Performance and Talent Management has evolved dramatically in the last 20 years with quite a bit of help from technology. We are also seeing companies and managers move away from the 9 box and other grid-like systems that place people in boxes. There is now a greater awareness that these processes are more likely to be biased, as the majority of the input comes from managers’ feedback, which can be skewed depending on relationships. In addition, there is also wide recognition that people favour people like themselves (‘commonality effect’), while we know that a more diverse workforce is key to an organisation’s success. So these practices and ways of working bring in and maintain ‘silo thinking’ and are a barrier to effective team collaboration and innovation.
People with targets, will probably reach their targets, even if they destroy the enterprise.
~William Edwards Deming
The reality is that most organisations are still operating in the more traditional form of command and control, characterised by micro-management, standardisation and a ‘carrot and stick’ reward structure which ends up pigeon-holing employees into made-up boxes, stripping them of their individuality and limiting their options and contribution.
People don’t need managing, systems do
… it’s not people that need managing, it is systems.
People are hired for their knowledge, experience, skills, and the unique contribution they can bring to a role, a team, and an organisation. Yet, once they are onboarded they are managed with a ‘one size fits all’ approach – rewarded and punished to behave and act in certain ways, and told what to do and how to do it. But, it’s not people that need managing, it is systems. For example, leaders are better placed establishing shared cultural values, removing unnecessary red-tape and removing obstacles, ensuring their teams have the necessary tools and resources to be their best and do their best; whilst also fostering a positive environment that maximizes employee engagement, accepts failures, and encourages passionate and motivated individuals.
From performance management to performance enablement
For starters, if we go by the above principle “manage the system, not the people”, then the words “performance management” need to change. There are so many more positive and motivating terms to use, such as performance enablement, performance contribution, value contribution, to name but a few.
Traditional performance management practices include: setting annual goals at the beginning of the year, for the duration of a year; a mid-year review for alignment; and a year-end performance appraisal where managers rate employees on the achievement of their goals and set professional development goals for areas of improvement.
The reality is that most performance evaluation conversations and development plans are just a tick in the box exercise. They are often born out of the need for compliance rather than commitment, they are focused on professional goals only and most often target areas of weakness instead of focusing on helping employees master their strengths. In addition, in most workplaces employees are expected to work together and collaborate, yet goals and rewards are still based on the achievement of individual goals. To me, this whole process sounds counter-intuitive.
The future of performance management
More companies have recognised these weaknesses in their process and are moving away from the traditional fixed ways of managing employees, especially now that there is a heightened awareness and focus on the employee experience and wellbeing.
We have ‘roles, responsibilities & expectations. We try to develop those around a person’s innate abilities and passions.
~Charles Koch, CEO of Koch Industries.
Koch Industries is the second-largest privately-held company in the United States. Their management philosophy, Market-Based Management®, encourages and equips individuals to practice lifelong learning, drive innovation, embrace transformation, and achieve self-actualization – all contributing to a healthy, growing organization.
They have team goals, and each team member has their own “roles, responsibilities, and expectations,” which is developed based on their strengths and their desired growth. Koch’s MBM® Guiding Principles define who they are as an organization. They live by them daily, as they are essential to creating a virtuous, mutually beneficial cycle.
When employees experience inner harmony, that alignment between their own sense of purpose and the work they do, they get into a state of flow. They are right at the intersection of optimal being and optimal doing. They not only become more productive and focused, they feel happy doing so.
Happiness in the workplace
According to Dr. Ron Friedman, happy employees work in companies that meet their employees’ needs, not only physical but also psychological.
These places of work:
- Provide work-life balance and support employee wellbeing,
- Create environments that promote engagement, and
- Satisfy everyone’s basic psychological needs of autonomy, competence, and relatedness (Friedman, R., The Best Place to Work).
In other words, psychological needs are at the heart of employee engagement.
So how can you foster a workplace environment of productivity AND happiness?
Autonomy – Exercising free will and the desire to be in control of our lives
- Lead with Aligned Autonomy – to strike the right balance between high levels of self-management and flexibility, and the need to marshal progress to make it all go in the same direction. You can achieve this by explaining the Why and the What, and leaving the How to the teams.
- Minimize the focus on rewards– When employees are only rewarded for their successes (i.e. the things they do well), they tend to stick to the routines they’ve been rewarded for and very rarely try new approaches. Instead, try rewarding employees when they try new approaches and recognise and celebrate failures as learning opportunities.
Competence – the ability to control the outcome of an activity and experience mastery of that task
- Move away from Job Descriptions – and instead, create roles and responsibilities which are crafted based on employees’ strengths. This means you also need to consider moving from individual goals to team goals to enable people to organise themselves around their strengths. One person’s weakness is another person’s strength.
- Provide strengths-based management – instead of trying to fix weaknesses or areas where employees have less natural ability. Strengths-based leadership maximizes productivity by allowing employees to become experts at what they already have a natural ability for. This increases focus, productivity, and a sense of purpose.
Relatedness – “interact with, be connected to, and experience caring for other people”
- Create connections – Create an onboarding process which involves other employees, so as to foster friendships and trust at work
- Create a “goals wall” – which allows employees to collaborate and connect on personal goals, heightening the feelings of caring for one another.
The traditional style of performance management which is still widely used today was created in the first industrial revolution and borne out of the belief that employees dislike their work and have little motivation, thus need to be micromanaged to ensure that work gets done “properly”. But what are the consequences of this type of culture? According to Gallup, global employee engagement is at a staggeringly low of 15% globally and in the UK last year, 45% of sick leave in organisations was stress-related. In the US alone depression is thought to count for up to 400 million lost workdays annually. Despite poor mental health being one of the leading causes of illness and sick leave worldwide, many employers are not fully cognisant of the impact they are having on people’s lives, and conversely the financial impact it has on their business at the same time.
It’s clear that current performance management activities don’t seem to be driving performance or engagement. In today’s knowledge economy, organisations need to be embracing a bottom-up approach to foster transparent communication and empower employees to make decisions faster by encouraging action at the team level.
Performance and happiness are not mutually exclusive in an organisation. Employee happiness is not fluffy, it is a business tool that, if incorporated and integrated in a strategic way, improves the productivity of employees and directly impacts the results and profitability of the company. Managing by strengths and creating the conditions that meet the psychological needs of employees increases happiness. And happiness increases the chances of an organisation’s key results to be achieved and, most importantly sustained.
Can you ignore it?
Rishita, great explanation of people and companies!
Performance management without strategic insight into people’s happiness simply applies project management as a tool for checking off tasks and boxes randomly.