HR Pulse

Against the odds: Performance management that works

 In some organisations the feeling of doom happens once a year, in most organisations twice a year and in a few others more regularly than that. You just have to walk into a government office where the performance management process is still compliance-driven and paper-based to see the despondence on the face of the person pushing the trolley with all the paper. In general, performance management is viewed as a necessary evil and most people dread the process.

A report by Gartner in March 2012 cited various research reports that indicated that organisations in general are not very satisfied with their performance management systems. Sibson Consulting and WorldatWork found, for example, that more than half of the respondents (58%) in a 2010 Study on the State of Performance Management gave their organisations' performance management system a grade of C or below. In this same study only 47% of respondents felt their performance management system helped the organisation to achieve its strategic objectives.

In its report, Gartner referred to another article by Avraham Kluger and Angelo DeNisi in the Psychological Bulletin. The authors published a meta-analysis of 607 studies of performance evaluations which concluded that at least 30% of performance reviews resulted in decreased employee performance. In general, employees felt that the process was not fair, and frequently found it demotivating.

The reason for this dismal view of performance management is often laid at the manager’s feet. Managers seem to lack the know-how and courage to conduct productive performance discussions and provide feedback that will lead to improved performance. Despite all the negative feedback, there are organisations that have succeeded in building robust and effective performance management systems. Interviews with these organisations reveal the following success factors:

1)    A strong link with the organisation’s overall business strategy

Successful organisations succeed in linking their performance management system directly to the organisation’s strategy. Chrystal Christian, Manager at the Training Academy of Volkswagen Group South Africa, says, for example, that the performance management system is viewed as a strong enabler to help Volkswagen achieve its strategic vision of being, ”The most fascinating automotive group in South Africa." Mpho Nkeli, the Chief Human Resources Officer at Vodacom views the alignment of performance goals to business strategy as one of the three main levers in implementing the organisation’s performance management process.

2)    A supportive organisational climate and integration with organisational values

It is clear that if an organisation’s culture and values do not support performance management, the process is doomed to fail. A company that succeeded in creating a supportive climate and aligning the process to its values, is South African Breweries (SAB). Lita Currie, Learning and Development Manager at SAB mentioned that performance management is part of the DNA of SAB - “we’ve had it for the last 21 years!  It’s the way we do things. Our PM system is underpinned by the values of the organisation and how we engage with one another. This is done through the key performance management interactions and all employees are expected to practice a level of communication which is characterised by respect, honesty and constructive feedback."

Christian explains that, “The culture at Volkswagen Group South Africa is one which epitomizes high performance. An easy analogy to arrive at because the products in the Group are external showcases of performance at many levels. Mostly everything is quantified, measured and reported on."

3)    Positive employee engagement

It is probably unrealistic to expect that employees and managers will be positive about performance management if there is not a level of positive employee engagement and commitment to the company. As Currie observes, “Performance management won’t work without employee engagement, though. Our people are passionate about our company and our brands, and that’s the reason why they go the extra mile. That has a direct impact on our high-performance culture."

4)    A consistent, transparent, enterprise-wide approach

I saw first-hand the confusion that an inconsistent approach can have on an organisation when I worked at the SABC in the late 1990’s. It had three different systems in the course of five years. Chrystal Christian of Volkswagen Group South Africa thinks that their system works well because of the transparency and uniformity of approach throughout the organisation.  

5)    Integration with the total talent management process, as well as a direct link to career management and training and development

In addition to the link between pay and performance, the more successful companies integrate performance management with talent management. There is also a direct link to career management and training and development. Volkswagen’s performance management system covers a broad area of technical competence and personal attributes required to meet the expected performance standards.

As  Christian  explains: “In addition, the outcome of any performance feedback is supported with structured training and development opportunities so that the total talent management process is interlinked”. Mpho Nkeli stresses that, “Enabling all our people to develop and meet Vodacom’s opportunities is of equal importance. With this mindset we are able to stretch and prepare for the years ahead."

6)    The use of feedback from multiple sources

Most companies that have effective performance management are starting to incorporate multi-rater feedback into their systems. Both SAB and the Volkswagen Group in South Africa obtain feedback from business partners, customers and a review of individual performance by a collective management team. This assists with the calibration of the results.

7)    Performance management is a managed process

Christian, describes how the Volkswagen Group South Africa is supported by a disciplined process of goal setting (top-down); monthly reporting on KPI (key performance indicator) progress and focus on corrective actions.

8)    Shared ownership

Companies that have effective performance management have shared ownership of the process and Human Resources are viewed as providing the tools and support. At SAB for example, line managers own the process – they have regular goal review meetings with individual employees and their teams, with a standard format that supports a coaching approach. At Volkswagen South Africa, performance management is a shared responsibility and individuals take ownership of their performance by being active participants in the process.

9)    A focus on results, as well as process

Currie tells how a couple of years ago they noticed that people would achieve the goals at any cost - which didn’t bode well for employee wellness. “The ‘what’ was more important than anything else.  SAB balanced it by bringing in the ‘how’ - currently a person’s style (as a manager or a team member) is also assessed and has the power to either decrease a performance score or increase it. Whole person goals were introduced looking specifically at encompassing not just ‘What’ output goals, but ‘How’ development, management and self-management goals."  

10)    Automation of the process

Best-in-class companies are not running paper-based systems any more. The sheer effort and lack of continuity severely impacts on the effectiveness of the process. Automation allows for the easy management of for example multi-rater input, regular reporting and monitoring.

It is clear that by taking these ten critical success factors into account, organisations can greatly improve the success of their performance management processes and also succeed – against all odds!