: Florence Stone is editorial director of American Management Association and editor of MWorld, its quarterly journal. She is the author of several management and leadership books, including The Essential New Manager's Kit and The Mentoring Advantage, published by Dearborn Trade, and The Managers Question and Answer Book, published by AMACOM, the publishing division of American Management Association.