There are countless variations on the details of what we can call traditional performance management. We are going to construct a composite that reflects the literature on the subject so that we can look beyond the superficial logic of the traditional approach.
What we are going to find is that while performance management can be described as absolutely logical, the assumptions underlying it that relate to organization effectiveness are somewhat flawed. We will also see that traditional performance management contains many excellent notions, but that the positive things about it are lost in a morass of conflicting purposes that usually guarantee that it will not work.
Overview of Traditional Performance Management Systems
Performance management approaches are generally described within the context of a Managing By Objectives framework (MBO). While some writers discuss performance appraisal independent of such a framework, there is an awareness that appraisal must be anchored to functions like strategic planning, goal-setting etc.
Generally, an MBO system includes the following components.
1. Development of role & mission statement.
2. Establishing strategic goals/strategic plan.
3. Defining key results areas.
4. Establishing indicators or effectiveness, goals, or organizational objectives.
5. Establishing, or negotiating individual employee objectives.
6. Establishing performance standards for each objective.
7. Action planning for each employee.
8. Periodic measurement and assessment of status of each objective/standard.
9. Coaching/training to remediate deficits.
1O. Some form of evaluation or assessment done formally and included in an employee's record.
Different writers use different terminologies, or add, subtract or modify the sequence of steps. Some systems, for example, include the writing and maintenance of job descriptions, some do not do so explicitly.
Within an MBO system the performance management process pertains to the management of individuals, beginning with the assignment of individual objectives through to the final, formal assessment process.
What Is Performance Management Supposed To Accomplish?
The literature regarding MBO and performance management suggests a plethora of benefits and purposes that are designed to make organizations more effective. We can summarize them as follows:
1. Increases management control over work and results.
2. Increases management ability to identify or "red-flag" problems early.
3. Links employee objectives and functions to overall organization objectives, thereby creating a sense of contribution for the employee.
4. Motivates employees by allowing them input into and ownership of their objectives and standards of performance.
5. Enhances communication by ensuring there is clear understanding of management expectations about results.
6. Supports remedial action or disciplinary action because a breach of standards can be defined objectively and in a measurable way.
7. Provides a system where feedback can be given to employees on a more objective basis, and not on management's subjective criterion.
8. Provides objective criterion that management can use to make decisions regarding pay scale, and promotion.
9. Provides a centralized record of performance for each employee, usually kept in the personnel office.
Doubtless you can add more to the list, but these are the common ones in the literature.
In the next chapter we will examine issues related to how performance management systems are implemented, and some of the problems associated with the logistical, and practical sides. For now we will confine ourselves to examining the claims for performance management, the assumptions underlying the approach, and assessing whether this system is as logical and sensible as it seems.
There is no question that there is a compelling surface logic for the steps in an MBO or performance management system. And, the benefits and purposes cited for such a system are intuitively compelling. There are very few managers (or employees) who would disagree with any of the functions or results supposedly associated with performance management. Keep in mind that while most agree with the concepts, few actually implement them.
We are going to suggest that performance management systems are based on a number of assumptions or premises about what effective organizations do, and what is required to make organizations work effectively.
What Does Performance Management Assume About Organizations & Performance?
I. An Additive Model For Organization Performance
Performance management systems are based on the assumption that an organization's success is a result of adding together all the individual outputs. In an American Management Association film, a leading authority of the time suggests "if person A and person B and person C do their jobs, the organization's results are A+B+C. Manage each individual's results, and you succeed.
While it may have once been the case that this was true, current research indicates that an organization succeeds as a result of the interaction of people, not the simple adding together of results. The whole is not simply a sum of its parts, but in a well managed workplace the parts interact to create the successful organization. Whether you read the accounts of Tom Peters, Rosabeth Moss Kantor, Edward Deming, Philip Crosby, Bob Waterman and others, the conclusions are clear. Organization success is based on synthesis, not adding results.
2. Focus on Results And There Will Be No Problems
Performance management assumes that if you focus on results, that you are much more likely to succeed. It makes sense...set goals, reach goals, and you get what is desired. The problem is that a sole focus on results neglects organizational and system issues that need to be in place for the results to happen. Again, the assumption is that somehow if you are clear about results, effective systems will emerge magically to bring those results to reality, or that leadership will be effective.
We know this is not true. While results ARE important, an examination of the process required to achieve these results may be even more important. Total Quality initiatives have brought this to the forefront. North American companies, focusing on results, quotas and output have gotten skunked in the market place and one reason is that they have been less able to provide the necessary conditions for quality output. There is an increased understanding that problems related to an organization's output are more often related to poor management of the systems, or the WAY work gets done, rather than problems with the people. In short, organizations set up barriers for the people to do their work.
3. Involving People In Goal Setting Is Motivating
Intuitively true. People do appear to want to have more control over their job tasks. Unfortunately, research suggests that this conclusion may be unwarranted. In Managing Organizational Behaviour (Tosi, Rizzo and Carroll, 1986) some interesting results were reported. In a study by Carroll & Tosi (1973) results indicated that "subordinate participation in setting goals did not result in higher levels of perceived goal success nor in more favorable attitudes towards a superior or toward management by objectives". It may be that in some situations, employee involvement is seen as positive, and in other not.
Research aside, the simple act of involving employees in the setting of their OW~ objectives is not sufficient. This is because employees are still uninvolved in the setting of organization goals and objectives that, by and large, DETERMINE their personal objectives.
For example, executive generally set overall goals for an organization, and then individual employees are given some control of what they will do, personally to achieve these goals. If the overall goals make no sense to the employee, management is only offering a choice of doing one stupid thing or another stupid thing.
Let's make it concrete. Departmental executive determine that a particular branch "needs" to move to another building. The manager of that branch, using a performance management approach, allows employees to choose activities and set standards and schedules related to the tasks. Employees can pack files, communicate the change to clients, or choose from a number of tasks. So, while employees have control over the smaller tasks, they are NOT in control of the overall direction or decision. If the decision seems arbitrary, no amount of choice about tasks will convince an employee that they are in control, or contributing to a worthwhile task.
4. You Can Measure Results Objectively AND Meaningfully
If you have ever tried to set meaningful standards of performance that are "measurable and observable" you will know how difficult it can be. If you have ever been involved in a performance dispute that goes to grievance, you will also realize how absolutely difficult it is to measure work, or document the findings.
What people find is that the more precise the standard, and the more objective the standard, the more likely it is to seem silly, or not capture the essence of the task or objective. Let's look at an example.
Consider the case of a person that processes driving license renewals, and deals directly with the public. This is a good example because it initially appears that one can set quantitative obj ective standards.
Discussion between supervisor and employee results in the following initial standard.
Process license renewal applications at an average rate of 20 per hour, with no errors.
Upon reflection the supervisor realizes that this standard does not account for customer satisfaction. Further discussion results in adding a "no complaints" clause, but it is somewhat complicated. Often irate customers will complain despite the best efforts of the employee. The employee is not willing to have his or her formal evaluation reflect things that are uncontrollable. A compromise is struck and it looks like this.
Process license renewal applications at an average rate of 20 per hour, with no errors and generate no legitimate customer complaints regarding rudeness, uncooperativeness or poor service.
Now we have a problem. By adding the clause regarding legitimate customer complaints, a new element has been added. Now, subjective judgement must be exercised. Now there is room for interpretation, and the manager is required to judge whether a complaint is "legitimate" or not. The standard is no longer obj ective.
We could carry this example to the point where the standard resembles War & Peace, but the point here is that the more quantifiable and measurable a standard is, the less relevant it becomes. It is easy to measure the trivial, but it is very hard to measure what is important in an objective way.
Even well written standards have an appearance of objectivity but require subjectivejudgments. This is problematic for performance review, and disciplinary action. Many public sector managers have found that even when standards are in place, it is impossible for disciplinary action to occur, because the standards "violated" were far more subjective than they initially appeared.
5. Coaching & Evaluation Can Co-exist
Another important assumption is that a manager can evaluate performance, thereby affecting things like classification, salary, and promotion, while at the same time function as a coach to improve performance.
It is possible, but highly unlikely that a manager can fulfil both of these functions. Possible if there is a high degree of trust between manager and employee, but that trust is hard to create.
The reason is that it is rare for an employee to be completely open about his or her incompetence in a particular area, particularly when there is a possibility that the manager will a) record that incompetence for posterity; and b) use that information to make decisions about the future of the employee. Without the information from an employee, it is difficult for a manager to coach for improvement.
Book learning suggests that an employee will self-evaluate, and in fact this is anticipated in some performance management schemes. There have also been suggestions that an employee will be tougher in evaluating him or herself than the manager might be. Do we honestly believe that each and every employee will work with a manager to improve performance, thereby exposing failures and inadequacies? It happens, but you can't count on it.
A research study conducted by Meyer (1975) asked employees to rate themselves relative to their peers. Thirty-seven percent (37%) of accountants rated themselves in the top 10% Forty-six percent of a blue collar group rated themselves in the top 10%. At no time did any significant number of people rate themselves as below average. Obviously you can't have 100% of people above average. Other studies corroborate this tendency for people to see themselves in a favourable light compared to others.
We don't want to place too much emphasis on this research, but it makes the point that self-evaluation can be problematic. In addition, it is difficult to establish the degree of trust necessary for a manager to wear the evaluator' s and coach's hats.
To quote Odiorne:
"Take the common appraisaI guestions which asks the subordinate to list for the boss his principaI weaknesses. Who but a fool would hand his boss any of his real weaknesses on a silver platter? The question practically demands that anyone with his wits about him lie like Judas. "
Conclusion
We need to reiterate that on the surface performance management appears to be a logical, rational approach to organization success. The problem is that it is based on assumptions that do not bear up under scrutiny. We have describe a number of these assumptions, and we would like to add the comments of Odiorne, from his book Managing By Objectives (1968). He describes the following limitations:
1) It can't appraise and completely identify potential. The system deals only with performance on the present job.
2) The system presumes that the man and his boss will together establish suitable standards that will serve the company well.
3) It implies that the boss understands the strict limitations on what he is supposed to do, and will refrain from playing God.
4) In action, it often aggravates a problem that appraisal should help to solve. It stresses results alone and doesn't provide for methods of achieving them.
OK. Maybe performance management isn't perfect, but nothing is. That's fair. And, as you read the discussion above, you may have mustered some points of your own in support of performance management. Good. We've made some progress.
Based on the above discussion, it would still be foolish to throw out the whole concept. There is more. The next question we are going to examine is whether performance management has a downside. Does it send the WRONG messages?
Is There A Downside to Performance Management?
Is it possible that traditional performance management programs cause problems for an organization? The answer is a resounding yes. The performance management system conveys to people in an organization how work is to be performed, and communicates, often unintentionally, values and organizational culture. More specifically traditional performance management systems can foster a lack of collective responsibility for the achievement of organizational goals, encourage competition rather than cooperation, and can impede the development of effective teamwork.
Just as important is that traditional performance management purports to empower employees, allow self-control and self-evaluation, allow participation and involvement, and increase the meaningfulness of work. More often than not these results do NOT occur, resulting in a reduction of the credibility of the manager, and subversion of the manager' s ability to lead.
The Message: You Are Responsible For Your Work
Since we live in a very individualistic society, it is not surprising that we eagerly embrace the idea that each person should be both responsible and accountable for his or her work. I am sure you agree.
Performance management is designed to enhance this personal responsibility. BtTr, at the same time, it implies that you are not responsible for the work of others, OR, by extension, the work that is done by others that is important to the organization. Performance management, by focusing on individual responsibility, reduces an employee's responsibility to the organization, and to activities that are not "his or her job".
This is no trivial or philosophical issue. Again, if we look at the research about successful innovative organizations we find that a distinguishing characteristic is that employees feel a strong responsibility for almost everything that goes on. They want to be involved, they contribute ideas, they function in a team context because they see the achievement of overall organizational objectives as more important than the achievement of their own objectives. They see the forest AND the trees.
Let's illustrate. A receptionist is responsible for answering a phone within some specific standard. Other employees do not have this responsibility. Unfortunately, there are occasions when the phone rings and the receptionist is otherwise engaged with another client, phone or other important task. It is not uncommon for either employees who happen to be in the area to ignore the ringing phone, because it isn't part of their jobs. This response is common, and often occurs unconsciously.
The result is that the phone goes unanswered, or the receptionist must do some juggling which may result in someone getting upset.
The point is that while performance management systems don't tell others NOT to answer the phone, the performance management system doesn't encourage them to do so. Because that function "belongs" to someone else.
The Message: Compete For Resources
In a performance management system employees are evaluated based on the achievement of their objectives (and standards). The payoff for employees is to get their things done, at times, competing for resources to the detriment of the achievement of other people's objectives.
In the government organization where I worked it was common for a person working on a project re, hoard books and materials needed to complete their objectives, often without telling anyone they had done so. Things just disappeared, sometimes for months at a time. The hoarder benefited by making sure that his or her objective could be achieved, while others suffered because of this very short-sighted approach.
It happens more often than you think, and it results from the emphasis on individual achievement rather than corporate results. Performance management systems tend to send the message implicitly. Nobody intends it.
The Message: Work As A Team But You Get Hung
Modem managers are realizing that teams are important to the achievement of organization objectives because many tasks are too large or complicated for one person to handle. So they encourage people to work in teams. Usually, though, a manager committed to performance management will want to designate one person to be both responsible and accountable for the project, a team leader if you like. As one manager put it, "I want to know who to blame if this goes screwy".
Now this sends some messages. It says to the team leader that he or she is to harness the energy and skills of the team, but if the team fails, the team leader hangs. This encourages the team leader to revert to individual mode when the team is not succeeding. It is not uncommon for a team leader to end up doing a great deal of the work, thereby negating the purpose of the team in the first place.
A second message is sent to team members who are not uniquely responsible for team outcomes. A team member is less likely to commit to the team if it is clear that there is only praise or blame for the team leader. In the situation where a team member must choose between working to achieve a team goal, or working to achieve a personal objective that he or she is responsible for, the choice is clear. The team will suffer.
Traditional performance management does not encourage a focus on cooperation, teamwork and the "big picture". It has a tendency to fragment an organization, or to use Rosabeth Moss Kantor's terminology, it causes segmentation.
Message: Let's Pretend
The truth of most workplaces is that the manager has the ultimate power to make work-related decisions. This is simply the way we set up organizations. The best performance management systems encourage employees to be involved in decisions that involve their objectives and standards, and many managers make a special effort to make use of this input. They solicit, they encourage, they do all manner of neat things to tell employees that their ideas are important, and that employees can and should control their own work
That' s nice, but it doesn't wash. Employees know that if push comes to shove, it is the opinion of the manager that will win out. Despite the fact that the manager encourages the employee to self-evaluate, the employee knows that the manager will make the final assessment.
What good performance management systems involve is getting everyone to pretend that this is not so. The message is:
Let's pretend that we are really in power and control, and pretend that our inputs carry equal weight,
If we sell performance management as a participative process, sooner or later employees will realize that it isn't quite so participative as it seems. This engenders a great deal of cynicism and accounts for the fact that in many organizations, performance management is seen by employees as unpleasant and negative. No amount of dressing up changes the reality of the power imbalance.
Now, employees recognize the legitimacy of the manager's position. The power imbalance is not the problem. The problem is pretending that decisions and evaluations are made on the basis of equal power. This pretending causes an erosion of trust and manager credibility, as the employee, who may have initially bought into the performance management system, finds that it is the manager's opinions that will prevail.
Some Conclusions
Even without looking at the logistics and practicality of traditional performance management, it is clear there are problems. Each of these problems, could be remedied with some creative modification of the system, but not without sacrificing something. Make standards measurable, and you waste time on the trivial. Make standards more subjective and you can't use them for disciplinary purposes. The more you stress individual responsibility the more you reduce collective responsibility. If one person owns an objective, by definition, nobody else does.
We close with a comment on what must be going on in your head. You either have a system that appears to work, or know of one. If performance management is so bad, how can this be? It must and does succeed sometimes.
First, it is rare that performance management systems are evaluated properly. We assume that they work. Second, where it is clear that a performance management system works well, you will invariably find a manager with superior interpersonal and leadership skills. Good managers can make almost anything work. Where it succeeds it succeeds because of this, not because of anything intrinsically wonderful about a traditional system. One hazards a guess that managers who can make performance management work so well, would bring success to the organization even if there was NO performance management of any consequence. An excellent manager can use a performance management system as a tool. No performance management system will make a poor manager a good one.
The following is Ch. 1 from our book entitled Performance Management - Why Doesn't It Work. The book is available directly from Amazon.com
What we are going to find is that while performance management can be described as absolutely logical, the assumptions underlying it that relate to organization effectiveness are somewhat flawed. We will also see that traditional performance management contains many excellent notions, but that the positive things about it are lost in a morass of conflicting purposes that usually guarantee that it will not work.
Overview of Traditional Performance Management Systems
Performance management approaches are generally described within the context of a Managing By Objectives framework (MBO). While some writers discuss performance appraisal independent of such a framework, there is an awareness that appraisal must be anchored to functions like strategic planning, goal-setting etc.
Generally, an MBO system includes the following components.
1. Development of role & mission statement.
2. Establishing strategic goals/strategic plan.
3. Defining key results areas.
4. Establishing indicators or effectiveness, goals, or organizational objectives.
5. Establishing, or negotiating individual employee objectives.
6. Establishing performance standards for each objective.
7. Action planning for each employee.
8. Periodic measurement and assessment of status of each objective/standard.
9. Coaching/training to remediate deficits.
1O. Some form of evaluation or assessment done formally and included in an employee's record.
Different writers use different terminologies, or add, subtract or modify the sequence of steps. Some systems, for example, include the writing and maintenance of job descriptions, some do not do so explicitly.
Within an MBO system the performance management process pertains to the management of individuals, beginning with the assignment of individual objectives through to the final, formal assessment process.
What Is Performance Management Supposed To Accomplish?
The literature regarding MBO and performance management suggests a plethora of benefits and purposes that are designed to make organizations more effective. We can summarize them as follows:
1. Increases management control over work and results.
2. Increases management ability to identify or "red-flag" problems early.
3. Links employee objectives and functions to overall organization objectives, thereby creating a sense of contribution for the employee.
4. Motivates employees by allowing them input into and ownership of their objectives and standards of performance.
5. Enhances communication by ensuring there is clear understanding of management expectations about results.
6. Supports remedial action or disciplinary action because a breach of standards can be defined objectively and in a measurable way.
7. Provides a system where feedback can be given to employees on a more objective basis, and not on management's subjective criterion.
8. Provides objective criterion that management can use to make decisions regarding pay scale, and promotion.
9. Provides a centralized record of performance for each employee, usually kept in the personnel office.
Doubtless you can add more to the list, but these are the common ones in the literature.
In the next chapter we will examine issues related to how performance management systems are implemented, and some of the problems associated with the logistical, and practical sides. For now we will confine ourselves to examining the claims for performance management, the assumptions underlying the approach, and assessing whether this system is as logical and sensible as it seems.
There is no question that there is a compelling surface logic for the steps in an MBO or performance management system. And, the benefits and purposes cited for such a system are intuitively compelling. There are very few managers (or employees) who would disagree with any of the functions or results supposedly associated with performance management. Keep in mind that while most agree with the concepts, few actually implement them.
We are going to suggest that performance management systems are based on a number of assumptions or premises about what effective organizations do, and what is required to make organizations work effectively.
What Does Performance Management Assume About Organizations & Performance?
I. An Additive Model For Organization Performance
Performance management systems are based on the assumption that an organization's success is a result of adding together all the individual outputs. In an American Management Association film, a leading authority of the time suggests "if person A and person B and person C do their jobs, the organization's results are A+B+C. Manage each individual's results, and you succeed.
While it may have once been the case that this was true, current research indicates that an organization succeeds as a result of the interaction of people, not the simple adding together of results. The whole is not simply a sum of its parts, but in a well managed workplace the parts interact to create the successful organization. Whether you read the accounts of Tom Peters, Rosabeth Moss Kantor, Edward Deming, Philip Crosby, Bob Waterman and others, the conclusions are clear. Organization success is based on synthesis, not adding results.
2. Focus on Results And There Will Be No Problems
Performance management assumes that if you focus on results, that you are much more likely to succeed. It makes sense...set goals, reach goals, and you get what is desired. The problem is that a sole focus on results neglects organizational and system issues that need to be in place for the results to happen. Again, the assumption is that somehow if you are clear about results, effective systems will emerge magically to bring those results to reality, or that leadership will be effective.
We know this is not true. While results ARE important, an examination of the process required to achieve these results may be even more important. Total Quality initiatives have brought this to the forefront. North American companies, focusing on results, quotas and output have gotten skunked in the market place and one reason is that they have been less able to provide the necessary conditions for quality output. There is an increased understanding that problems related to an organization's output are more often related to poor management of the systems, or the WAY work gets done, rather than problems with the people. In short, organizations set up barriers for the people to do their work.
3. Involving People In Goal Setting Is Motivating
Intuitively true. People do appear to want to have more control over their job tasks. Unfortunately, research suggests that this conclusion may be unwarranted. In Managing Organizational Behaviour (Tosi, Rizzo and Carroll, 1986) some interesting results were reported. In a study by Carroll & Tosi (1973) results indicated that "subordinate participation in setting goals did not result in higher levels of perceived goal success nor in more favorable attitudes towards a superior or toward management by objectives". It may be that in some situations, employee involvement is seen as positive, and in other not.
Research aside, the simple act of involving employees in the setting of their OW~ objectives is not sufficient. This is because employees are still uninvolved in the setting of organization goals and objectives that, by and large, DETERMINE their personal objectives.
For example, executive generally set overall goals for an organization, and then individual employees are given some control of what they will do, personally to achieve these goals. If the overall goals make no sense to the employee, management is only offering a choice of doing one stupid thing or another stupid thing.
Let's make it concrete. Departmental executive determine that a particular branch "needs" to move to another building. The manager of that branch, using a performance management approach, allows employees to choose activities and set standards and schedules related to the tasks. Employees can pack files, communicate the change to clients, or choose from a number of tasks. So, while employees have control over the smaller tasks, they are NOT in control of the overall direction or decision. If the decision seems arbitrary, no amount of choice about tasks will convince an employee that they are in control, or contributing to a worthwhile task.
4. You Can Measure Results Objectively AND Meaningfully
If you have ever tried to set meaningful standards of performance that are "measurable and observable" you will know how difficult it can be. If you have ever been involved in a performance dispute that goes to grievance, you will also realize how absolutely difficult it is to measure work, or document the findings.
What people find is that the more precise the standard, and the more objective the standard, the more likely it is to seem silly, or not capture the essence of the task or objective. Let's look at an example.
Consider the case of a person that processes driving license renewals, and deals directly with the public. This is a good example because it initially appears that one can set quantitative obj ective standards.
Discussion between supervisor and employee results in the following initial standard.
Process license renewal applications at an average rate of 20 per hour, with no errors.
Upon reflection the supervisor realizes that this standard does not account for customer satisfaction. Further discussion results in adding a "no complaints" clause, but it is somewhat complicated. Often irate customers will complain despite the best efforts of the employee. The employee is not willing to have his or her formal evaluation reflect things that are uncontrollable. A compromise is struck and it looks like this.
Process license renewal applications at an average rate of 20 per hour, with no errors and generate no legitimate customer complaints regarding rudeness, uncooperativeness or poor service.
Now we have a problem. By adding the clause regarding legitimate customer complaints, a new element has been added. Now, subjective judgement must be exercised. Now there is room for interpretation, and the manager is required to judge whether a complaint is "legitimate" or not. The standard is no longer obj ective.
We could carry this example to the point where the standard resembles War & Peace, but the point here is that the more quantifiable and measurable a standard is, the less relevant it becomes. It is easy to measure the trivial, but it is very hard to measure what is important in an objective way.
Even well written standards have an appearance of objectivity but require subjectivejudgments. This is problematic for performance review, and disciplinary action. Many public sector managers have found that even when standards are in place, it is impossible for disciplinary action to occur, because the standards "violated" were far more subjective than they initially appeared.
5. Coaching & Evaluation Can Co-exist
Another important assumption is that a manager can evaluate performance, thereby affecting things like classification, salary, and promotion, while at the same time function as a coach to improve performance.
It is possible, but highly unlikely that a manager can fulfil both of these functions. Possible if there is a high degree of trust between manager and employee, but that trust is hard to create.
The reason is that it is rare for an employee to be completely open about his or her incompetence in a particular area, particularly when there is a possibility that the manager will a) record that incompetence for posterity; and b) use that information to make decisions about the future of the employee. Without the information from an employee, it is difficult for a manager to coach for improvement.
Book learning suggests that an employee will self-evaluate, and in fact this is anticipated in some performance management schemes. There have also been suggestions that an employee will be tougher in evaluating him or herself than the manager might be. Do we honestly believe that each and every employee will work with a manager to improve performance, thereby exposing failures and inadequacies? It happens, but you can't count on it.
A research study conducted by Meyer (1975) asked employees to rate themselves relative to their peers. Thirty-seven percent (37%) of accountants rated themselves in the top 10% Forty-six percent of a blue collar group rated themselves in the top 10%. At no time did any significant number of people rate themselves as below average. Obviously you can't have 100% of people above average. Other studies corroborate this tendency for people to see themselves in a favourable light compared to others.
We don't want to place too much emphasis on this research, but it makes the point that self-evaluation can be problematic. In addition, it is difficult to establish the degree of trust necessary for a manager to wear the evaluator' s and coach's hats.
To quote Odiorne:
"Take the common appraisaI guestions which asks the subordinate to list for the boss his principaI weaknesses. Who but a fool would hand his boss any of his real weaknesses on a silver platter? The question practically demands that anyone with his wits about him lie like Judas. "
Conclusion
We need to reiterate that on the surface performance management appears to be a logical, rational approach to organization success. The problem is that it is based on assumptions that do not bear up under scrutiny. We have describe a number of these assumptions, and we would like to add the comments of Odiorne, from his book Managing By Objectives (1968). He describes the following limitations:
1) It can't appraise and completely identify potential. The system deals only with performance on the present job.
2) The system presumes that the man and his boss will together establish suitable standards that will serve the company well.
3) It implies that the boss understands the strict limitations on what he is supposed to do, and will refrain from playing God.
4) In action, it often aggravates a problem that appraisal should help to solve. It stresses results alone and doesn't provide for methods of achieving them.
OK. Maybe performance management isn't perfect, but nothing is. That's fair. And, as you read the discussion above, you may have mustered some points of your own in support of performance management. Good. We've made some progress.
Based on the above discussion, it would still be foolish to throw out the whole concept. There is more. The next question we are going to examine is whether performance management has a downside. Does it send the WRONG messages?
Is There A Downside to Performance Management?
Is it possible that traditional performance management programs cause problems for an organization? The answer is a resounding yes. The performance management system conveys to people in an organization how work is to be performed, and communicates, often unintentionally, values and organizational culture. More specifically traditional performance management systems can foster a lack of collective responsibility for the achievement of organizational goals, encourage competition rather than cooperation, and can impede the development of effective teamwork.
Just as important is that traditional performance management purports to empower employees, allow self-control and self-evaluation, allow participation and involvement, and increase the meaningfulness of work. More often than not these results do NOT occur, resulting in a reduction of the credibility of the manager, and subversion of the manager' s ability to lead.
The Message: You Are Responsible For Your Work
Since we live in a very individualistic society, it is not surprising that we eagerly embrace the idea that each person should be both responsible and accountable for his or her work. I am sure you agree.
Performance management is designed to enhance this personal responsibility. BtTr, at the same time, it implies that you are not responsible for the work of others, OR, by extension, the work that is done by others that is important to the organization. Performance management, by focusing on individual responsibility, reduces an employee's responsibility to the organization, and to activities that are not "his or her job".
This is no trivial or philosophical issue. Again, if we look at the research about successful innovative organizations we find that a distinguishing characteristic is that employees feel a strong responsibility for almost everything that goes on. They want to be involved, they contribute ideas, they function in a team context because they see the achievement of overall organizational objectives as more important than the achievement of their own objectives. They see the forest AND the trees.
Let's illustrate. A receptionist is responsible for answering a phone within some specific standard. Other employees do not have this responsibility. Unfortunately, there are occasions when the phone rings and the receptionist is otherwise engaged with another client, phone or other important task. It is not uncommon for either employees who happen to be in the area to ignore the ringing phone, because it isn't part of their jobs. This response is common, and often occurs unconsciously.
The result is that the phone goes unanswered, or the receptionist must do some juggling which may result in someone getting upset.
The point is that while performance management systems don't tell others NOT to answer the phone, the performance management system doesn't encourage them to do so. Because that function "belongs" to someone else.
The Message: Compete For Resources
In a performance management system employees are evaluated based on the achievement of their objectives (and standards). The payoff for employees is to get their things done, at times, competing for resources to the detriment of the achievement of other people's objectives.
In the government organization where I worked it was common for a person working on a project re, hoard books and materials needed to complete their objectives, often without telling anyone they had done so. Things just disappeared, sometimes for months at a time. The hoarder benefited by making sure that his or her objective could be achieved, while others suffered because of this very short-sighted approach.
It happens more often than you think, and it results from the emphasis on individual achievement rather than corporate results. Performance management systems tend to send the message implicitly. Nobody intends it.
The Message: Work As A Team But You Get Hung
Modem managers are realizing that teams are important to the achievement of organization objectives because many tasks are too large or complicated for one person to handle. So they encourage people to work in teams. Usually, though, a manager committed to performance management will want to designate one person to be both responsible and accountable for the project, a team leader if you like. As one manager put it, "I want to know who to blame if this goes screwy".
Now this sends some messages. It says to the team leader that he or she is to harness the energy and skills of the team, but if the team fails, the team leader hangs. This encourages the team leader to revert to individual mode when the team is not succeeding. It is not uncommon for a team leader to end up doing a great deal of the work, thereby negating the purpose of the team in the first place.
A second message is sent to team members who are not uniquely responsible for team outcomes. A team member is less likely to commit to the team if it is clear that there is only praise or blame for the team leader. In the situation where a team member must choose between working to achieve a team goal, or working to achieve a personal objective that he or she is responsible for, the choice is clear. The team will suffer.
Traditional performance management does not encourage a focus on cooperation, teamwork and the "big picture". It has a tendency to fragment an organization, or to use Rosabeth Moss Kantor's terminology, it causes segmentation.
Message: Let's Pretend
The truth of most workplaces is that the manager has the ultimate power to make work-related decisions. This is simply the way we set up organizations. The best performance management systems encourage employees to be involved in decisions that involve their objectives and standards, and many managers make a special effort to make use of this input. They solicit, they encourage, they do all manner of neat things to tell employees that their ideas are important, and that employees can and should control their own work
That' s nice, but it doesn't wash. Employees know that if push comes to shove, it is the opinion of the manager that will win out. Despite the fact that the manager encourages the employee to self-evaluate, the employee knows that the manager will make the final assessment.
What good performance management systems involve is getting everyone to pretend that this is not so. The message is:
Let's pretend that we are really in power and control, and pretend that our inputs carry equal weight,
If we sell performance management as a participative process, sooner or later employees will realize that it isn't quite so participative as it seems. This engenders a great deal of cynicism and accounts for the fact that in many organizations, performance management is seen by employees as unpleasant and negative. No amount of dressing up changes the reality of the power imbalance.
Now, employees recognize the legitimacy of the manager's position. The power imbalance is not the problem. The problem is pretending that decisions and evaluations are made on the basis of equal power. This pretending causes an erosion of trust and manager credibility, as the employee, who may have initially bought into the performance management system, finds that it is the manager's opinions that will prevail.
Some Conclusions
Even without looking at the logistics and practicality of traditional performance management, it is clear there are problems. Each of these problems, could be remedied with some creative modification of the system, but not without sacrificing something. Make standards measurable, and you waste time on the trivial. Make standards more subjective and you can't use them for disciplinary purposes. The more you stress individual responsibility the more you reduce collective responsibility. If one person owns an objective, by definition, nobody else does.
We close with a comment on what must be going on in your head. You either have a system that appears to work, or know of one. If performance management is so bad, how can this be? It must and does succeed sometimes.
First, it is rare that performance management systems are evaluated properly. We assume that they work. Second, where it is clear that a performance management system works well, you will invariably find a manager with superior interpersonal and leadership skills. Good managers can make almost anything work. Where it succeeds it succeeds because of this, not because of anything intrinsically wonderful about a traditional system. One hazards a guess that managers who can make performance management work so well, would bring success to the organization even if there was NO performance management of any consequence. An excellent manager can use a performance management system as a tool. No performance management system will make a poor manager a good one.
The following is Ch. 1 from our book entitled Performance Management - Why Doesn't It Work. The book is available directly from Amazon.com