Hi,
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.
10. 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?
1. 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 OWN 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, executives 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 executives 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 objective 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 judgment 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 objective.
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.
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.
10. 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?
1. 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 OWN 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, executives 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 executives 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 objective 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 judgment 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 objective.
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.