Performance (Mis-) Management (Part 2)

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In last week’s blog, we discussed three examples of poor Performance Management:

  1. Politics for a Bonus: An employee at a high-tech company chose to participate in the most visible project over the most impactful and critical project to improve her standing in a peer manager calibration-based performance management system.
  2. Meeting the Quotas: A salesperson who received a mediocre review for not meeting his cold call targets in spite of far exceeding his revenue targets “gamed the system” to make his cold call numbers look better rather than focusing on revenue.
  3. Going “Above and Beyond”: An energy company relocating two of its plants rewarded the team that was late and over-budget but worked long hours, not the team who worked reasonable hours and finished on-time and on-budget.

Three Questions Every Performance Manager Should Ask

So, with these examples in mind, here are three questions every process designer should ask when developing a performance management process. They won’t solve the problem, but may help reveal the issues before they have a chance to negatively impact performance.

  1. Are we measuring for the right things? No system is perfect. If you measure by peer review, for example, the unintended consequence is that an employee may focus on being popular rather than effective. Understanding that possibility and balancing it with direct performance measures and clear performance targets can help.
  2. Are we rewarding for activity or results? The well-intentioned idea that process drives results can lead to difficult situations where employees who actually deliver great results find themselves hog-tied by an inaccurate measure of success. You might ask, “Why did the salesperson ‘cheat’ the company by calling the helpdesk to fill his quota of outbound calls?” You should also ask, “Why should the salesperson receive his fully earned bonus (real money) by fulfilling a non-results metric?”
  3. Are we rewarding heroism over performance? The culture of the “eighty-hour workweek” is a subject much larger than this article. It’s become an imperative in many places to talk about how busy you are, how many hours you’ve worked, or the crippling schedule that’s ahead of you. Performance management often supports this phenomenon. But working long is not the same as working smart and getting results. Are the people doing the heroic work of keeping things moving actually doing good for the organization? Maybe they are, but maybe they’re working hard due to an unresolved underlying issue of their own or their management team. It’s a question worth asking. In our energy company example, the better way to manage performance would have been to give bonuses to the management and team members of the on-time, on-budget team—as well as the team members of the team that worked long hours. Perhaps they should fire the management team of the late, over-budget team for incredible mismanagement.

Despite a flood of news in the media that should convince me otherwise, I remain convinced that, by-and-large, people are good. Most want to do well, and they want to do well by others. And yet, companies often struggle with processes that award what seems to be “bad” or even outwardly dishonest behavior. Before you blame the person, make sure you look at the measures of success and the way you reward them.

Even the most passionate employee is working to make money. It’s job one. It pays the bills. If they feel that performance management is standing in the way of their well-deserved earnings, then they will develop a work around to make it work for them. It’s just business. The companies that recognize this will not only prevent the bad situations, but positives will follow: passionate employees, strong satisfaction and retention, and most important—productivity and results.

Andy Rice

Andy has played an instrumental role in the success of his clients, working with Fortune 500 companies and other organizations on critical initiatives including integrated talent management strategy and planning, talent management transformation, change management, business process improvement, and technology selection and implementations.

Topics: Performance Management, Compensation, Talent Management