What is Performance Management?
Performance management is a systematic and continuous process that involves planning, monitoring, developing, reviewing, evaluating and rewarding the performance of individuals or teams within an organization. It aims to optimize individual and team performance, align behaviours with strategic goals, enable professional development, and thus contribute to the overall success of the organization.
Key practices of performance management typically include
- Setting “smart” objectives
- Providing regular feedback
- Appraising performance against established criteria
- Identifying areas for improvement and development
- Recognizing and rewarding achievements (or managing the consequences of underperformance)
How To Transform Performance Management?
A Working Hypothesis
Our hypothesis is that the functionality of performance management within an organization is intricately tied to a prevailing "action logic," a framework about how the "world works" shaped by the fundamental beliefs of founders or leaders. This encompasses three key dimensions: a) the values associated with the concept of "performance"; b) a set of beliefs regarding how organizational performance interconnects with individual behaviors; and c) an understanding of the ways in which individual behavior can be effectively influenced.
On this basis, we are pursuing a dual approach to performance management reform: Firstly, we are critically examining contemporary practices to assess their effectiveness within the "traditional" logic, drawing insights from academic research. Secondly, we are deliberately revising the conventional logic and developing new tools and processes that resonate with a novel approach centered around organizational flourishing. This parallel approach enables us to propose innovative solutions that both align with a redefined organizational logic while also addressing existing shortcomings and lessons learned from established practices.
Traditional Performance Management
Traditional performance management often relies on some variant of "pigeon training": a combination of a utilitarian performance definition, emphasizing profit maximization and financial returns, and an engineering approach to performance optimization:
It is assumed that performance can be accurately forecasted, attributed and measured, that all required activities and outcomes can be predefined, and that causes of individual performance are easily determinable (and manipulable). Total performance is treated simply as the aggregate of individual and unit achievements.
On that basis, financial targets are decomposed and cascaded to organizational units, teams and roles, guided by the annual budgeting cycle. Then, “cybernetic” controls are established through governance cycles, both at organizational and individual/unit level.
Individual behaviours are assumed to be rational and selfish. Performance results from a linear combination of factors, such as personal ability, motivation and opportunity. Hence, at the individual level, performance can be optimised by: a) ensuring a match between individual competencies and role requirements, b) alignment of individual and corporate purpose. Motivation can be stimulated through carrots and sticks, i.e. extrinsic rewards and punishments. On that basis, appropriate incentives are established.
Performance Management Innovation
As Jon Ingham explains in his insightful lecture (see session archive), performance management has undergone a remarkable transformation in recent decades, with many innovative organizations leading the way in reshaping its principles and practices. Notably, Jon highlights a continuous trend towards heightened agility, a strong focus on human development, increased social inclusion, and the integration of innovative technologies. However, despite such progress, inconsistencies across companies and important shortcomings persist. As Antoinette Weibel reveals in her comprehensive revision of academic research, there is a significant gap between both traditional and innovative practices and tangible real-world improvements, across almost all relevant activities.
A Quest For genuine Transformation
While traditional performance management has already faced considerable critique, in our view much of it does not change the prevailing "action logic". As a result, many innovative practices ultimately serve as "lipstick on a pig": they legitimise and perpetuate a morally unsustainable paradigm.
- Ethically, a predominantly utilitarian definition of performance as profit maximisation mostly goes unquestioned. The broader CSR movement has sometimes challenged a merely instrumental purpose, but without much success. Our focus on "flourishing" will demand a more substantive review of what we mean by performance, for whom, and how it can be measured.
- From an ontological standpoint, performance continues to be viewed as a property of individuals or teams, rather than an emergent organisational property shaped by more intricate mechanisms both within the company, as well as in the broader market and ecosystem. Our revision requires a more holistic approach, including organisational design and governance, in order to determine what it means to "cultivate" flourishing within a social system.
Performance management is the
continuous process of setting goals, monitoring progress, and providing ongoing
feedback to align employee work with organizational objectives. It moves beyond
annual reviews to foster employee growth. The future of performance management
is data-driven, agile, and human-centric, focusing on continuous coaching,
AI-enabled insights, and holistic employee well-being.
Key Aspects of Current
Performance Management:
- Continuous Feedback: Moving away from annual
reviews to regular, real-time check-ins.
- Goal Alignment: Ensuring individual,
team, and organizational goals are aligned.
- Developmental Focus: Aiming to improve
employee performance and potential, rather than just evaluating past work.
- Objective
Metrics: Using data, such as KPIs and sales data, to reduce bias in
evaluations.
The Future of
Performance Management (Trends & Innovations):
- AI and Data-Driven Insights: Artificial intelligence
(AI) and machine learning (ML) will analyze large datasets to provide deep
insights, predict future performance, and summarize peer reviews.
- Continuous and Real-Time
Feedback: Technology
will enable ongoing, actionable feedback rather than waiting for annual
reviews.
- Employee Well-being and Mental
Health: Performance
management will increasingly integrate wellness, recognizing that health
directly impacts productivity.
- Skills-Based Frameworks: A shift from focusing
solely on roles to identifying and developing portable skills and
capabilities.
- Remote/Hybrid Support: Tools will evolve to
effectively track and manage performance in distributed teams.
- Empathy and Human
Connection: The focus is shifting toward "coaching" and
"empowering" rather than just monitoring.
Key Takeaway: The future is
not just about measuring performance; it is about enabling it through
personalized development, AI-driven insights, and a focus on the whole
employee.
Beyond Ratings: A Paradigm Shift In Performance Management! by tamra chandler
Tamra's inspiring call to action during our session was simple yet powerful: "Colleagues in HR, have some courage to change!" Join us for a stimulating 90-minute workshop as Tamra shares her powerful insights from decades of work in HR and organisational transformation, across sectors!
With a laser focus on the appraisal process, Tamra's message was crystal clear: if you still use traditional ratings, normal distribution curves, or forced levelling, just stop! Now! It's simply not good enough to rely on outdated methods. Instead, Tamra offered invaluable insights from decades in the field on fostering fairness, providing developmental feedback, and making reward systems more effective and transparent.
This session is an absolute treasure trove of wisdom, packed with practical lessons, innovative ideas, and actionable strategies for transforming performance management. Trust us, you won't want to miss it!
Tamra is a globally recognized thought leader, author, and speaker celebrated for developing innovative and transformative approaches to maximizing organizational performance. With over three decades of strategic collaboration spanning diverse sectors, she has been at the forefront of reshaping HR practices and organizational paradigms. Formerly a Partner at EY, she founded PeopleFirm LLC in 2009, earning accolades such as Forbes Magazine's "America’s Best Management Consulting Firms" and establishing it as a prominent women-owned enterprise in Washington. She is the esteemed author of three influential books on performance management: "How Performance Management Is Killing Performance"; "Rethinking Performance Management"; and "FEEDBACK (and Other Dirty Words) Why We Fear It, How to Fix It".
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