Make Performance Management Effective and Easy

Performance management (PM) is broken. A 2015 Deloitte survey revealed that a mere 8% of companies find their PM systems add value to the business. Despite attempts to overhaul these processes in recent years, frustration among managers and demotivation among employees remains widespread (Agovino, 2023).

The Problem: Control vs. Motivation

Traditional PM systems often fail because they focus on controlling employee work and measuring outcomes for compensation purposes. This approach reduces PM to a sum less than its parts, overlooking the potential for growth and engagement.

Solution 1
Leverage and Add to What Works

Instead of abandoning the entire system, we can leverage the effective aspects of PM while minimising the counterproductive ones. Here's how:

• Goal Setting

  Setting clear, specific goals remains crucial for driving performance. Consider adding:

  • Purpose
    Aligning individual goals to the company's or team's purpose enhances motivation by connecting work to a larger meaning.

  • Team Goals
    In today's collaborative work environments, team goals foster collaboration and boost overall performance.

  • Development Goals
    Creating individual development plans aligned with goals ensures continuous learning and growth.
    
    

• Monitoring Progress

  Regular monitoring helps individuals stay focused and provides timely support. However, we need to shift the focus from evaluation to:

  • Support
    Offer regular coaching and guidance to help employees overcome challenges and achieve their goals.

  • Autonomy
    Empower employees to monitor and self-manage their work, allowing them to identify areas for improvement and action.
    
    

• Feedback

  Timely and constructive feedback is essential for improvement. But traditional PM often ties feedback to evaluations and rewards, undermining its effectiveness. Instead, focus on: 

  • Progress
    Provide feedback specific to progress towards goals or standards, highlighting areas needing improvement and suggesting actionable steps.

Solution 2
Minimise the Evaluation

The traditional year-end review, with its emphasis on evaluation and compensation, often demotivates employees. Minimise this aspect by:

• Decoupling the Evaluation
  Separate the evaluation process from goal setting, development, and feedback discussions. Conduct a brief evaluation meeting and discuss other topics in dedicated sessions.

• Focusing on the Evaluation BAR
  When conducting the evaluation, be concise and factual, focusing on the:

  • Background
    The goal, target, or performance standards for the year

  • Actions
    The actions the individual took to achieve the target or overcome challenges

  • Results
    A summary of results achieved or missed and possible actions to reach even higher future performance

• Providing Context
  While rewarding individuals, express gratitude for their contributions. Explain the context, such as company/team performance, market changes, and their position within the pay range, to provide a broader perspective on compensation.

By focusing on these key points, we can transform PM from a source of frustration to a catalyst for growth and engagement.

Further Resources:

• Alan Colquitt, Ph.D. and Edie Goldberg, Ph.D. offer valuable insights on the current state of PM systems and effective strategies for improvement.

References:

• Agovino, T. (2023). HR Magazine.

• Deloitte (2015). Human Capital Trends Survey.

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About the Author

James Eyring, PhD
Dr. James Eyring is Chief Executive Officer of Organisation Solutions, a global leadership and team assessment, coaching, and development firm. James has led Organisation Solutions' global coaching and assessment practice since 2007, and became CEO in 2021. Based in Asia for 25 years, he brings a deep, first-hand understanding of leadership across global and emerging markets to his work with executives and their teams.

With a PhD in Industrial/Organizational Psychology and over 30 years of experience assessing, coaching, and developing executives and their teams, James is an active researcher and thought leader on leadership, growth capabilities, and potential. He has taught undergraduate and graduate-level courses and published widely in academic and practitioner outlets — most recently authoring book chapters on Strategic Workforce Planning and Innovations in Assessment in SIOP's Professional Practice Series.

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