The Upside And Downside Of Performance Management

Judy Olian, http://www.smeal.psu.edu/news/latest-news/jul03/manage.html/, Accessed:

Wednesday 15th September, 2010

(Judy Olian is Dean of Penn State's Smeal College of Business and a leading expert in
strategic human resources management.)

Many people don’t like performance management meetings—both the giver and the receiver
of the feedback. If everyone was an A player, it would be a breeze. The problem is the C’s.

A survey by Mercer Consulting published in December 2002 indicates that only a third of
managers in 300 large North American companies think their performance management
system is mostly or completely effective. The rest view it is as only somewhat effective, to
entirely ineffective.

Employees responding to the same survey were most positive about the clarity of their goals.
The majority had clearly defined performance goals, understood how their performance
would be evaluated, felt their performance review helped identify actions to improve their
performance, and were pleased with the system’s capacity to differentiate and recognize
varying levels of performance.

However, they were unhappy with several other aspects of the process. Employees reported
that although 80 percent of their managers conduct routine performance reviews, only a
quarter provide ongoing and constructive performance feedback. Employees were most
disappointed with the level of coaching received from their manager, the perceived link
between performance and tangible rewards, and ongoing informal feedback about their
performance. They were also troubled by their managers’ failure to confront the performance
problems of non-contributing employees. And that’s the Achilles heel of performance
management.

Employees are generally supportive of performance management processes that reward peers
who are clear A’s. They don’t resent special credits for the strongest performers and effective
team contributors, provided the performance contributions and bases for reward are
transparent.

The C’s cause disproportionate problems. They bring down the team as whole, individual
employees bear the burden of carrying and covering for them, and they often stir conflict
around them within a work group.

Just as poor performers prefer to hide from the boss, many managers avoid dealing with the
C’s. While it’s pleasant and appropriate to reward and provide nudging and subtle coaching
to employees who are on the rise, it’s the C’s who need the most corrective action. However,
they are the least likely to get it because they represent an uncomfortable challenge.

Why? Sometimes their performance limitations are intractable. Their problems are often
interpersonal, which makes interactions with them awkward to downright painful. The skills
needed to counsel such employees are often clinical, outside managers’ repertoire. In many
instances, it’s emotionally or pragmatically difficult to fire them, and managers choose to live
with the problem while letting it fester. However, as the Mercer survey indicated, tolerance of
these C performers is among the most frustrating aspects of performance management
systems to other employees, undermining the system’s credibility and impact.

A recent article in the Harvard Business Review by Beth Axelrod and colleagues reminds
readers that sugar coating the truth about inadequate performance is not fair to these
employees, or to their peers. It fails to improve performance, and it’s corrosive to the team.
The essence of performance management is coaching these C performers to an improved
performance level and if that fails, to a fair and respectful exit from the organization.

The best kind of performance management is that which culminates in an annual celebration
of the employee’s performance. Over the course of the year, ongoing informal feedback will
have ameliorated minor performance flaws, and both manager and employee will be ready to
applaud these improvements.

Dreaded performance management meetings occur because the employee and manager have
persistently avoided burgeoning performance problems. At the annual performance review,
they are forced to sit down and confront the issues, which by then may have spiraled to the
point of no return. In the interim, other members of the team will have been disenfranchised.

That’s why performance management suffers from a bad odor. It’s much healthier to deal
with performance issues, the good and the bad, as they occur.