Across the UK, Valentine’s Day at work means flowers, love poems and, of course, chocolates from friends and lovers. But that’s where the sweet treatment ends.
Personnel Today’s Tough Love survey, carried out in association with HR consultancy Chiumento, shows just how badly organisations handle under-performers.
On average, respondents reported that 16% of the workers they employed could be classed as poor performers. Assuming an average wage of £22,000, with the average company size of those surveyed at 9,000 employees, this would add up to nearly £32m in wasted wages per year.
The overwhelming conclusion of this is that current performance management approaches – which encompass anything from annual appraisals to informal lunches with key staff – just aren’t delivering the goods. So what’s wrong with performance management, and how can managers get tough on workers who don’t make the grade?
One HR professional aiming to get to grips with performance management is Mark Platt. As change manager for Coors Brewers – the UK division of the global brewing giant – he is introducing the organisation’s worldwide performance management system, which aims to bring benefits for employer and employees alike.
It’s a slow process. The main UK production base at the former Bass Brewery in Burton on Trent is unionised and some of the 1,000 production workers are suspicious of the company’s motives. However, Platt says the programme is part of “a global change programme designed to create a world-class workforce across the company”.
Coors is in it for the long haul. “If you start talking to people, you shouldn’t be surprised the first few times if they are distrustful and wonder why you are doing it,” explains Platt. “Results are only going to come over time.”
The issues at Coors are shared by an overwhelming majority of organisations, according to the research – some 96% of respondents reported performance management to be a problem, with 29% seeing it as a major problem.
Recognising the problem
Half the challenge, according to respondents, is getting managers to recognise that performance management is an issue in their organisation, and that the solution to the problem needn’t end in tears.
This was the case at the St Martin of Tours housing association in London, which introduced performance management two years ago. HR manager Peter Finch says that it has been an “interesting” experience, as project managers have been slow to implement performance management practices.
“They are often reluctant to performance manage and sometimes don’t understand what is required,” he says. “We need to do more work to reassure people that the process doesn’t have to be confrontational.”
When performance management falls down, many managers often make the mistake of going back and burying their heads in paperwork, hoping that performance data will somehow hold the key to its improvement.
“It’s unlikely to be the right solution,” says Steve Watson, director of Birmingham-based consultancy RewardWorks. “It’s the equivalent of moving the deckchairs on the Titanic. Invariably it’s not the process itself that is the problem; it’s because people don’t know how to do it, or are reluctant because they are scared.”
Watson believes the best performance managers are those who are given no choice in the matter. He draws an analogy with mothers who are left alone with screaming children and have to get on and deal with the situation. The challenge for HR is to encourage line managers to recognise that performance management is about ongoing and daily good management practice, rather than completing paperwork on a yearly basis for the HR department.
Taste for training
Good performance management training goes a long way, he adds.
“It depends how managers wish to learn, but one idea is to give them some relatively stress-free ways of exploring how they might go about managing what, inevitably, many people see as conflict.” This can be as straightforward as praising employees regularly for doing things right, rather than constantly finding faults. “You should do this on a frequent basis, as you might do with your children – it makes for a better relationship,” says Watson.
But not every manager is comfortable with discussing employee weaknesses in an honest and open manner.
Watson adds: “Managers, or whoever is doing the appraising, must be comfortable with talking with their people. Keep the process simple, because you don’t want to spend the allocated two hours, or whatever, filling out paperwork and not talking.”
Most organisations rely on systems – whether these are appraisals, scorecards or software programmes – to tell them how staff are performing. This doesn’t tackle the root cause of under-performance, according to Doug Crawford, head of employee engagement at Chiumento.
He believes that performance should be “enabled”, rather than managed. “The role of the manager should be to support the employee and to create the sort of environment where employees are engaged and motivated. Most management performance methods don’t address that issue.”
Academics say it is no surprise that managers bear the brunt of the blame. The process is too often seen as being pushed down from above – something done by managers to employees, says Elizabeth Houldsworth, head of management learning research at Henley Management College.
“Many employees believe that, done well, it can help to deliver clarity as to what is expected of them. A constructive dialogue can help to motivate them to achieve this. But done badly, the old cynicisms can quickly resurface,” she explains.
This has been one of the drivers for the increasing use of methods that actively root out poor performers rather than encourage them to improve. Referred to in some circles as “rank and yank” or “forced distribution”, this approach was expounded by Jack Welch, former chief executive of US-based General Electric. It required managers to identify the bottom 10% of performers, who were to be “managed out of the business” each year.
Houldsworth has found that although the number of organisations actually removing individuals from the business is quite small, there is evidence of a movement towards more “forced distribution”. Interestingly, Personnel Today’s survey found that this approach to managing performance was most prominent in IT, where 54% of firms “managed out” poor performers.
More sophisticated techniques
But the picture isn’t all bad. Houldsworth and Dilum Jirasinghe, a management consultant for Hay Group with whom she’s writing a book on performance management, found in their research that line manager acceptance of the need for performance management has increased over the past decade. In turn, HR professionals have a far more sophisticated understanding of ways to tackle poor performers, particularly in light of new legislation regarding employee consultation and unfair dismissal cases.
The task now is for HR professionals to influence upwards – working with the most senior management group to ensure that they too are seen to follow the principles of performance management and lead by example. And while it’s often the line managers that get blamed for under-performing staff (in most sectors, more than half of the respondents to the Tough Love survey said line managers were responsible), companies are starting to realise that the limited ability of some managers to manage and motivate is often the root cause of failure.
“We have found at least one interesting example of an organisation recognising and acting upon this,” says Jirasinghe. “They have sought to focus their performance management process to better understand the performance of their leaders.”
Linked to leadership capability is the issue of business clarity. If managers and their employees are unclear about what they are meant to achieve, then it is unsurprising that they carry on in the same old vein – with no improvement in results.
Both Houldsworth and Jirasinghe believe HR managers will increasingly be expected to drive programmes to refocus and re-energise performance management. But it is clear that HR cannot own the process, and the important thing is not to get too bogged down in performance metrics. Research by Fortune magazine and the Hay Group reveals that performance management within these most admired organisations include measures on teamwork, long-term thinking, building human capital and customer loyalty.
“Measurement-based approaches to performance management characterised by financial targets and metrics are characteristic of the majority of average organisations,” says Jirasinghe. “The best appear to be those that set expectations that move beyond purely financial metrics to include the extent to which leaders build human capital by developing and managing talent – motivating employees and customers alike.”
So while the results of the Tough Love survey may be difficult to swallow, the right approach to performance management could deliver sweet results.
Which works better? Carrot or stick?
This summer, Dilum Jirasinghe, a management consultant for Hay Group, and Elizabeth Houldsworth, head of management learning research at Henley Management College, will publish a book, Managing and Measuring Employee Performance: Lessons from Research into HR Practice.
In it, they have identified a framework that captures the two opposites of performance management, which they describe as “performance development” and “performance measurement”.
Performance development can be viewed as the “carrot” which promises a motivating workplace and employee career planning. Performance measurement is the “stick” which strives to hold employees accountable and measure their contribution.
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Both approaches have strengths and drawbacks, they argue. The book concludes that the world’s most successful companies are flourishing as they balance the measurement and development philosophies of performance management.
Performance management: is your organisation up to it?
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