Rethinking performance management

Performance management (PM) processes have existed for more than 80 years. During that time there has been much debate as to their effectiveness, resulting in organisations continually overhauling their procedures, but this often fails to yield the desired results. Research by Chiumento and Personnel Today reveals that poor performance is still an issue for 96% of organisations. So why is this?

Where we are now

The research shows that 82% of organisations have reviewed their PM processes in the past two years, yet only 20% feel they are effective. Almost a third feel poor performance is a significant problem although for some sectors, namely government, education and retail, this rises to more than 40%.

With nearly one in six employees rated as ‘poor performers’, this poses significant commercial implications. It is estimated that the cost of employing ‘poor performers’ for an organisation employing 9,000 employees is at least £32m a year – this does not even take into account the adverse impact on customer service, revenue and profitability.

Alarmingly, 80% of managers are deemed ill-equipped to deal with poor performance and 63% are not motivated to address poor performance issues. Nearly 40% feel their organisation tolerates poor performance, and this figure worsens significantly for government and professional services organisations.

The root causes of the problem

Despite considerable time and effort spent revamping PM processes, the issue appears to be systemic for the following reasons:

  • There is an underlying flawed belief that performance can be ‘managed’

  • There is an over-reliance on mechanistic, systems driven approaches

  • Managers are inadequately equipped to get the best from their people and ‘people management’ capability is frequently unrecognised and undervalued.

To address these issues, organisations must adopt a radically different approach to performance management to avoid making past mistakes.

Managers need to be developed to inspire and motivate and be accountable for enabling others to succeed. It is important not to see PM as a ‘one size fits all’, mechanistic process, but understand the need to establish ongoing dialogue and relationships and shape individually tailored performance contracts.

So what are the practical steps that organisations can take to create a more engaged, high performance workforce?

Change from ‘managing performance’ to ‘enabling performance’

People can’t be coerced into performing well, at least not for a sustained period of time. At a basic level, they need clarity about what is expected of them and must be equipped with the skills, information and tools to enable them to do their job.

Crucially, they also need the opportunity to utilise their potential and be motivated and engaged. The manager’s role is therefore to ‘enable’ an employee to succeed, by creating a motivational climate and providing appropriate support. Ways to achieve this include:

  • Appoint managers and team leaders with the requisite people management skills

  • Measure managers’ performance in terms of their effectiveness in enabling people to succeed. Reward managers who spend time enabling and supporting their direct reports

  • Hold managers accountable for their part of the performance contract – which should include an agreement as to what the manager will do to enable the employee to fulfil their side of the agreement. This is hardly ever explicit.

Focus on ‘relationships and conversations’ rather than ‘systems and processes’

This does not mean abandon all PM systems – they have an important role to play. However they should be regarded as a support process. The real focus should be on the creation of manager/employee relationships that are built on trust. Tips to do this include:

  • Encourage managers to have regular, honest and constructive conversations with individuals, based on mutual trust

  • Shape performance contracts that address individuals’ aspirations and needs, engage the individual and deliver value to the organisation

  • Review performance measures and focus on those that reinforce the desired behaviours and which are geared to improvement and learning.

Equip managers to get the best from their people

Building management capability is more than sending managers on training courses; it is about providing ongoing coaching and support – essential if new capabilities are to become embedded. One of the more encouraging findings from the Tough Love research is the rise of coaching, but there is a long way to go before the full impact is felt. Some ways to equip managers include:

  • Train and support managers to provide more regular, constructive feedback that encourages an individual to learn and improve their performance

  • Don’t just address the symptoms of poor performance; spend time identifying and dealing with the underlying causes

  • Unleash potential by recognising and building on individual strengths rather than focusing predominantly on addressing ‘weaknesses’.

Finally, to ensure this becomes embedded in the organisation’s culture, you need commitment from the top, and a senior management team who are prepared to lead by example. There needs to be recognition that performance is not solely an HR issue – failure to get the best from people carries significant financial consequences.


These suggestions may appear to be merely common sense – unfortunately as the survey results demonstrate, common sense does not equate common practice. Organisations need to stand back and review their underlying assumptions about what is needed to generate sustained high performance and not to repeat the mistakes of the past – simply ‘tweaking’ the performance management process will not work.

By Doug Crawford, head of employee engagement, Chiumento


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