How to do performance management in 2022.

Or at least my view.

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Happy Wednesday, folks!

I know I’m one day late, but better late than never and all that fuzz.
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Today we’ll talk about performance management. And let’s just get to it.

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In the modern world, organizations are constantly moving forward. There is always something new to be discovered and achieved. Thus, you need your employees to grow and develop. Most of us agree here. 

We also often conclude that we need a performance management process to do so.

After all, we need to know what our employees are doing and how we can keep them motivated and productive. The idea is as old as our profession. The earliest versions of performance management emerged in the 1920s, and I've covered that somewhat in the past. It's almost a religious fact that you need to have a performance management process in place, or else people won't develop or even work. The "you can't manage what you don't measure" argument still holds true in many organizations. 

Hence you need to measure it. But how do you measure performance? What are the performance metrics we use in our day-to-day work? Back in the day, it was pretty straightforward; we measured time. You came to the factory, stood at the assembly line, and went home. How fast you did stuff was what counted. But we all can acknowledge that this has shifted over the last decades. Perhaps even more dramatically in the past few years. 

We, of course, haven't been ignorant of the shift. Through different models, we've been trying to keep up. We have 9-grids, 360-tools, and whatnot, and are trying our best to evaluate our employees—all to develop people as fast as possible. 

I believe that’s the wrong approach. 

Firstly, a performance management process can be a hindrance rather than a help in developing people. It’s often viewed as cumbersome and time-consuming. As Alanis Morissette would have put it, isn't it ironic? Here we are trying to improve performance and output while asking the employees and managers to spend a lot of time filling out forms rather than working or developing themselves. Is it worth it? 

Moreover, and here I'm heavily influenced by the works of Marcus Buckingham and Ashley Goodall and their excellent book "Nine Lies About Work," we are poor raters of others. And most of the performance management processes we have today are built around the "brilliant" managers and their ability to accurately rate their employees’ performances. Research has shown us repeatedly that we are poor raters who are more wrong than right. Our ratings usually tell more about us vs. the ones we are rating. Not great.

Still, organizations spend an endless amount of time on their performance processes. They hire HR experts (such as myself) to manage their processes. They spend money on expensive tools and systems to help them manage their employees' performance. Some even invest heavily into coaching and training to help them be more accurate in their ratings and feedback - but the results are underwhelming at best. 

The critical problem with our traditional performance processes is that they require too much effort from both sides to produce results that are, at best, mediocre. Not great either. 

Let's do a quick calculation on this! 

You have 500 employees and 60 managers. If you do the proper process, we estimate that the employee spends at least two hours on their development in connection to the process to prepare and have the talk and summarize stuff afterward. That's 1000 hours spent. 

Then the manager must spend one hour preparing for the talk with the employee, one hour in the meeting, and thirty minutes to summarize—two and a half hours per manager. 

The average manager has 8,3 employees, but let's be conservative and say 8. 

That's 8*2,5 = 20 hours per manager times 60 managers. 1200 hours. 

That's 2200 hours. The median hourly pay for a US worker with a college degree is 40 dollars per hour. That's 88000 dollars in time spent on the performance process. And I'm on the lower end here. 

It might be money well spent. But for it to be, you need to be sure it's increasing retention, performance, and employee engagement. 

Are you sure of it? 

Or are we still doing the performance process in the same good old way that we always have for the sake of the ritual versus looking at what we gain from it? 

What to do instead? 

Beyond being influenced by “Nine Lies About Work,” it's impossible for me not to be influenced by old workplaces, such as Spotify; combine that with the work I've been doing over the last years with different organizations, and I've landed at the conclusion that I like a lightweight approach to performance management and performance reviews. 

To put it simply, don’t overdo it. 

And do it for the right reasons. Enable the business and enable managers. 

I'm not saying or advocating that you should abandon the performance management process, I'm saying you should challenge how you do it and the value you get from it. Explore alternative ways of doing it and even new ways of working so that the process can work for you rather than you working for it. 

How do you then do it? 

As mentioned, I like the lightweight approach, which centers around a meaningful conversation between the employee and the manager. 

Simply an open and honest conversation about where the employee is heading and how the manager views that direction. 

Before having the conversation, the manager should ask themselves a bunch of questions. 

"Ok, Johannes, we hear you, but what ARE these questions?" 

In their book, Marcus and Ashley point out that we are poor raters of others but are indeed great raters of our own experiences. No one else knows our experiences better than we do. Hence the questions should be aimed more toward what the manager experiences and feels vs. how they perceive someone else. 

It's an approach that resonates with me, and every time I have the opportunity, I squeeze these questions in. 

"Do you always go to this team member when you need extraordinary results?" 

"Do you choose to work with this team member as much as you possibly can?"

"Would you promote this person today if you could?"

"Do you think this person has a performance problem that you need to address immediately?"

"How would you feel if this person were to leave tomorrow?"

These are the questions Marcus and Ashley highlight in the book, and I can't stress enough that this book is worth reading. I have it as an e-book, a physical book, and an audiobook, and I listen to it at least once a year. 

By asking these questions, the manager is way better prepared for the conversation with the employee, and as mentioned, that's where the magic happens. Hence, we need to design and ensure the exchange is good. 

Another controversial aspect is that I would like to add a calibration meeting around performance. I say it's controversial because when suggesting this, the reaction from many is that "but is it ok to talk about employees in this way"? And I believe it to be if you take your stance in the questions above. Then it's the managers talking about their reactions, not if person X is this or that way. 

I like to do this calibration meeting before the manager discusses it with the employee because it allows the manager to practice what they want to say to the employee. 

And then it's time to meet with the employee, and did I say that's where the magic should happen? Did I? That meeting is probably worth a whole article, but that's a story for another day. 

There you have it, my semi-high-level thinking on performance management. There are (most likely) flaws to this process and if you have opinions, suggestions for improvements, or other comments - please let me know in the comments!