Performance Management is Stupid!
Let’s Be Clear
We humans like to grow. We need to grow. And certain individual, team, and organizational growth creates value: good stuff like brand equity, financial health, shareholders returns, etc. Most organizations, however, are not facilitating such growth, at least very well. They’re applying an archaic process, and accompanying mindset, to measure and assess employee activity and contribution. This process is widely known as performance management. Without exception, this process does not celebrate one’s uniqueness, and it rarely appreciates the influences of time, organizational dynamics, external conditions, or a host of other variables that affect desired outcomes. This must change. We must humanize the corporate experience and employ a process that’s fair, engaging, and inspiring. We must align roles, supervisor expectations, and organizational need to each individual’s unique talents and interests. To make this happen we have to adopt a new, more evolved mindset and, in turn, create a new process. Performance management, as it’s evolved over time, is not that process. It cannot be modified to facilitate value-generating growth. It must be blown up! It must be expelled to make room for a better way.
Now, before going further, know I’m a positive guy. My friends and family say so, which is most important. I also work with the Positive Coaching Alliance, as well as another non-profit called the Character Combine. For more than two decades I’ve consciously worked to ensure my behavior – my energy, thoughts, actions, and language – contributes to people’s confidence, positive feelings, and positive sense of self. I see people. I honor them. This is who I am. I share this to highlight that I use negative language very sparingly. When I do, I do so intentionally, and only when there’s real hope of making a positive difference. This is one such case, for I am shamelessly out to change the absurdity known as employee performance management.
Now that you know me a bit, please consider this statement: “Employee performance management is just plain stupid.” Let me state this again for effect, and so I’m not misunderstood in any way: Employee performance management is stupid, ignorant, downright asinine. It doesn’t make a bit of sense! Damn, that felt good! How’d it feel for you? Say it yourself. Try it. Let me know how you feel when you do. When doing so reflect on the times your “performance” was reviewed, and, if appropriate, when you reviewed the “performance” of others. Was it honest? Was it fair? What did the outcome of that meeting or process inspire you to do? High-five somebody? Donate to charity? Or gag, up-chuck, or even throw something, or somebody? Likely the latter, as most people view performance reviews as… well… stupid.
Is this my opinion? Yes. Is it supported by fact? Yes. In 2004 (yes, nearly 10 years ago!) the Corporate Leadership Council published a study that all but confirmed that performance reviews actually disengage both the one being reviewed and the reviewer. In other words, for the direct report and the supervisor, it shrank commitment to the organization and personal job satisfaction. Now, almost 10 years later, most organizations are still doing it, and they’re doing so blindly. They’re doing so because they feel they “should”. After all, the common thinking goes, how else can an organization ensure its people have goals, as well as accountability around the achievement of those goals? How else do high “performers” (gag!) get identified? And what other way can an employee distribution be created to “fairly” distribute merit increases? There are, of course, better ways. To date, however, many leaders have lacked the creativity, focus, and fortitude to bring them to life. What are some of these better ways? I’ll conclude with a framework for a new approach. Until then, I’ll keep applying the tenderizing mallet to performance management before we cook it for good.
To stage the hammering, I request you forget everything – and I mean everything – you’ve learned or experienced in your educational and business life about employee measurement and rewards. This may be a huge ask, I know. I’m asking you to have what Carol Dweck, the world-renowned Stanford University psychology professor calls, a growth mindset. Similarly, please adopt Einstein’s assertion: “We can't solve problems by using the same kind of thinking we used when we created them.” To add a third pillar to our exploration, consider the Chinese proverb:“The beginning of wisdom is to call things by their right names.”
Where did “Performance” Come From?
For context, a quick story: I started my career in finance and operations, first with Charles Schwab, then with Ernst & Young. At the time, the early 90’s, reengineering, benchmarking, and corporate performance management were dominating the consulting landscape. These services were supported by the evolution of Enterprise Resource Planning (ERP) software, namely SAP and Oracle, and Business Intelligence (BI) software, namely Cognos, Brio, Hyperion, and a host of others. In short, the collective energy was around more effectively measuring and managing the operational and financial dynamics of a business. A worthwhile pursuit? Certainly. Endless? Definitely. Over the 20+ years since, operational and financial improvements have contributed significantly to business continuity, operational efficiency, and shareholder value. How is this relevant to our story? These efforts were, and still are, about measuring and managing the performance of a business and related processes. This made sense, and still does. Does it make sense, however, when applied to people? Let’s decide.
Long before the early 90’s and, in fact, going back to post-WWII corporate America, the need to compensate, promote, and otherwise reward employees became an ever-clearer need. Conversely, the need to identify those who did not meet expectations also became a need. Coupled together, these two themes became the ongoing justification for performance appraisals and, later, performance management. Yes, with the influence of Peter Drucker and others, Management by Objective (MBO) emerged in the 1950’s and evolved over the years that followed. Yet, despite repeated attempts to integrate MBO principles into employee performance reviews, this concept still hasn’t taken hold in most organizations, at least as a positive cultural norm. Why is this? The idea is sound: employees all aligned around strategic objectives. Quite simply, it’s because we’re not calling this process by its right name and, as a result, we’re not approaching supervisor-direct report discussions and related measures with the right mindset.
Calling Things By Their Right Names
In the United States we all-too-often use language lazily. I don’t believe I’ll get too many arguments on this. As a result, in matters of importance, we sometimes don’t have the words. We either don’t have the ability or don’t take the time to appreciate key distinctions. Out of habit, we thus use words we’ve heard or learned over time, whether or not they’re accurate or appropriate. We then wonder why we’re not understood or why we’re not understanding others.
To truly understand performance management, we need a coherent narrative around how we got here. Reflect on your own experience: You likely joined an organization and went through your first performance review. You didn’t question it because you were young in your career and new in the company. You took it as something to learn. It’s part of the game. Years pass and you’re still going through it, and now you're reviewing others’ performance. Again, you don’t question the process or related measures because it’s the cultural norm. It’s a reality of doing business. Plus, what’s the alternative? You don’t want to take on the challenge of changing it without first knowing what you’re going to change it to or, at least, how you’re going to to go about creating something new. As a result, you accept it. It’s a pain, yes, yet a reality that has to be dealt with. You and your colleagues occasionally grumble about it, and similar grumblings have likely occurred at several organizations over the course of your career. Even so, the basic process remains the same. You have to be reviewed, you have to review others and, more recently, you have to review yourself. All of this has to be done so employees can be compensated “fairly” and to ensure low performers are identified, put on a performance plan, and/or managed out.
In the end, performance reviews and performance management is what you know. It’s OK. The truth is, however, the terms are grossly inappropriate, as is the associated process.
Do you know the formal definition of performance? Have you thought about it? One formal definition means to “act”, as in to put on a performance. Put more clearly, it’s to play a character, a role, someone other than who you truly are – to be something other than your authentic self. Is this what we want employees to do? The other common definition relates more closely to how it’s used in organizations, as in the questions:
“How did he perform over the past year?”
- “What was his performance like last quarter?”
What’s really being asked here? We’re asking what someone did, if what they did met expectations and, unspokenly, if what they did actually mattered. Is this what we should be asking? If it is, are there better, more appropriate ways of wording the questions?
Before answering, we have to answer these upstream questions: What’s the intent of the over-arching process? And even before that, what do we, as leaders, ultimately, want? Is it to nurture a positive culture, elevate employee engagement, and fairly reward desired behavior, contribution, and growth? If so, should we also acknowledge, honor, and facilitate the advancement of one’s individual humanity? Should we make the discussion authentic and helpful as opposed to forced and disengaging? For our purposes here, let’s say yes across the board. Let’s agree that these are the outcomes we want to achieve. Great. We now have the context in which to create better, more appropriately worded questions. It’s a clear vision. We now need a supporting framework, an architecture that captures the key dimensions of employee activity; something that’s understandable, fair, and engaging. From this starting point, would we end up with something called “performance management”. I hope not!
Such a framework simply cannot be rooted in the notion of performance. Despite my years of reading and creating research, despite my years working with organizations around the world, I have never come across a study that shows, statistically, how employee performance – as measured through performance reviews – drives positive culture, positive customer experience, brand equity, and/or positive financial outcomes. If you’re aware of such a study, please send it to me. I’ll either discredit it in minutes or promote it from the highest mountaintop. Now, to be clear, I’m very familiar with a host of research that has linked employee behavior with such outcomes. Particularly with better organizational research methods and the emergence of positive psychology and time-use research over the past 15 years, this body of knowledge is growing at an ever-increasing rate. The problem is, we’re not measuring behavior. Some might argue, “Yes, we are. We thoroughly look at behavior. It’s part of our performance appraisal form.” Behavior, though, is not performance. In the best case it’s a dimension in an overall evaluation. In the worst case it’s totally absent. Even when it’s present the fact remains, the actual behaviors (sometimes packaged in competency models) are often ill-conceived, and the means in which they’re measured are often worse (e.g., roundtables). The accompanying dimensions within the appraisal form (financial, process, etc.) are also poor. What results is a bunch of noise.
Given performance is the wrong word, what is the right word? The answer is tied to what you, as a leader, want of employees and of the organization’s culture. Again, do you know? Do your colleagues know? No matter the specifics of the responses, when truly thought through the essence of what’s desired will revolve around this simple theme: development. Employees – all people for that matter – inherently want to develop, grow, learn. We’re like sharks in that way. We have to keep swimming. We have to keep learning. You, as a leader, want this to happen. Employees need to learn, to continuously get better and expand their experience. Only then will they be able to stretch, innovate, create, and contribute. Why then, are we not reframing, if not wholly uprooting, what’s currently known as the performance management process? Idea: Let’s replace it with the more aptly named, Talent Development Process.
In this naming convention notice the absence of the word “management”. As with performance, it, too, is the wrong word. Webster’s Dictionary defines “Management” as “the process of dealing with or controlling things or people.” “Dealing with” or “controlling” people… really? Do you want or need to be “dealt with” or “controlled”? Are you trying to “deal with” or “control” someone else? If so, how’s that going for you? Great? If so, bring that story to this debate or, better yet, write a Harvard Business Review article as I’m sure it’d end up being a top article download in perpetuity. People “management”… weird. Business and processes are managed. People are led. We’re emotional beings who are inspired to make choices and take action. We are not cogs in a wheel, yet performance management treats us like we’re indistinguishable, interchangeable parts, devoid of uniqueness. The truth is, we’re all unique, thus we need an evaluation system that celebrates our uniqueness, yet also aligns us with organizational objectives and rewards us within financial constraints.
With the essence of the argument now before you, if an organization’s executive team still wants to “manage” the “performance” of their employees and, similarly, if they want to remain on the futile pursuit of identifying “high performers” or Hi-Po’s (HR jargon; again, gag!), then those leaders are being, well, __________ (enter your own adjective). OK, I don’t want to put executives on the defensive… No, actually, I do. As an executive you're entrusted with leading a group of people, a workforce. How then, are you measuring and managing that workforce, what is in all likelihood your organization’s most important asset? Publically, as well as behind closed doors, answers to this question have been poor. Reflect on your own situation: How are you, and fellow executives and managers, systematically measuring and managing the workforce, or what some call “human capital”? If measures are coming from the performance management system, then that’s bad. Why? Answer for yourself. Is data within your performance management system good? Do you believe it’s accurately reflective of individual, team, and organizational achievement, capability, and capacity? How’s the quality of performance data you create?
Now, to empathize, you and other leaders want to ensure things get done, and this is the overriding intent of performance management. Even so, many still say, “It’s all about the outcome.” “What’s the result?” “What have you done for me lately?” These phrases are certainly appropriate for a John Wayne or Clint Eastwood movie – oh, my apologies to the more youthful among you – great for a Dwayne Johnson or Vin Diesel movie. In the real life an employee, however, this notion is silly. Can people control most business or process outcomes? If you live vicariously through action heroes, your response will likely be a quick “yes.” If you’re aware and reasonable, your response will be an unapologetic “no.” Can people influence business and process outcomes? Yes, absolutely. How do they do this? By doing the things that they can control, namely focusing their energy, applying their effort, and contributing their unique talents. The problem is “performance management” rarely measures focus and effort (behavior) and contribution. It may try, but it doesn’t do it well. The dimensions, metrics, and targets are often misguided and often unfair. The associated rating scales – expectation scales of 1 to 3 or 1 to 5, for example – are even worse, as are the methods of applying them. Often there’s a push for a forced distribution (yet another gag), and I’ve even heard of an unforced distribution being required (what’s that?). All garbage! Therefore, analytically, garbage in, garbage out. The resulting data is of negative value. It’s either distracting or worse: It provides false information. Why is this being done again?
The process is being done because measuring employee activity can, and should be, critically important. The trouble is, we're not measuring the right things, and even when we are, the data is most often poor. Why? Few have had the forethought and patience to think through and decide upon measures and metrics with analytics in mind. When this is done, when we know the story we want to tell beforehand, we can then generate actionable insight, like understanding how employees create value and how certain workgroups contribute to organizational success. This is very doable. What’s needed are relevant and accurate data. After all, employees work within what economists call an “open system.” An open system is the opposite of a closed system (e.g., a laboratory) where all the cause and effect relationships are accounted for and no new variables can enter. Organizational realities are not like this. Far from it. In organizations there are literally thousands of identifiable variables that, at any point in time, contribute to desired outcomes, and more enter and exit the organizational ecosystem as time rolls on. It’s complex, very complex, and organizations knowingly or unwittingly have been using employee performance data to understand the ecosystem or identify those who’ve contributed most (and least) to its overall health. The problem is performance management processes and associated data are grossly ill-suited to this task. Performance management data does little or nothing to help explain who created value, how value was created, or who will create value moving forward.
The Right Mindset
Now, ask yourself: Do you need your performance managed? If so, you’re either unfit for your job or actively disengaged from it. Whatever the case, if you need your performance managed the situation isn’t good for anyone: you, your supervisor, the team, or the organization.
On the other hand, do you want clear and fair goals, ample resources, and a forum to understand your progress, explore ideas, identify problems, troubleshoot, and otherwise communicate? I sense “yes” across the board. So again, do you need your performance managed? No. Or at least I hope not. Do you want to grow and develop? Yes. I hope so! Why then, are we not calling this process by its right name? Are we, both individually and collectively, so stuck that we can’t walk out of the polluted drudge of employee performance management and into the healthy, revitalizing, more appropriate notion of talent development? What if we did this? What if your organization did this? What would be the cost? What would be the benefit? For starters, consider the following:
- Could you still reward people fairly (assuming your organization does so now)? I contend merit increases would be done much more fairly.
- Could you still identify those who weren’t meeting expectations?
- Could such a change happen? What are the barriers? What are the leverage points?
- Most importantly, how would supervisors and employees feel about changing to a new, more fluid process? Would it elevate engagement, confidence, innovation, culture, and productivity, or diminish them as the current process does
So what does a Talent Development Process look like? A full answer is an accompanying article. For now, know it’s based on growth in the following dimensions:
These dimensions are the cornerstones of The TAD FrameworkTM. TAD stands for Talent Assessment & Development. The TAD Framework is a meta-framework in that it’s used for job design, organizational design, workforce planning, workforce analytics, talent acquisition, talent development/learning, the process formerly known as performance management, total rewards, etc. For now, I ask you to sit with it. Imagine being asked how you progressed in these dimensions over the previous month, quarter, or half-year. Imagine frequent development discussions with your supervisor or direct reports with these dimensions as the guide. What would those interactions feel like? What would be the benefit? I’m not asking relative to the current performance management process. That bar is way too low. To the contrary, ask yourself: What’s the best way to systemically maximize the talent contribution and engagement of all employees? What if there was a way to accurately measure the capability and capacity of individuals, teams, groups, and the workforce on the whole? What would that look like? These are the questions that guided the formation of the TAD FrameworkTM.
In the end, it’s not about individual performance. Performance is the wrong word, and it perpetuates an unhealthy, counter-productive mindset. Performance in a business or process context is appropriate. When evaluating people, however, it’s simply wrong. The right word is development. Development honors our humanity, namely our need to grow, connect, and contribute. It's something we want to talk about, not something we want to run away from. Any evaluation system, any new process, therefore, must have development as its guiding theme. Younger professionals and those that’ll follow in the years ahead will demand this; as will innovative organizations that outperform their competition. As we move forward, let us do so consciously, creatively, and courageously, for ourselves and for those we serve.