June 10 2006 - "Most organizations have lost sight of the fact that performance management systems should aim to enhance performance by motivating staff." This is the conclusion of recent research by The Work Foundation in six case study organizations. The report suggests that "HR professionals are too concerned with 'tweaking' PM forms and software rather than focusing on what should result from the process - improved performance".
The report, 'What makes for Effective Performance Management', by Kathy Armstrong and Adrian Ward, identifies "profound confusion" about what PM is for. It is treated as a reward mechanism, a learning and development experience, or an exercise in control. Motivation appears to be less of a priority. The report argues that while the task of managing performance was universally held to be a "good thing" by the organizations concerned, they were unable to identify any concrete organizational benefits to justify this opinion.
Marianne Huggett, a consultant with The Work Foundation, said:
"An awful lot of organizations appear to be perpetually tweaking the process of performance management while ignoring the bigger picture of what it is supposed to be about in the first place - improving an organization's performance.
In too many organizations, performance management is a matter of elegant bureaucracy - a tiresome form-filling exercise staff and managers could cheerfully live without. Meanwhile, there is a reluctance to ask hard questions about what really comes out of it. In some cases, organizations might be well advised to not to worry so much about the forms and bureaucracy, and simply try and encourage ongoing dialogue and quality conversations between line managers and employees instead."
Armstrong and Ward say that "process can take up the most time and resources, but add only a small amount of value. This can be particularly dangerous where there is little or no attention paid to improving management's skills in managing performance - where the system itself is hoped to solve all the performance management issues, rather than the managers."
The report cautions against crude use of measurement in PM. The case study organizations use various techniques including 360-degree feedback to "vast amounts" of quantitative data. Often, this data is synthesized into a single rating that is intended to represent an individual's net contribution and determine their remuneration. This frequently describes an individual's performance as "satisfactory" or "average" - which the authors suggest is "not an overly motivating message". Furthermore, some managers use performance-related pay mechanisms to compensate staff they regard as being poorly paid.
"The real danger of becoming embroiled in the technical debates about rating, ranking and quotas is that it can drain the capacity of performance management to be a powerful vehicle for feedback, motivation and, yes, performance improvement" the authors say.
The report identifies seven critical issues of process and people management capability that organizations should debate when setting the parameters of performance management.
Process: the means by which individual performance is directed, assessed and rewarded.
People management capability: the skills, attitudes, behaviours and knowledge that line managers need in order to raise performance.
Armstrong and Ward argue that successful PM depends on the interplay of all of these factors.
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