Bill Conway would say that there are two things that matter: working on the right things and working on them the right way. Performance Management is all about how we as leaders orient our organizations around those two things.
When we asked our Partners In Improvement to define Performance Management, we heard a range of perspectives:
- the strategic orientation of the organization
- process performance management
- setting of goals and objectives
- individual performance appraisals
- daily direction and feedback to reinforce desired behaviors
- providing tools and coaching to help people be successful
- rewards and recognition
From the strategic perspective, performance management begins with the identification of what’s vital to the organization. If these priorities are not clear and it is not clear what role everyone plays in the priorities, the rest is unlikely to mean much.
Several of the Partners pointed out that performance management refers not just to people management, but to process management, and plant management (which one of the Partners called the “3 Ps – People, Plant, and Process”).
One of the Partners explained that she always starts by measuring the performance of the process. To improve the process, based on the root cause analysis she would work to improve the people performance, tools, materials, methods, the environment, or whatever factor was driving the performance of a process.
While there are clearly a wide range of views about how to manage performance, several excellent points or best practices generated quite a bit of support during our discussions:
- Performance Management must be about much more than individual performance measurement. As Deming said, over 90% of problems are caused by the system not the person. To manage performance, we must manage the system by which people, plant, process interact to produce results.
- Frequent observation and feedback is more helpful to people than formal annual reviews.
- Frequent communication about what an organization needs and wants greatly increases the odds that the organization will get what they need and want.
- Group rewards encourage teamwork, while individual rewards encourage an individual to optimize his or her own goals even if it may sub-optimize the organization as a whole.
- Tying money directly to performance appraisal can be a two-edged sword – raising stress and reducing the intrinsic rewards and personal satisfaction from doing a good job for the team.
- Avoid performance management in the rear view mirror – in other words, avoid “Monday morning quarterbacking.”
- Make more of the goal setting process which produces targets against which we measure performance and take corrective action