What We’re Still Getting Wrong About Performance Management

Performance management has been part of the business landscape for so long that many companies have lost sight of the outcomes they expect to achieve through the process. In fact, most performance management processes have multiple, conflicting intentions. On the one hand, they aim to measure performance — a metric that is often elusive, especially for knowledge workers. On the other hand, organizations also have the goal of improving employee performance. The performance management process is often also aimed at collecting data that can inform talent decisions, as well as related data such as career aspirations and development opportunities. Although all of these elements have something to do with the employee, trying to incorporate this mishmash of things into a cohesive assessment is like making dinner with what you’ve got in your fridge: Once in a while it meets expectations, but usually it ends up being a questionable proxy of a meal. For organizations, such an approach is both time-consuming and ineffective.

Instead, organizations and practitioners need to be clear about what they’re trying to achieve in performance management. Is it to get visibility into employee performance to inform downstream talent decisions? Or is it to accelerate employee performance? Force-fitting two objectives into a single approach creates confusion, not clarity. The solution isn’t to sacrifice one desired outcome but to create two distinct processes.

Measuring Performance

Most organizations want to collect some employee performance data to help inform downstream talent decisions. The best data to use is objective and quantitative, such as sales that can be attributed to an employee. But for so many employees today, there is no real objective data for evaluating their performance. In an attempt to capture what the manager already knows, organizations often manufacture complex frameworks to create some sort of quantitative data to represent someone’s performance. Those frameworks are usually based on the assumptions that all great performers have a set of common attributes represented by an ideal competency model and countable outcomes as described in annual goals. In the real world of work, this is rarely true. The solution to capturing this complex dynamic of employee performance is not overengineered rubrics but a radically simple measurement system.

The fundamental objective of performance measurement is to capture a representation of an employee’s performance from the people who have the best visibility into that employee’s performance. Luckily, due to proximity to the employee, most managers can easily tell you whether their team member is performing as expected. No matter where an employee sits in the organizational hierarchy or what kind of work they do, there are five commonsense dynamics that capture a large part of an employee’s performance:

Work quality: Does the manager experience the employee doing high-quality work?
Work timeliness: Does the manager experience the employee accomplishing their work in a timely manner?
Proficiency: Does the manager experience that the employee is proficient in the skills they need to do their job?
Team partnership: Does the manager experience the employee partnering appropriately with colleagues?
Team leader partnership: Does the manager experience the employee partnering appropriately with the manager?

As tempting as it might be to ask about a lot of things, sticking with the critical few factors that are needed to inform downstream talent decisions keeps the process simple and scalable and enables managers to collect data more frequently than once a year.

One regional credit union simplified its approach to measuring employee performance six years ago. It now asks managers to share their experience regarding each of their employees’ performance four times a year. Rather than spending countless hours writing annual narratives to describe work and goals that become outdated soon after they are created, managers respond to a simple six-item survey. This method not only saves time but reduces recency bias and the emotional angst of a traditional process. Managers are able to share their data and quickly get back to their work of leading their teams. HR gets more frequent, more reliable data to inform downstream talent decisions and stay abreast of the real-time talent canvas playing out in the business.

Accelerating Performance

Most employee performance management programs are built around the belief that what’s measured gets done. While measurement might highlight areas that need attention, measurement in and of itself doesn’t create movement on the thing that’s being measured. This holds true for employee performance as much as for counting quality defects on a manufacturing line. Knowing an employee’s performance level is necessary to inform downstream talent processes, but it doesn’t accelerate employee performance.

Like measuring performance, improving performance has also become an overengineered, emotionally burdensome check-the-box task. But the activity that has universally been shown to accelerate employee performance is simple: frequent attention from an employee’s most important people at work, usually the employee’s manager(s). A simple attention-giving activity sounds like, “What are your priorities this week? Do you need anything to help you achieve those priorities? How are you feeling about your work?” Data from StandOut powered by ADP shows that employees whose managers check in with them weekly using this simple approach are up to three times as likely to feel all-in at work. And when employees feel that way, they are more likely to go all-in in their work performance.

The regional credit union mentioned earlier instituted the practice of weekly check-ins. The simple practice has been game changing. Employee concerns are addressed before they become problems, and, more important, employees naturally feel more connected to their work, their managers, and their organization. Because the organization launched a strengths-based philosophy at the same time it introduced the practice of frequent check-ins, the focus is more on amplifying each employee’s uniqueness than their weaknesses.

The Bottom Line

You don’t need a global study to tell you that employees feel like most organizations’ traditional approach to performance management doesn’t motivate them to do outstanding work. In my experience talking to HR leaders over the past five years, only one has raised their hand when I asked whether their organization’s performance management program is delivering on its expected outcomes.

Tweaking the performance appraisal form isn’t enough to change the warranted perception of traditional performance management. Performance management needs to be completely rebuilt with two distinct processes to measure and accelerate employee performance: separate processes with separate outcomes. Employees win by getting more attention from their managers; managers win by removing the time-consuming, emotionally burdensome traditional appraisal process; and the organization wins by getting more real-time access to performance data and improved employee performance. This approach isn’t a rehash of what most organizations do today. It’s a do-over that’s long overdue.

Editor’s note: This article appears in the Spring 2024 print edition under the title “Recognize the Dueling Objectives of Performance Management.”