The Failings of Performance Management
BY JOHN M. BERNARD
PART TWO OF A FOUR-PART SERIES ON APPROACHES TO EMPLOYEE ENGAGEMENT
In the world of management, employee engagement is the Holy Grail. Extensive research shows a compelling positive correlation between the level of engagement and customer satisfaction, product quality and profitability. In fact, organizations in the top quartile of employee engagement out earn their competitive peers by 22-28 percent.
In my last blog I wrote about attempts at workforce engagement through exhortation (words, talks, campaigns, encouragement, and rewards). The fatal flaw in that approach is that enthusiasm doesn’t solve underlying problems, and believing that if we just “pump” people up we’ll get sustainable improvement is naive.
A very popular and common approach to engagement is performance management, often the modern-day equivalent of management by objective. It’s underlying assumption is that if management organizes the work, and everyone is accountable for his or her part, the organization will achieve extraordinary results. Underneath this approach is a belief that it is all about individual accountability – and if we write it down and hold people to their piece of the puzzle, the business is bound to succeed. And sometimes they do succeed although it is usually only with small incremental improvements that do not move the needle forward enough.
Performance management isn’t a bad notion, but it has some fundamental flaws. First of all it holds people accountable for things they usually only have some control over. Also, in the absence of relevant concrete measures it often has many “measures” that are based on opinion rather than fact. Second, a performance management goal measured only by a task due date, and does not include a measure for the quality of the completed task because it is viewed as too subjective, is a very weak goal.
Third, if employees are not solving problems using data-driven root cause analysis, no amount of performance management mechanics will improve the customer experience or achieve financial goals.
And the reality is if performance management is used as a hammer, then everyone ends up scrambling to meet their targets even if doing so has an unintended negative consequence to the team or the organization. In the real world things change and sometimes walking away from certain objectives becomes clearly the right thing to do. But changing plans can have a consequence during that dreaded annual performance review.
Performance management can easily lead to an every-man/woman for himself/herself environment. That annual review must go well.
There are exceptions to every rule, but most performance management systems have the hollow ring of an empty metal barrel.
Dr. W. Edwards Deming, one of the most influential management thinkers of the past century, called performance reviews one of the “7 Deadly Sins” of western management. He said that the system people work within and its impact on co-worker and customer interactions determines 90 to 95 percent of performance – not the individual.
Deming and others (me included) believe that performance management does far more to engender individualism, self-protection and fear than it does to serve the need every organization has for innovation.
Learn more by reading Business at the Speed of Now.
Employee Engagement by Exhortation
Okay. Forgive the big word. Merriam-Webster defines exhortation as “language intended to incite or encourage.” In plain speak it’s about excited talk, passionate words, and loud barking. If we talk about our organization’s goals with enough energy we will create it – that’s the underlying belief of the exhortation approach to employee engagement.
The great search for ways to engage employees involves many well-intended but misguided approaches. Exhortation. Management by objectives. Tools and techniques. Over the next three posts I’ll explore each approach and reveal why they have very limited results.
Exhortation focuses on building enthusiasm through campaigns, posters, rallies, all-hands meetings, and incentives. It’s about pulling the organization together in an auditorium with colorful banners everywhere, the surprise appearance of a marching band, a new set of exciting incentives including a trip to Hawaii for the best new idea – all in hopes of inspiring a revolution in performance.
See the famous speech: George C. Scott as General Patton
It’s all about challenging people with words in the hope that somehow magically the organization will find its way through the current maze of obstacles to success — if everyone genuinely shares the excitement and “steps up” to the challenge.
The underlying belief of exhortation is that people simply are not giving it their all, and so management’s job is to entice and encourage people to do a better job than they previously have.
We’ve all seen this done. It’s hard to deny the excitement of it all. Hope is a wonderful thing!
Engaging employees through exhortation doesn’t work because it assumes employees:
- Understand the direction the organization is heading
- See how what they do every day contributes to that direction
- Know exactly that for which they are accountable
- Are able to measure their success in meeting their goals
- Have the skills, knowledge and tools to do their jobs successfully
- Know how to effectively solve problems they encounter
- Feel safe making decisions and implementing their ideas
If these elements are not in place, the exhortation approach might have some temporary impact, but in the end it is sure to disappoint everyone involved.
Wishing it doesn’t make it so.
When Change is Cosmetic
It is hard to comprehend that with all the incredible effort to more effectively engage employees over the past 25 years, according to Gallup data, we as leaders have failed miserably. The numbers today are hovering around 30 percent engaged, 50 percent disengaged and 20 percent disengaged. And if anything engagement has slightly declined over the years regardless of all the efforts to creating higher performing organizations.
As a result, it seems easy to assume that these numbers reflect the authentic nature of humans in the workplace, but two facts dispute that assumption.
FACT ONE: There are some organizations that achieve significantly higher levels of engagement, and according to Gallup, and they enjoy statistically greater profitability, higher customer satisfaction and better quality products and services.
FACT TWO: In my experience, by utilizing the NOW Management System as described in Business at the Speed of Now, an organization can significantly improve employee engagement in as few as 18 months.
Among the sincere efforts to engage employees are such powerful methods as lean, Kaizen, and Six Sigma. Sure they can effectively fix broken processes, but they don’t change the way of thinking in a systemic way. Yet, these efforts, treated as programs, rarely survive long term unless by sheer force of will.
Insincere efforts such as communications campaigns and suggestion boxes are truly cosmetic, and are nothing more than hope that if we wish for change hard enough it will happen.
You can lather on makeup to try and improve things – and it may work for a while – but real engagement demands a different system of management. It requires rethinking HOW we run the organization. And, it requires managers do a lot of work reengineering their management process.
People Are Terrible Machines
A charming children’s book titled “Children Make Terrible Pets” tells the story of a young bear who came upon a small lost boy in the forest and wanted to take him home as a pet. His mother cautioned the bear warning that children do not make good pets.
The whole notion made me laugh because it reminded me about the reality that people by their nature are independent, curious, questioning, passionate, emotional, opinionated and frequently irritable. To conclude the opposite, that human beings are basically rational and logical, defies what we experience in each other and in ourselves. And to believe that it is human nature to sit by quietly and comply with whatever we are told to do is to misunderstand the very nature of being human.
But when we look at the workplace and our underlying management model it is highly dependent upon people doing exactly as they are told – being compliant. Even in this post-Mass Production Age employees are largely still seen as cogs in the great machine of enterprise. The enterprise relies heavily on these complicated, messy and often troublesome humans to mechanically and reliably repeat its processes delivering its goods and services.
The problem is that people are terrible machines. Rather than being able to rely on them to just do as they are told, it is their nature to question, to challenge, and to improve whatever it is they do. This is not to say people are not reliable, the problem is they just don’t enjoy being compliant for compliance’s sake. Machines do a much better job at being compliant because they are designed to only do what they do.
To get people to comply we have to disengage their human nature. We have to use something to keep them focused and doing what we want them to do. Unfortunately, the drug of choice for controlling people is fear. Fear of losing their job, fear of not fitting in, fear of not being good enough, fear of the boss, or even simply the fear of being called out in front of your peers.
Now I know fear is not a polite word and the vast majority of managers would likely deny they use fear to keep their people on the straight and narrow. But in the real world of messy, creative, thinking and feeling human beings, fear is the silent killer of human spirit and thus human innovation.
After all, without fear, people are terrible machines. So, with a little fear, most people out of necessity will begrudgingly leave their humanness at home, come to work, and try their best to simply do what they are told to do.