Fixing a Broken Performance Management System – Part I

July 5th, 2016 by

As a manager, few things are harder than delivering honest performance feedback to an employee.  Of course giving bad news isn’t supposed to be Performance-Review-Chalkboardfun.  Some managers avoid giving bad news altogether hoping performance improves on its own.  Others sugar coat the news to the point that the employee can’t see the problem.  Then there are those managers who just “tell it like it is” with no filters or tact.  They may succeed in getting their point across but at a cost.  

Many managers struggle equally at giving good performance news.  Some pour on the kudos so much or so generically that employees aren’t sure what specific actions are being praised.  And then far too many other managers don’t take the time to give any feedback at all, usually because they are so “busy.”   It’s no wonder why HR professionals and executives alike regularly bemoan the state of their performance management process.  So it seems that the only people that like how performance management is practiced at many companies are those slackers who aren’t being appropriately addressed …

At what cost? Employee underperformance is at epidemic proportions in some companies.  On average, U.S. managers waste 34 days per year dealing with underperformance.  Tolerated underperformance is also a leading reason top performers, who have to work harder to cover the slack, leave for greener pastures.  Eventually this underperformance affects customers and that of course affects the top and bottom line.  Don’t believe me, think of how frustrated you are as a customer when you’re at the hands of an underperforming employee.  How does that employee’s behavior affect your future buying patterns? 

The Cure.  Fortunately the cure for poor performance management is simple to understand and it doesn’t hurt.  And to be clear, the problem isn’t with whatever appraisal form you use. I’ve never seen an appraisal form that makes up for poor hiring, unclear expectations, infrequent or non-existent 1:1 meetings with employees, poor managers, poor execution,  and so on.  More on the form in next week’s article.

First, most employee performance problems are really hiring problems.  We regularly hire people that don’t fit our culture and then we waste valuable time trying to “fix” them.  I heard it put once, you’re hired [too quickly] for what you know and fired [too slowly] for who you are.  The cure: only hire people that fit your culture.   At this point I normally see executive eye rolling when I speak on this subject.  I realize that “defining your culture” seems like another “squishy” HR thing to a busy executive but the process really can be quite simple.  Minimally take your company values and find people that possess those values.  Of course this assumes we have values, and that we live those values daily.  Applicants either possess the values or they don’t.  This isn’t a 1 – 10 rating kind of thing.  If they posses the value, then take Gino Wickman’s advice in his book Traction and ask yourself for each applicant:  Do they Get it [the role], Want it [to work with you], and have the Capacity [knowledge, skill and capability] to do it (GWC).  I could add twenty more steps for defining your culture, and they probably won’t get you any farther than your values and GWC.

Second, there should be no disagreement over what successful performance looks like at your company. Instead of using out dated and/or generic job descriptions, consider setting clear expectations and measures for each employee that are directly or at least indirectly tied to organizational priorities.  So for example, a typical CFO job description might say “Assure optimum utilization of financial resources through sound forecasting and cash management.”  Alternatively, a success profile would say:

  • Reduce costs by 10% across-the-board to achieve EBIT objectives for the next fiscal year. 
  • Establish cross functional cost reduction teams within three months completing work in 12 months.
  • Within nine months, achieve a 15% price reduction in raw materials.
  • Develop a back-up sourcing plan to ensure cost reduction of $700,000 in year one.

Now imagine you’ve taken the time to establish annual performance objectives like that with each of your employees.  I realize it takes time for the manager.  But think how much easier it would be to measure performance, to deliver feedback.  Think of how much ownership the employee would have over the results.  And think of how much better your company performance would be if all employees were working a similar plan.  Unfortunately, without such specificity, the responsibility rests on each manager to subjectively determine if someone’s performance is satisfactory.  And that is a very uncomfortable place to be and is one explanation for why typical performance ratings don’t reflect reality.

So, hire people that fit your culture and provide crystal clear expectations of success for each employee and you’re well on the way to fixing your broken performance management system.  Tune in next week when I cover more secrets to fixing your broken system.

If you have employees in North Carolina and need help implementing or fine-tuning your Performance Management system, CAI can help with advice, information, tools, templates and more.

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