Process and Results
The Twin Challenges of Performance Management
By Dennis E. Coates, Ph.D.
A large, exclusive retirement community began using
performance appraisal several years ago. Although the
completed appraisals are kept on file, their only practical
use has been to determine the amount of an employee’s salary
increase. The problem is that managers are given quotas for
the increases, so they award ratings more to justify the
increases than to record an evaluation of performance.
Consequently, many employees complain that their evaluations
are inaccurate and unfair. Every year this process stirs
feelings of stress, anger and distrust that linger for months.
Stories like this are common in the workplace. The evolution
of performance evaluation practices during the past fifty
years has been painfully slow. A variety of appraisal methods
have been tried over the years, but most are considered by
experts to be ineffective.* In all too many organizations, the
performance management system is disliked by managers and
employees alike. People say the important things aren’t
evaluated, and they feel the ratings are overly subjective.
Performance appraisals are typically used as a basis for
compensation or personnel action, but most people don’t
consider this a fair or reliable way to make these decisions.
Most performance management systems do little or nothing to
improve employee performance. In the first place,
leadership—not the performance management system—is the
primary factor in employee performance. Performance management
tools and methods can support managers’ efforts; but if
managers don’t lead effectively, these tools can’t make up the
deficit. Second, most performance management systems rely on a
single evaluation tool—performance appraisal.
Over the years, it has been used to evaluate and set goals
for two aspects of performance: (1) the “process” of
performance—how people do their jobs, and (2) the “results” of
performance—what people get done: the desired outcomes and
achievements of their work. These two aspects are very
different and no single evaluation tool has ever been able to
serve both purposes successfully. In this article I address
these issues, with the goal of providing a working model for
using the best practices and the most current technologies in
the service of a successful program of performance management.
Throughout, I stress two fundamental principles.
PRINCIPLE #1
Improve Employee Performance
To improve employee performance, leaders address four
components.
The first step to creating the conditions for high levels
of performance is to understand the factors that influence it.
A basic fact of work life: employees don’t have to do their
best work to keep their jobs. Any performance standard you
specify will fall short of what they can actually deliver.
Some of the most important contributions are nearly impossible
to measure: courage, integrity, persistence, extra effort,
creativity, initiative, risk-taking, personal leadership,
teamwork, positive attitude, commitment and concern for
people. Managers can’t demand these aspects of performance,
and employees know this.
Leaders can do a lot to improve performance by addressing
these four areas. Their routine interactions with the
workforce have a powerful impact on performance and can far
exceed any gains achieved through a performance management
system. Keeping these four factors in mind gives a leader a
framework for analyzing and resolving performance problems.
Neglecting any area creates significant barriers to high
performance.
Ability Evaluation
Are people capable of doing what’s expected of them? A lot
depends on their skills, knowledge, experience and physical
condition. To develop abilities, a leader can demonstrate
knowledge and skills, share experience, arrange for training
and opportunities to practice, mentor talented professionals,
and coach team members.
Motivation Evaluation
People may be able to do what’s expected, but do they want
to? Motivation comes from within and has many sources: needs,
goals, values, attitudes and personality. Are employees’ needs
aligned with the needs of the organization? What are the
payoffs? If employees work harder and smarter, will this lead
to satisfaction? To inspire motivation, a leader can express
excitement about the future, build a climate of trust, provide
support and encouragement, show confidence and appreciation,
praise outstanding achievement, and counsel for improved
performance.
Empowerment Program
People may have know-how and plenty of desire, but they may
not have what they need to do their best work. To empower
employees, leaders share responsibility and authority, address
concerns and problems, and allow people the freedom to learn
from mistakes. They create structure, set goals, clarify
roles, develop teams and build relationships. They make sure
employees have materials, facilities, information,
communication, transportation, tools and other resources. All
this “stuff” is expensive, and it’s management’s job to
provide it.
Character Evaluation
People may be competent, motivated and fully empowered, but
work presents unpredictable challenges. Will they be
frustrated by adverse conditions, or will they overcome them?
Will they exercise honesty and integrity? Will they persist?
Will they show courage? It depends on who they are. To do the
hard things, employees will have to call on these and other
personal traits.
Nevertheless, people often perform at very high levels.
Here’s why:
- They can. They have the right abilities.
- They want to. They’re motivated.
- They have what they need. They’re empowered.
- They overcome challenges and adversity. They have strong
character.
Leaders can expect employees to use character strength, but
their character is already well formed, and building on it is
largely an individual responsibility. So it’s important for a
leader to be a good judge of character and look for these
traits when selecting an employee. Beyond that, leaders can
set a good example, provide challenging opportunities, express
clear expectations of behavior, and encourage employees when
the going gets tough.
PRINCIPLE #2
The Process & Result Aspects of a Performance Management
System
Manage the “process” and “results” aspects of performance
separately. In the past, personnel managers have traditionally
relied on performance appraisal to evaluate both the process
and results aspects of performance. However, many managers
don’t understand that the two aspects of performance—”process”
and “results”—are very different and must be managed
differently. The failure to distinguish between the two
aspects and to manage them separately has caused enormous
problems. A performance management system works by defining,
measuring and improving aspects of performance. A properly
designed performance system can improve both ability and
motivation—two of the four pieces of the performance puzzle.
To improve abilities, one system will focus on the
“process” of performance, diagnosing current skill levels,
analyzing the needs for improvement, and developing
work-related abilities.
Another system will focus on the “results” of performance,
improving motivation by measuring results, holding people
accountable and rewarding them for achieving the desired
outcomes of work.
Appraisal of the “process” aspect of performance
The first step is to define the abilities desired of
individual employees—competencies, knowledge, skills, tasks
and behaviors. This is the function of job and task analysis,
a well-established technique that outlines the behavioral
components of work. Job and task analysis involves a
painstaking research effort and may require specialists to
accomplish it. Furthermore, in an environment of change, these
analyses require continuous updating. The descriptions of work
process become the basis for evaluating levels of competence,
which can identify specific needs for training and development
programs. The difficult task of assessing how well people are
doing their jobs has traditionally fallen to supervisors, even
though this person is usually not in the best position to
observe employee performance on a regular basis.
Peers, direct reports and customers have better
perspectives on what employees actually do. However,
consolidating evaluations from many sources can be an
administratively daunting task.
360-degree (multi-rater) feedback technology makes this
kind of assessment feasible, efficient and economical. It uses
computers to collect, aggregate and report the ratings of
self, superiors, peers and direct reports for a thorough,
multi-dimensional evaluation of performance. These services
can be out-sourced, or they can be administered in-house,
using onsite software or web services. Without 360-degree
feedback, managers would find it very difficult to evaluate
abilities for developmental purposes separately from the
evaluation of results for motivational purposes.
Appraisal of the “results” aspect of performance
There is a logical connection between the process of
performance and results of performance. If people improve how
they go about doing their work, the end
results of their work may improve. But on the other hand, they
may not. Other powerful variables also impact on results, such
as organizational leadership, goals, strategy, structure,
resources, incentives, and staffing levels. Results matter,
above all. So in this context, rewarding individuals for the
way they do their work rather than the results of their work
is misguided, because doing so
is expensive and may have little impact on results.
The most productive way to motivate employees to achieve
organizational goals and objectives is to link incentives to
the their accomplishment. The classic example is the sales
bonus. Sales performance has several easily defined and
measurable outcomes that are critical to the success of the
organization. Sales representatives earn rewards for achieving
these goals. This system is so effective that for many sales
teams, bonuses are the only means of compensation.
Creating a well-designed system of accountability,
measurement and rewards that motivates individuals to do the
right things isn’t easy. The challenge is to define outcomes
that, when accomplished, actually help an organization achieve
its long-range business goals. One typical mistake is to
define the wrong performance objectives. Another is to
identify a myriad of short-term or interim objectives, so that
the desired end result gets lost in the minutia. Yet another
mistake is to identify high-level outcomes or goals set so far
in the future that it’s hard to relate an individual
employee’s efforts to eventual goal achievement. Many
organizations focus on individual objectives, when in truth a
coordinated effort is needed for success and a team objective
would be more appropriate. Others emphasize a myriad of
financial objectives, not appreciating that if they don’t
emphasize outcomes crucial to the business, the desired
financial objectives are not likely to follow.
For example, if a baseball team owner sets up a special
performance bonus for home runs, players’ motivation will be
affected every time they’re at bat. The problem is that the
real team goal is to win games, which does not always require
a player to hit a home run. Often, hitting a bunt or sacrifice
out to advance a player already on base is the key to victory.
With a home-run incentive system, a player will swing for the
fence instead—a tactic that has a much lower percentage of
advancing runners. Focusing on the wrong results objectives
can cost an organization dearly. One major insurance company
had
experienced disturbingly high turnover rates among its sales
force. Therefore, it established a special bonus for sales
managers who reduced turnover below a certain threshold.
Predictably, turnover rates came down. But so did the average
quarterly sales figures. The real cause of the turnover had to
do with the system for managing the sales representatives,
which was unaffected by the effort to retain sales personnel.
Performance results objectives must be linked to
organizational goals. Therefore, it’s important that an
organization has a clear vision and a viable strategic plan
for achieving the vision. Once team and individual objectives
are defined, a system for tracking and reporting the results
can be implemented and individuals can be held accountable.
Dozens of measurable, work-related results objectives may
be specified. Some examples: missions accomplished, goals
achieved, deadlines met, quality improved, products developed,
customers delighted, standards exceeded, projects finished,
tasks completed, productivity increased, waste reduced,
contracts closed—the list goes on. The key is to know which
outcomes will contribute directly to the organization’s goals
and to specify end outcomes rather than in-process objectives.
About the author
Dennis E. Coates, Ph.D. is CEO of Performance Support Systems,
Inc., based in Newport News, VA. He coordinates research and
development and provides strategic direction for the company.
He is the author of 20/20 Insight GOLD, an award-winning 360º
feedback system (www.2020insight.net). Denny is also the
original author of MindFrames personality test and all of the
MindFrames reports on www.Initforlife.com.
Copyright © 2006, Performance Support Systems, Inc. All
rights reserved. |
