A friend and colleague of mine likes to describe performance management as "an unsolvable problem". There are days, frankly, as I work with my clients to make this process a more valuable and effective one, that I feel inclined to agree with him. It's difficult. But it's also important.
With organizations increasingly seeking to spend their compensation dollars as wisely as possible - by linking them to performance results - we are left with this simple fact. There is no paying for performance without performance measurement of some type. And unless you are willing to reward performance simply and solely at the business unit level, that measurement will eventually need to get down to the level of the individual players.
So on to the task of making this process work better. Performance management can be improved, but not by merely fixing the form or the rating scale, as we are so often asked to do. It takes strong doses of commitment, discipline and accountability. Here to reinforce this point come the results of a new study by Mercer, the 2008 Performance Management Practices Survey, based on the practices of 350 U.S. companies.
Based on its findings, Mercer highlights the four most important drivers of performance management success:
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Executive commitment to the process. Amen. Unless your leadership group is willing to stand behind your program, not just in word but also in deed, your chances of making performance management truly work are slim to none.
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Calibration meetings to ensure that managers use the same “yardstick” to evaluate performance. Particularly in organizations with a history of inflated ratings, some level and type of calibration exercise is essential to ensure there is both truth and equity in how employee performance is measured. Insisting that managers present and explain their rating decisions in some kind of forum of their peers forces a level of accountability into the process. Something about sunshine being the best disinfectant. According to the Mercer results, 22% of participating organizations hold informal calibration meetings and 11% make calibration meetings mandatory.
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Strong manager capability. Certainly, there are skills and capabilities that have to be developed in order for managers to do a good job of planning, managing and assessing the performance of their reports.
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Use of technology. While technology alone will not turn a poor performance management process into a successful one unless numbers 1 through 3 above are addressed, today's performance management tools do bring great capabilities and advantages to enterprise performance planning and measurement. In the Mercer study, 40% of participating organizations already have this technology in place.
Also interesting as a side note, Mercer examined 23 elements of performance management program design to see which ones are used most frequently. The five more common performance management program design elements are:
- Individual goals (91% of participating organizations)
- Formal year-end review discussions (91% of participating organizations)
- Overall performance ratings (90% of participating organizations)
- Competencies/behaviors (83% of participating organizations)
- Formal performance planning discussions (82% of participating organizations)
Helpful information - I think - if your organization is truly interested in taking the steps necessary to make performance management work.
Ann -
Yes, Thanks, this is VERY helpful.
Posted by: Dan McCarthy | November 22, 2008 at 08:14 PM
Dan:
Glad that you found it so!
Posted by: Ann Bares | November 23, 2008 at 07:04 PM
Congratulations! This post was selected as one of the five best business blog posts of the week in my Three Star Leadership Midweek Review of the Business Blogs.
http://blog.threestarleadership.com/2008/11/26/112608-a-midweek-look-at-the-business-blogs.aspx
Wally Bock
Posted by: Wally Bock | November 26, 2008 at 06:32 PM
Thanks, Wally! Always cool to make it to the Midweek Review! Readers, be sure and click through - Wally has highlighted a number of interesting human capital related blogs and postings this week.
Posted by: Ann Bares | November 28, 2008 at 10:04 AM