Performance management and appraisal systems have been the subject of criticism for many years. For example, as far back as 1957 the motivation guru Douglas McGregor called into question the value of such assessments, whilst by the 1980s the ‘total quality’ champion W.E. Deming was describing appraisals as the ‘third deadly disease’ of management. At the same time, surveys of personnel professionals in both the U.S. and Britain had found that less than 20 per cent were satisfied with the effectiveness of such systems. Subsequent independent assessments have concluded that ‘rarely in the history of business can such a system have promised so much and delivered so little’!

Indeed, the suspect status of the practice was evident in one recent national survey, which found that almost 9 out of 10 Civil Servants couldn’t agree with the statement that ‘poor performance is effectively addressed’, whilst a more recent survey of performance management in the U.S. serves to confirm what many have known for some time. That is, the process can be time-consuming, stressful, unproductive and often irrelevant.

As a result, many organisations would be happy to discard the practice - if they didn’t have to make decisions about employee goals, development needs, promotions, pay rises, terminations, transfers and enrolment on training programmes. But it is also true that there is extensive evidence in support of proper performance management practices.  Furthermore, it’s argued that staff should be given feedback – in an appropriate manner – to enable them to do the job effectively and to develop in the desired direction. Consequently, instead of dumping their systems, many organisations are now opting to develop and re-design them.

Recent Developments in Performance Management Systems ⚓︎

For example, numerous organisations - including Adobe, IBM, GE, Goldman Sachs, New York Life, Juniper Networks, Deloitte’s and Cisco - are experimenting with new systems to good effect. That is, there is an apparent shift toward more frequent feedback and ‘check ins’, upward feedback, team-based goals, qualitative as opposed to quantitative forced ranking assessments, multi-rater feedback and a preference for more ‘agile’ performance management systems, via ongoing communication, coaching and development processes.

The conclusion from one international survey is that the impact of these practices is high, with 90 percent of companies (that have undertaken such redesign processes) experiencing direct improvements in engagement, whilst 96 percent report that the processes are simpler. leading 83 percent to conclude that the all-important quality of conversations, between managers and their direct reports, is going up. 

Starting the Redesign Process ⚓︎

Hence, to kick-start the process and enable such outcomes, the key question is how do you re-design the system?

The re-design process should start with an acknowledgement that performance management systems cannot be simply ‘borrowed’ from one organisation and transplanted into another. That is, there is no ‘one best way’ to manage performance which will suit all organisations. Like the financial, information technology or marketing system, it must be customised to meet your entity’s unique circumstances.

That is, a host of contextual factors need to be considered when taking decisions on such issues as the system’s objectives, the scheme type(s), the content of the review or appraisal form, review frequency, who reviews whom and the role of supporting technologies and training/development supports.  In effect, the system has got to be in tune with the prevailing practices and culture of the organisation if it is to meet expectations.

Importance of Consultation ⚓︎

Consultation with all parties in the evaluation and re-design process can help in this regard and prove invaluable in gaining acceptance of - and adherence to - the final product, whilst ensuring that it fits the corporate culture. Accordingly, all reviewers, reviewees, sections or divisions with responsibility for acting on any of the outcomes of the process (e.g. training, payments) should be provided with the opportunity to list the pros and cons of the system already in operation – so that ‘the baby is not thrown out with the bathwater’ -  and to make an input to the redesign process, either en masse or via a representative sample of their cohort.

For the purpose of (re)designing the system, it is recommended that a consultative or working group, with minimal yet appropriate representation of all parties to be affected by the new system, be established.  That is, it is appropriate that those working the existing system and who will be affected by any revised system, should make an input to the process.  This can help to ensure their commitment to the new system, as it is constructed in line with the organisation’s unique culture and context.

To progress matters, the relevant consultative group should be given specific terms of reference (and a deadline) for the (re)design and implementation of the new performance management system. The relevant terms of reference might (simply) read:

That   the   Working   Group   propose   to   the Managing Director\Chief Executive Officer of ---XYZ--- on an appropriate revised performance management system, by ………

The composition of this working or consultative group should be small, to facilitate the efficient conduct of business, yet it should also be representative of all of the main parties to be affected by the new system. Ideally these representatives would also have a nominated ‘substitute', who would be available to attend the group’s meetings in the event of their absence. This group may include an:

• External Facilitator, to co-ordinate and direct the group’s proceedings, assist in the resolution of any difficulties encountered and to provide specialist back-up and expertise in the subject area.
• H.R. specialist, who may be given responsibility for driving, monitoring and initiating follow-up actions in respect of the new system.
• A member of the very top management group, to convey the wishes of this group and to underline the importance being attached to the initiative. This input should also serve to ensure the system’s relevance to organisational/business/stakeholder needs.
• Middle management representative(s) – as above, this representative’s role will be to convey the wishes of this group and to emphasise the importance attached to the initiative.
• Staff/Trade Union representative(s). Given that the response of the ‘troops on the ground’ will ultimately determine the success or failure of the revised practice, this input – though often ignored – is essential.

To give effect to the aforementioned terms of reference, this Working or Consultative Group should be tasked with making proposals to the Managing Director/Chief Executive in respect of the following range of issues:

• What should the system's objectives be and how will their attainment or otherwise be measured?
• Exactly who is to be covered by the system(s)? Is it mandatory? What are the implications for non-participants?
• What performance management or appraisal scheme or combination of schemes will be used?
• Should there be different objectives and scheme types for different staff categories?
• Exactly what will be assessed\appraised i.e. what are the performance criteria? - objectives? - competencies? – qualitative v quantitative measures?
• Will there be formal performance and/or development interviews? How often? Can technology enable (or replace) such exchanges or interactions?
• What documentation (if any) should be prepared? (i.e. what should the form look like in terms of content and lay-out\face impact?  Should there be an explanatory booklet? What should be in it?).
• What role can new technology play in the process (in terms of communication? feedback? assessment? recording)?  
• Who should have access to what documentation/information?
• Is there an appeals system? If so, what form should it take?
• Who will have responsibility for follow-up actions arising from interactions and/or review meetings?
• Who will monitor the system to ensure that it’s working?
• How will the system relate to the organisation’s reward/remuneration system? Is there a performance-pay link? How will it work in practice?
• Who will training be provided for? (i.e. reviewers and/or reviewees?)
• What will the duration and content of the training – to enable the system’s successful launch and implementation - be? Will there be ‘refresher’ courses?
• Should the proposed system be introduced on a pilot or trial basis? Who will be the ‘guinea pigs’ for the pilot?
• When and how will the existing system - and the pilot system - be assessed?
• What should the system be called (i.e. what should its formal title be?)
• Who reviews whom?
• Will the system stand up to legal challenge(s)? 

Stages in the Redesign Process ⚓︎

Having listed the issues for the group to address, it will also be beneficial to map out appropriate stages to be followed in reaching an end product. Such stages might well be:

Stage 1  Set up a representative consultative/working group. This also entails procedures for dealing with absence(s) (e.g. by having substitute reps.), the scope for constituents to make submissions to the consultative group and arrangements for keeping all affected parties up-to-date on the group’s progress.                                     

Stage 2  Having evaluated the existing system, decide upon the revised system's objectives and how their attainment or otherwise are going to be measured.                   

Stage 3  Decide on the scheme type(s), procedures and processes to meet the agreed objectives.         

Stage 4  Draft explicit and simple documentation and/or the technological supports to be deployed and decide who will have access to what information.          

Stage 5  Communicate with the affected management and staff by the various means available, to both market and test the proposals.                                                               

Stage 6  Provide adequate and appropriate training for all affected staff.                       

Stage 7  Implement and monitor the progress of the system, subsequent to a pilot test. 

Stage 8  Validate the system for further improvements periodically, via communication with the participants.                                        

Despite all the bad press that performance management has endured over time, given the necessity for – and the persistence and potential of – good performance management practices, it’s hard to avoid the conclusion that if it’s not working it must be fixed. Performance management may well ultimately determine whether your organisation survives or thrives.

Source: McMahon, G., Successful Performance Management: Effective Strategy, Best Practice and Key Skills, Liffey Press, Dublin, 2016.