PERFORMANCE is arguably the most famous word in the world and especially in the corporate world. The majority of organisations use performance as the leverage for management.
By Simon Bere
They generally define performance as how well they have achieved, in most cases based on their set targets, but for some, also how well they are doing compared to their competition or some other benchmark.
In commercial profit-making organisations, performance is generally based on sales and profits.
To ensure the company or organisation performs, the traditional approach includes setting performance, defining key result areas for employees and periodically undertaking strategic plans for the purpose of evaluation.
Employees are induced to perform according to expectations predominantly through rewards, incentives and the threat of punishment (including dismissal) if they perform below “standards”. The employees then undergo some form of “performance appraisals” to determine how they have faired and what corrective action, if any, they must take to improve their performance in areas where they fall short. Then some organisations also do some training, mainly on areas of improvement.
Some organisations also use some tools such as the balanced score card to improve their performance management. The question is: To what extent do the traditional approaches to performance management work?
Research shows that most organisations, compared to the resources, assets and opportunities they possess, perform well below their potential. Most such organisations are either average or dismal performers. Some even argue that organisations, even those that we deem to be doing extremely well, may actually be operating at or below 20% of their full potential.
Why do many organisations still operate below their potential? I argue that the performance management models organisations use are a major reason for organisational performance below potential. Here is why.
The definition of performance
I have picked the following sample of definitions of performance from the online version of Merriam-Webster dictionary
1(a) the execution of an action
(b) something accomplished, feat
2 the fulfilment of a claim, promise,
or request : implementation
(3) the ability to perform, efficiency
(4)the manner of reacting to
An analysis of these definitions shows that performance is defined in three main forms:
lIn terms of a result as expressed by the following phrases such as “something accomplished” and the fulfilment of a claim, promise or request
lIn terms of action such as implied by the phrases such as “the execution of an action” and “the manner of reacting to stimuli”.
lIn terms of state or quality as exemplified by the terms “the ability to perform or efficiency”
The traditional performance management approach
Using this taxonomy of performance, it is evident that most organisations’ view of performance is heavily skewed towards the result and action versions of the definitions in their approach to performance management.
In other words, organisations look at their results as a way of determining how well they have performed. This approach is also applied to the performance of individual employees, where what they have produced is used as a measure of their performance.
This is like using the end result to as the measurement point of performance, the reason why major performance evaluations in organisations (even though some organisations also do some quarterly performance evaluations) are done at year end and performance targets set at the beginning of the year.
The major problem with this model of performance management approach is that the appraisal come when it is too late to make any corrections to remain on target and to achieve the set targets.
Conducting a performance evaluation after action has been already completed is like hitting the bag while the cat has already bolted out of the bag; little correctional action can be taken so that the person or the organisation remains on target. This approach is too tactical and too reactive to shift the performance and results of an individual or an organisation.
There is also a tendency for most individuals, teams, managers, CEOs and their organisations to view performance in terms of execution or how well someone is doing on a particular task or mission or responsibility. However, this view of performance management does not adequately take into account the totality of factors are responsible for producing results.
A comparison of corporate performance management and performance management in other spheres
As opposed to the corporate world, performance in the sporting world is viewed differently in that in sport, performance is viewed primarily as a capacity for action by the sports person or by the team.
This means that performance management is managed primarily in terms of preparing the people or team to perform at a certain level or to continuously improve one’s level of performance. In other words, performance is not managed primarily during or after the act, but before the act.
How well as person is doing is them also continuously monitored during the act itself. Finally performance is assessed after the act is finished to extract lessons for future improvements.
Contrast with performance management in the corporate world where;
lCompanies will set targets
lPeople will act to achieve those targets, largely without any strategic monitoring of how well they are doing and why
lThe people’s performance will then be assessed on what they have produced through the performance appraisal system.
lThe actors are expected or assumed to have the capacity and capability to produce the required results.
In the engineering disciplines performance is regarded first as a deliberately built-in quality of a machine and not just how well the machine is performing.
In other words, the performance of a machine is measured against the performance standards built in the machine when it was developed not just how well it is doing in terms doing what is expected to do.
In corporate organisations, individuals and teams are not trained to any specified performance level; they are assumed to be top producers by virtue of their academic and professional qualifications and experience. In many situations academic qualifications correlate with subject matter knowledge and not actual performance, which is predominantly a skills and capability issue and not just knowledge.
People’s and teams levels of maximum performance and their best possible results are not known, so their actual performance is not measured against their intrinsic parameters but only against an external standard.
In the military people are first trained to perform to certain set performance standards before they are deployed to execute tasks where their level of performance is important for success.
In corporate organisations, people and teams are assumed to have the capability to deliver on targets according to expected quality and efficiency standards.
Proposing a different performance management alternative change your performance management model
The commonly used performance management model is flawed because it is based on the views of performance as action and activities and performance achievement or accomplishment. This causes leaders and managers to focus on using actives and results as the central theme for measuring performance, which, as I suggested is a tactical, reactive end of process approach that helps little in improving results. In addition, the model leaves out the critical factor in performance, which is fore knowledge of, and preparing the individual’s or teams capacity to perform at the level required to deliver the set performance targets. By the time the organisation conducts a performance appraisal, the damage has already irreparably done.
To improve on performance and results, decision-makers and their managers in the corporate world must move away from this performance management model.
Separate performance from results and treat the differently
A major strategy for moving away from the ineffective traditional performance management approach, chief executive officers and their leadership and management teams must separate results and performance. They must then define performance as a quality or as an ability to perform by individuals, teams and the organisation rather viewing it as how well work has been done or the quality of results that are produced.
View performance as an input and not as an output
By separating performance and execution and results, leaders, managers and their teams can then treat performance not as an output put as an input into producing results. This allows the organisation to treat performance issues in advance of action and at the same time they set their targets, meaning they will also, in advance, determine what level of performance will be required by the individuals and the teams to produce the desired results. Professional athletes for example, know in advance the level of performance required to win a race and they prepare themselves for that performance well in advance.
They do not enter a race without knowing their level of current performance as well as what level of performance is required to win the race. If their level of current performance is way too below the level of performance required to win a race, professional athletes will either get into the race just for training purpose or they will not entre the race.
Shift from tactical performance management to strategic result management approach
Performance appraisals that come at the end of the action period are reactive and tactical. In fact, such appraisals have little value except for providing some vague ideas on what to improve as well as a way of motivating people to put more effort in their work by making them know that their “performance” will be evaluated. In very rare cases so subjects of performance appraisals know with certainty what exactly needs improvement and how because the criteria for evaluation misses out on the unique aspects of the individual that one needs to focus on.
In strategic performance management, the main objective is to make sure as far as possible that when targets and objectives are set, everything that needs to be done to meet the targets and objectives is done before individuals, teams and organisations engage in the physical effort in pursuit of the mission, the goals and the objectives.
These strategic imperatives include:
lThat the total situation is assessed as accurately as possible and the intelligence is as accurate as possible
l That all the tools and resources required to achieve the mission, objectives and targets are known and that a solid plan to acquire and avail the resources as when required is in place.
lThat all direct and indirect actors in effecting the action required to achieve the mission, goals and objectives have the capabilities required at, or beyond, the level demanded by the situation, are highly motivated for the action and they have the tools, resources and all support they need to execute the mission effectively.
Most importantly, shifting from the tactical to the strategic approach in performance management involves moving performance from the output basket into the input basket. The second is then to monitor action and execution outputs to establish the variance between intended performance and actual performance and make timeous decisions to control the results.
Have in integrated approach to performance management
By separating performance from results, I am pointing towards the results management approach which is an approach that is premised on organisations focusing on managing results rather than just managing performance. In other words, what is currently called performance management will then be called results management in which the results produced are a function of three main factors which are the environment, the strategy and the performance.
The corporate world has lot to learn from the three worlds of sport, the military and engineering fields in the terms of performance, effectiveness, efficiency and results production. That most organisations, regardless of how they view themselves in terms of results, are operating at or below 20% of their potential is no fluke, neither is it jut motivational hype.
By abandoning their traditional performance management models, which are flawed, and adopting practices from these there worlds, performance in organisations will dramatically rise and organisations will tap deep into the vast potential for better results that they have failed to tap into for decades if not centuries.
Organisations that pay heed to the call to switch over and shift will completely outperform those that remain stuck in the old performance management paradigm. If such organisations are businesses, those businesses that embrace the new paradigm will completely outclass, outcompete and out dominate those that remain stuck to what is obviously acceptable but deeply flawed. The time for action is now.
lSimon Bere is a personal, business and organisational breakthrough metastrageist, consultant, speaker, trainer, solutions developer and problem solver who specialises in the breakthrough strategies for solving problems, transforming situations and unlocking the potential of individuals, teams and organisations. Contact him on email@example.com or WhatsApp 0715302313