It’s difficult to overstate the importance of performance management (PM) to overall business success. Between formal and informal processes, it’s responsible for getting employees all moving in the same direction, but also for helping them become their best version of themselves, boosting retention, improving engagement, and so much more. However, if performance management is so critical to success, why do so many organizations fail at it?
Ultimately, it usually comes down to things that go wrong deep within their PM processes. It’s hard to get the details right. And it’s usually the small things that derail our best efforts.
Are your performance management efforts doomed to failure? They could be. In this post, we’ll discuss some of the most common details that organizations get wrong to help you correct your course.
Problems with Metrics
One of the most common problems when it comes to performance management is a failure to align metrics with desired performance. For instance, consider the way that some manufacturing companies work. Each shift has a production target that is specific to itself and does not tie to the shift before or after. There is no continuous flow. On the surface, it seems to make sense. If you set a single goal for each shift, then each shift will strive to meet that goal and the business will hit productivity goals.
The problem is that it doesn’t usually work that way. When a shift is solely responsible for its own production, the people on the shift will decide whether they can reach the goal or not. If they are running behind, there is every incentive not to push toward an insurmountable goal because any progress that shift makes would go to the people on the following shift. It would lead to a skewed image where the shift that did much of the work would get none of the credit.
A better option would be to set overall daily productivity goals toward which all shifts work, with all efforts feeding into the same goal. It’s all about getting employees pulling in the same direction, and ensuring that each shift supports the others.
Performance management is all about people management and setting accurate targets. You want to encourage your people to move from where they are in terms of performance to where they need to be (point A to point Z). However, you cannot set point Z as the target – it is simply too much of a challenge. Even setting point M as a midway point between the two may be too much.
Setting targets requires a good understanding of what you’re asking of your people, as well as whether it is feasible to reach a particular point in development within a specific timeframe. More and more, organizations are moving toward “chunking” the performance journey into smaller steps, similar to how content is chunked in learning and development. These “baby steps” break big performance asks into smaller, more manageable adjustments. They might be small now, but they add up to big changes over time.
However, the converse is also true. To make progress and change easier on employees, managers may set their targets too low. While very high targets can be demotivating for employees, those that are too low are often seen as not worth the bother.
Managers and leaders must find the right balance of too high and too low. Striking that midpoint requires a solid understanding of what your team can realistically accomplish, but also the cultural effects that impact goal-setting. For instance, in the US, the “bigger is better” fallacy often rears its head in the goal-setting process, leading to goals that are simply unattainable and leading to disengagement and frustration in employees.
The Missing Link
No organization can be successful if employees don’t buy into the need to change. If employees don’t believe performance targets are meaningful, they won’t buy-in. They might pay lip service to reaching those goals, but their effort will be minimal.
The missing link here is transparency – managers and other leaders often fail to connect the dots for employees in terms of why changes are necessary and how they ultimately affect the company’s success. Many challenges exist here, though, including metrics at one level of the organization not linking with metrics in another. That creates a very real disconnect between employee efforts and organizational results across the business.
Again, this is a balancing act. Targets and changes must be unified, but also tailored to each level of the organization. For instance, at the C-suite level, production could be the focus. One step down, the focus is identifying production-related bottlenecks. The step below that could be identifying the root causes of bottlenecks. Below that is delivering a solution to those root causes. And, for employees on the ground, the goal is following processes that eliminate the root causes that create production-related bottlenecks, helping to ensure that the business can hit production targets.
However, it’s not enough to set related targets. Those must be communicated to individuals at all levels of the organization and a line must be drawn from each employee’s daily performance to the performance of the business. Connect the dots and you’ll link everything together, creating transparency that supports success and understanding at all levels.
Bring It All Together
The pitfalls discussed in this article are just the tip of the proverbial iceberg, yet they are among the most common problems affecting performance management across organizations in all industries. What’s more, most organizations that experience one of these pitfalls often experience two or more. It is crucial to take an unbiased look at how things are done, why, how targets are set, and make all necessary changes. Doing things simply because “that’s how it’s always been done” is no longer good enough. Radical performance improvements often require radical changes to performance management.
With buy-in from employees, support from management, and a deep understanding of the business, as well as how to set targets for change, it becomes possible to transform even the lowest-performing company into a powerful competitor.