If the cylinders in your car’s engine aren’t in tune, your car performs poorly. So you tune-up the engine. But engines today are a far cry different than early-twentieth century engines. And so are tune-ups. Likewise, if your organization isn’t performing the way it should, it may be time for a performance management tune-up. According to Gallup’s new report “Re-Engineering Performance Management,” the old ways simply do not work anymore. Here are few important highlights from Gallup’s findings.
HISTORY OF PERFORMANCE MANAGEMENT
If your mechanic approached your car’s engine like it was a 1909 Model T four cylinder, you’d find another mechanic. Yet, leaders today depend on performance management processes that are just as antiquated. Many “modern” organizations’ performance management systems are designed on early- and mid-twentieth century (and even older) principles.
“Modern-day organizational use of performance evaluations,” Gallup reports, “first gained widespread notoriety during WWI, when military forces began using performance ratings as a means to identify soldiers whose poor performance merited a dismissal.
After WWI and WWII, performance evaluation systems became more common in nonmilitary organizations.” Those performance management systems were designed not only to achieve vastly different objectives in vastly different organizations, but also to serve a generation that’s vastly different than the millennials of today. If your organization is trying to make old management systems work in today’s workplace, you may be trying to repair a new engine with an old solution. A very old solution.
“Unfortunately, traditional performance management approaches were not built to fulfill the demands of the modern workforce,” reports Gallup.
First, there’s employee job satisfaction. And it matters. It matters that the people doing the job look forward to coming to work, see themselves as part of a larger team, and contributing something of value to the company mission. It matters if employees are engaged. Gallup reports that “the cost of poor management and lost productivity from employees in the U.S. who are not engaged or actively disengaged to be between $960 billion and $1.2 trillion per year. The cost of lost time spent on traditional approaches to performance evaluations alone is estimated to range from $2.4 million to $35 million per year for a company with 10,000 employees.” Do the math. The cost of disengaged, unfulfilled employees is high. Yet many leaders and managers may be scratching their heads wondering how they can motivate their employees to perform better.
WHAT WENT WRONG
Gallup reports that “30% of employees strongly agree their manager involves them in goal setting. These employees are nearly 4 times more likely to be engaged than other employees.” Yet, according to Gallup, today’s performance management systems “are broken in many organizations.” The systems are broken not because they are innately wrong, but because they are completely wrong for today’s organizations and today’s people. “They are characterized,” reports Gallup, “by insufficient metrics, infrequent performance reviews and ineffective feedback, leaving most employees underutilized and unmotivated.” Very likely if we’ve been in the workforce for more than a few years, we’ve been subject to “performance management” that is nothing more than a paper drill.
When it’s time for a report or evaluation, someone hammers it out (often the employee), managers and employees get together for “performance counseling.” Managers ask leading questions. Employees answer cheerfully (or not). They sign on the line, make copies, file them (maybe), and all’s forgotten. In my view, even the so-called antiquated performance management systems will work—at least work a lot better—if they were followed in good faith. But, generally, they aren’t. “This results in an investment of time and resources that is not delivering the desired impact of improved performance,” Gallup reports.
WHAT TO DO
Change the way you manage performance. Perhaps dramatically change it. Indeed, there’s a lot of advocacy for change these days. We want to change this, transform that, modernize the whole thing, and so more talk about changing performance management systems is tired. Perhaps. But that’s what leaders do. Not paper-leaders, real leaders: leaders make substantive, positive, lasting cultural change that pays dividends for employees and, by extension, pays dividends for the larger organization and the customer. So where to start?
“If leaders were to prioritize one action,” the report reads, “Gallup recommends that they start by equipping their managers to become coaches.” That’s a first step.
Leaders and managers serious about improving company performance, about giving employees a fulfilling, rewarding, engaged experience would do well to spend some time reading Gallup’s report. It could be time very, very well spent.