Friday, November 20, 2009


Performance management is meant to be about getting the best out of employees yet instead the process breeds mediocrity and disillusionment. With this article I hope to expose the way performance is invariably calculated, it's pitfalls and suggest how it can be done differently or more correctly, how it can be done according to the evidence obtained from within the practices of a good society.

Somewhere in the middle

Setting goals is a good thing. We should all want to do this. They help us to focus on those areas of our job role that will most benefit us as individuals, our team, it's manager and ultimately both the customer and the business. It is therefore strange that companies so often make a hash of performance setting and reward.

Invariably most large companies will use a simple measure to budget for performance related bonuses. A bell-curve. Few people are budgeted to receive a very poor performance rating and therefore no bonus, as well as very few are budgeted to do extremely well. The bell-curve is designed for mediocraty, where the majority will fall somewhere in the middle. It is this budgeted measure that now impacts the true value of goal setting.

If you are less than aware of the dark art of performance grading you will have yet to learn about 'consolidation'. This is where your performance rating is then compared against your team mates, right up to comparisions with other team members of different areas making up the same department. Essentially, if the budget states that only 5% of employees are to receive the top end of the bonus scale, then if a department exceeds this quota, you will have to decide who gets into that 5% and who gets pushed back.

What you might not be aware of is that most companies will have a process for exceeding their quota yet it requires paperwork and the strong will of your managers.

In effect, if you do very poorly or extremely well, you could be bumped up or down according to how the business has prepared their budget. And without the strong will of your management team, you are going to be preferably squeezed into the comfort of the middle. It is the middle where most budget resides and the least scrutiny paid.

What does this practice really mean? The weak scrape through and continue to erode the customer experience and business goals. Those that excel are demoted in both recognition and enthusiasm, which in turn will show in how well the customer is treated and business goals achieved.

Taking a purely rational, factual based view of the way most large companies manage performance, mediocrity is the goal. It is easier and cheaper to budget for. The matter that it actually affects employees, the business and the customer is less of a concern. Such affects do not appear in the budget.

Excellent until proven otherwise

What if the curve was different? What if everyone was expected to excel in achieving the goals they have set? What if no one was expected to do poorly? Does that mean you are aiming for excellence, or are you essentially making it easier for the weak to hide and setting no challenge for those that thrive on being better than their peers?

Whilst I feel the argument is strong, it is only strong because of poor management. And the quality of management is not down to the individual manager, but the structure of teams.

Mandate or motivate?

For a team to be effective it needs to have clear direction and simple processes. Individuals need to work together and support one another. Drive to achieving a business goal needs to be at the core of the team. So what needs to be managed?

Individuals are less likely to need management if everything is clear and their peers are aligned to support them. Therefore management is there only to deal with ambiguity as a result of change. Change in customer behavior, in business goals, and in personal circumstances.

A team, no matter the size, can deal with change providing it is broken down simply. The roles of the individuals are clear and empowerment to succeed is strong. Whether a colleague goes off sick, or the customer's stop buying as much, the team are most likely to respond well to the change provided they are permitted to.

So where does that leave a manager? Well, other than the title, nowhere. What it does open up is the opportunity foe someone to be placed as a leader. Someone who can coach and mentor the team and the individuals to excel. Someone who can act as an ambassador between teams. Someone who will protect and nurture the team.

This is not an outlandish concept that has never been tried. It is in fact the core of society. Management is an invention of man based on monarchies and slavery of past. You don't need to be managed. You get up in the morning, go to work, pay your bills, and so on... all without a manager. You do however have the respect for others who have clarity of thought, share knowledge and show both compassion and drive. It is these people we look to when personally we don't see a solution, when we don't have the answer or when we simply have lost our way. We look to these people as our leaders.

So if you budget for excellence across the company, empower your teams and provide good leadership, how do you monitor performance?

Black on white

Performance is based on 1 single and very simple criterium. Did you achieve the goal? Yes or no.

How do you measure how well that person did at achieving that goal? How do you determine if that goal was met at the sacrifice of another? How do you know that achieving that goal was easy or hard for the individual?

Whilst relevant, these questions are only relevant when the goals are unclear.

"Make money" - is not a goal. It's ambiguous and invokes the questions of measure. "Demonstrate an improved relationship with the customer where they spend more money with us than they have in the past" - is much better. On achieving this goal the detail is inherent.

At this point does it matter of whether the person was working to the best of their ability or not? The goal has been achieved and an incentive applied. But the question is then how do you get people to excel?

Driving towards excellence

Performance ratings based on goals are not going to demonstrate this. To measure someones ability to excel based on meeting goals then becomes undeniably subjective and emotive. No performance measure should be left to this as it will demeritise the whole process to that of a popularity contest.

If you want to recognise excellence, you have to recognise it at it's source. When it happens. In the same way you would also nip bad behavior as soon as it arises. Much like receiving a speeding ticket days after the offence. It's a bit late to be contemplating driving more slowly. As logic would suggest, you don't send out rewards to drivers who kept to the speed limit - that's the point after all, the job at hand. So how would you notice someone who was undeniably courteous and excels in careful driving? Through the recognition of other drivers. Through on the spot reward. A simple wave rewards the driver who courteously allows another in to a busy lane. A thank you at the end of a safe journey from the passengers. It is recognised and rewarded as it happens.

The great thing about recognising excellence as it happens is that it is infectious. Once one person has let someone into a busy lane and received their wave as reward, so does that driver make space at the next intersection and so on. Even casual observers become infected. Drivers behind you begin to let in other cars and so on.

Excellence is everywhere and happens all the time. A manager, particularly one constantly in meetings, will be exposed to less of this happening within their team. It is therefore essential than the guidelines are clear for how rewarding can be done and get everyone doing it.

In summary

- Budget for excellence not mediocrity.
- Set clear achievable goals based on evidence.
- Lead your team don't manage them.
- Give everyone the opportunity to recognise and reward excellence as it happens.