Performance management—beyond appraisals

by Karla Wright, Wright Consulting

The words "performance management" hold many meanings. The concept has great potential for improving employee and organizational performance. In the past we have relied on performance appraisals to "manage" performance. The practice is so widespread and accepted that some managers actually think performance appraisals are required by law. After so many years of practice you would think performance appraisals have been perfected. Not so. We have learned that performance appraisals fail for many reasons, including these:

  • rating scales are applied inconsistently
  • evaluators are not trained
  • supervisors don't value the procedure or use it only to reprimand
  • standards and criteria are not objective or not related to the work performed

Build a support system

Effective performance management requires work processes and human resource management systems that are aligned to the organization's philosophy regarding performance management.

Effective performance management is an ongoing process, not an annual appraisal meeting and a form to fill out. Performance appraisals that have become mere exercises in administrative paperwork are doomed for failure. The form should be a useful tool for managing performance and designed with the organization's values, needs and goals in mind.

Send a message

Most companies have mission and vision statements. These values and core beliefs should be embedded in the performance management system. If performance matters, send the message on day one of employment. Communicate it through handbooks, message boards, orientation programs, training, and daily reinforcement by company leaders. Ultimately, send the message that performance matters through the pay delivery system.

Focus on improvement

Reduce time spent on the past. Focus on the future. Future goal setting can lead to both employee and organizational improvements. Resist the temptation to prepare a long laundry list of all possible improvements. Targets should be carefully selected, defined, recorded, tracked, and reported. Targets should be achievable yet challenging. Not all goals and targets are quantifiable. If you can't put a numeric goal to a desired outcome, carefully define what the outcome will look like and the employee's role in securing the outcome. Remember, "it is more important to measure what counts than what is countable."

The employee should be in a position to actually influence the outcome. Don't set goals that are beyond the scope of the employee's control. Do set goals that are aligned with organizational interests. Set individual goals that mesh with group goals and the company's core beliefs and values. Don't instill fear by insisting that the goal be met OR ELSE.

Set "no fear" performance standards

Setting performance standards may be the most difficult part of the performance management cycle. How much production can you expect? When is it reasonable to expect perfection? How do you judge the effectiveness of interpersonal communications? Who sets the standards? These are just four of many critical questions to be answered. Somewhere between documenting responsibilities and determining rewards the performance standards must be set.

Employees must know what is expected so they can work i toward the goals. Management must know what they want so they can plan, establish, analyze, and improve work activities to meet company goals.

Setting performance standards is time consuming and requires considerable study, analysis, and reflection. It is worth the investment. Systems should be flexible to modify performance standards as company needs change and the job changes to meet company needs.

Raise the bar

Communicate to employees early that goals and standards change to meet ever changing business needs. Realize that working toward a goal can be as rewarding as actually achieving the goal. Employees receive job satisfaction from perseverance, work planning and execution, sharing challenges with coworkers, reaching and being recognized for intermediate successes, and just the overall feeling of a "job well done."

The performance management cycle.

Track performance

Effective performance management must be supported with ongoing performance documentation. Waiting 365 days to document performance is risky and impossible. Performance management is an ongoing process. Various methods can be used to document employee performance throughout the year. When supervisors witness good (or poor) performance they should document the incident(s).  Special "critical incident logs" or simple notes on a sheet of paper will provide memory joggers. Also, if challenged by an employee regarding an incident, the supervisor has a written resource to rely upon rather than just memory or hearsay.

If employees are experiencing severe performance problems, documentation becomes even more important. It is important that employees are not singled out and that the supervisor be consistent. Although often overlooked, good performance is as important as poor performance to documeet. The reason for ongoing communication about performance is to reinforce the good performance which will lead to continued good performance and to deal with the poor performance in an appropriate way that will extinguish it.

Deal with it

Although no employee wants to hear bad news, it is important to be forthright and honest with employees. It is much better to deal with a problem when it happens than to let it become a more serious concern.

Provide ovations

The most powerful motivator supervisors have available is recognition. The least expensive means is the one-on-one "thank you" or "I really appreciated that" or "let me know when I can return the favor." More formal ovations will be motivating to some but not to all. At the minimum, formal reward and recognition systems send the message that employee contributions count.

Employee performance improves through constructive feedback. A recent study of employee satisfaction with performance appraisals showed that many employees did not want to be appraised more frequently on a formal basis but they wanted more frequent and continuous informal, day-today or casual feedback.

Reward performance

Much has been written about the relationship between performance and pay. Most believe good pay and strategic pay increases help retain good employees. It is also widely believed that rewarding an employee for good performance will result in continued good performance. It makes sense to pay good performers more than mediocre performers. Still, definitive answers are not available. However, we do know that to be motivational, strategic pay awards must be directly linked to performance and be significant to the recipient.

Companies often view salary budgets as fixed costs. This mindset reinforces the practice of across-the-board increases. Although easy to administer, they may not support company values. The idea of performance pay will make some employees uneasy, but in many cases, capable employees, desiring recognition for their efforts, will relish the strategy of rewarding good performance and will be motivated by the idea.

Scrap performance appraisals

Performance management is much more than sharpening pencils, stocking up on performance appraisal forms, spending a weekend writing from memory how employees did, and telling them their pay raise. Scrap the ailing irrelevant forms, irrational ratings, and irritating annual appraisals, and develop effective performance management practices.

Effective performance management is an employee-valued system of encouraging and rewarding employee contributions for the specific purpose of improving employee performance which directly affects organizational success.

Karla Wright is a human resource management consultant who started Wright Consulting in 1989 to help individuals and organizations improve performance. Wright Consulting is located at 5940 Pommel Circle, West Des Moines, Iowa, 50266.  The phone number is 515-222-1441.

CIRAS News, Vol. 31, No. 4, Summer 1997