The Essence of Performance Management

13th November 2014

There can be no doubt that the management of performance is the most important thing an organization has to do and an effective performance management system is the best way to do it. But it is not easy. Performance management can promise much more than it achieves. Pulakos (2009) quoted a Watson Wyatt survey which established that only 30% of workers felt their company’s performance management system helped them improve their performance. He asked the question ‘What makes performance management so hard?’ His answer was as follows:

Managers avoid performance management activities, especially providing developmental feedback to employees because they don’t want to risk damaging relationships with the very individuals they count on to get work done. Employees avoid performance management activities, especially discussing their development needs with managers because they don’t want to jeopardize their pay or advancement. The issues affecting the performance of performance management are discussed in detail Chapter 4 of the book.

Overall Principles of Performance Management

The overarching principles governing effective performance management were defined by Egan (1995): Most employees want direction, freedom to get their work done, and encouragement not control. The performance management system should be a control system only by exception. The solution is to make it a collaborative development system, in two ways. First, the entire performance management process – coaching, counselling, feedback, tracking, recognition, and so forth – should encourage development. Ideally, team members grow and develop through these interactions. Second, when managers and team members ask what they need to be able to do to do bigger and better things, they move to strategic development.

Strebler et al (2001) suggested that the following principles were required for performance management to work effectively:

Have clear aims and measurable success criteria.
Be designed and implemented with appropriate employee involvement.
Be simple to understand and operate.
Make its use fundamental to achieving all management goals.
Allow employees a clear ‘line of sight’ between their performance goals and those of the organization.
Focus on role clarity and performance improvement.
Be closely allied to a clear and adequately resourced training and development infrastructure.
Make crystal clear the purpose of any direct link to reward and build in proper equity and transparency safeguards.
Be regularly and openly reviewed against its success criteria.

The Essence of Performance Management

The views of practitioners on the principles of performance management as identified in the research conducted by Armstrong and Baron (1998, 2004) were as follows:

‘Performance management is what managers do: a natural process of management.’
‘A management tool which helps managers to manage.’
‘It’s about how we manage people – it’s not a system.’
‘Driven by corporate purpose and values.’
‘To obtain solutions that work.’
‘Only interested in things you can do something about and get a visible improvement.’
‘Focus on changing behaviour rather than paperwork.’
‘Based on accepted principles but operates flexibly.’
‘Focus on development not pay.’
‘Success depends on what the organization is and needs to be in its performance culture’.

Two further important principles were suggested by Sparrow and Hiltrop (1994): first, that top management must support and be committed to the system, and second, that line managers should own and drive it. The latter will only take performance management seriously if it is clear to them that top managers believe in it and act accordingly. And performance management will only work if line managers want it to work and are capable of doing so. Both these principles emphasize that the bad old days of performance appraisal as the property of the personnel or HR department are over. The role of line managers is explored in Chapter 24 of the book.