The evolution of performance management: From stick to coaching
Claire’s heart was beating fast as she approached her manager’s office. Today was time for the dreaded performance appraisal. Last year her manager caught her off-guard and discussed things that he thought she performed poorly in throughout the year. She wondered why he could not have told her earlier. Her self-esteem was in tatters after the meeting and to add insult to injury, she did not receive a performance bonus and only a marginal increase! She was wondering what type of surprise lay in store for her today and seriously considered calling in sick.
Fortunately this approach to performance management seems to be followed by the minority of organisations. According to Bersin and Associates’ ‘High Impact Performance Management Study’ in 2011, only about 30% of organisations follow the results-only approach to performance management. The majority of organisations in the study followed a development-driven performance management approach.
Bersin and Associates compared these two approaches to performance management and called the one approach, the Competitive Assessment Model and the other approach the Coaching and Development Model. The theory underlying the Competitive Assessment Model is that by carefully evaluating people against their goals and each other, companies can create higher-performing organisations. In this model, behaviour such as the quantitative assessment of performance, bonuses tied to specific objectives and comparative evaluation is reinforced. The underlying belief is that “we want high-performers in our organisation." According to Bersin and Associates this approach stems from the General Electric Model of the “rugged individual”, and the belief that competition breeds success and that execution drives results.
Bersin and Associates described the underlying theory of the Coaching and Development Model as one where it is believed, that by identifying people’s strengths and development areas against a specific position, you can coach and develop people to improve their performance. The behaviour that is reinforced in this model is that of development planning, careful identification and communication of critical competencies, as well as self and multi-rater assessment. The underlying belief is that organisations want the “right people with the right behaviour." Bersin and Associates are of the view that this model stems from professional sports, Generation X and Y values and Tom Peter’s approach of “In search of excellence."
The evolution from the Competitive Assessment Model to the Coaching and Development model is depicted as follows by Bersin and Associates in their 2008 publication, The Essential Guide to Performance Management Practices.
Most organisations are not just following the Coaching and Development model to performance management because it feels good. Research by Aberdeen in 2010 showed that organisations with a more balanced approach to performance management reported increased customer satisfaction and had greater employee engagement. Based on an analysis of the performance of more than 600 sales representatives across 11 sales forces examined by SEC Solutions, a sister programme of the Corporate Leadership Council, calculated that improving the performance of the “core” of the sales force in a given organisation by 5% would yield more than $13 million in revenue.
Bersin and Associates, in a 2011 study, reported that organisations that are effective at coaching and developing their employees have better talent and business results than those that are not. They found for example, in a 2009 study that organisations with high-quality development plans have twice the revenue per employee than organisations with low-quality development plans.
What does all of this mean to organisations? The main message is that the nature of performance management is changing. That is why companies like Vodacom are not using the term Performance Management anymore, but prefer the term Performance Dialogue. In performance dialogue the emphasis is on the conversation that is aimed at improving performance. It also emphasises the developmental nature of the conversation and the link to learning and continuous improvement. It further assumes as Mike Brennan and Kim Heger say, “That annual reviews do not adequately capture a year’s worth of employee contributions - nor do they help employees to better understand how those contributions impact the success of the business." (http://clomedia.com/views/articles/transform-the-review-process). That is why the performance management process is not viewed as a one-time event, but as an ongoing conversation, recognising that employees want regular feedback to help them understand their contributions to organisational success.
This means that organisations need to develop line manager’s skills to be able to conduct the performance conversation effectively and to be able to give successful coaching. If all managers effectively implement the coaching and development approach to performance management, we will not have employees like Claire wanting to call in sick, just because it is time for the dreaded performance appraisal. Employees and managers will be eager to engage in these crucial conversations as it will be to their own benefit and ultimately, the organisation's.
