Measuring the Right Thing in Performance Management

Ever feel like your performance management is a bit of a box ticking exercise?

You’re not on your own. A Towers Watson survey of 100 UK businesses in December 2013, revealed that 96% believed that Performance Management is important for their organisation, yet only 64% reported having either an effective or very effective approach.

People and their ongoing performance and development are crucial to profit. A growing understanding of this means a tick box approach to people appraisal and management isn’t going to cut it anymore.

What is performance management?

As defined by Michael Armstrong of the CIPD: “Performance management is a process which is defined to improve organisational, team and individual performance and which is owned and driven by line managers”.

Performance Management (PM) practices have been an integral part of most business models for decades and were traditionally a one-dimensional and isolated system managed by Human Resources.

Why is it so important?

CEOs now have a keen eye on how robust our PM systems really are and how closely linked they are to the overall business strategy.

Why is this? In the last 20 years or so, applied psychologists and professionals have been able to prove a direct link between people management and profitability.

Increasingly, many firms are moving toward rewarding development and innovation as there is now a realisation of just how important and influential employees can be to an organisation’s growth and ultimately its bottom line. PM systems are no longer a simple HR activity.

Subsequently millions of pounds have been invested into revamping organisation-wide PM approaches. The idea is if you invest in your people, you will gain a competitive edge, as well as benefit from increased profitability.

Updating your approach

In the past, most companies measured their employee’s performance based on their hard skills such as sales targets, volume of work etc. Generally any type of skill that could be tangibly measured and produced hard data. This was quite easy for line managers to appraise, you either met your targets or you didn’t. But now there is growing appreciation of soft skills and other less quantifiable behaviours and their role in performance.

It’s trickier to assess the more intangible or soft skills such as teamwork, cooperation and generally any trait that can be associated with Emotional Intelligence. How do we ensure that these skills are fairly and objectively appraised?

Although not as exact as the data produced by measuring hard skills, there are ways in which you can provide the most consistent and objective feedback possible as an appraiser:

360 degree feedback

Gaining feedback from the employee’s peers, customers, direct reports and superiors gives a well-rounded view of the individual and may provide valuable information on their competencies and soft skills and how they work.

Goal setting

Creating goals and milestones with the employee not only motivates them throughout the year but it is also a way to obtain data from the development of soft skills. For example, if there is a need to develop teamwork skills, you could create a goal with the employee to get involved with a least two team based projects a year. Linking some of these goals to the overall business strategy ensures that every person is ultimately working towards the same objectives.

Regular meetings throughout the year

Not only does this build a good rapport between you and your appraisee, it also increases their motivation to perform well. It is important to always ask them to send you the topics they would like to discuss in your meeting, as well as sharing yours. Having a combined agenda such as this brings structure and an appropriate level of expectation to the meeting.

Performance Appraisals and Performance Management systems in general are very complex yet desirable subjects to understand, especially by senior executives. As managers and appraisers, it is difficult to master the appraisal process. However, with increased self-awareness and consistency, along with some of the tips mentioned, you’ll not only make the process more efficient for you and your appraisee, but also hopefully more enjoyable!