Performance Management - What's the secret?

"If you had to narrow it down to one thing, what is the most important component in performance management?" 

This was one of the questions I was asked last week while giving a presentation on the difference between performance management and performance measurement.  The answer is actually fairly simple.  Performance management at its heart, is clarification of expectations and communication.  There is no more important component in the performance management process than communication.

Unfortunately, communication is not the central theme of most so called "performance management" programs.  Yes, in these other systems there are communication meetings, usually once, or even twice a year depending on how your HR group has structured the program.  But these are performance "review" meetings.  What I'm talking about are the on-going dynamic performance "management" discussions that lead to the successful achievement of organizational initiatives.  These must happen at least once a quarter and should happen bi-monthly or even more often.  Who ever heard of managing something by reviewing it once a year?

The tone of these progress meetings is also different than a "review" meeting.  There is an inquisitive, coaching, mentoring, and partnering tone to a progress meeting versus a judgmental, tense and even competitive tone that typifies a "review" meeting.

I am convinced that if you were to go into most any organization and you did nothing more than get every manager and employee to sit down every other month and talk about the employee's performance and how the two of them can improve their working relationship, that alone will improve performance.

Communication is one of the major differentiators between true performance management systems and performance measurement systems (i.e. performance appraisal).

I know you all knew that already, but sometimes the obvious seems to get lost in the structure of the process.

Comments

[Joe Pentlicki]

Mr. Nelson,

I find your posting of particular interest. I would like to probe more into this subject. The question was "what's the most important component of performance management." Your reply was clarification of expectations and communication.

Let's think about this a minute. Managing performance means what? I suppose the real question should by why. Why do we want to manage performance? The common answer is that we manage performance to achieve organizational goals and objectives. However, what if there are changes in the environment (internal and external). These environmental conditions could be changes in the economy, markets we serve, supply chain, competitor strategy, customer expectations, and many other reasons external to the organization. All of these changes can affect the direction of an organization and their corresponding goals and objectives.

If organizations continue to manage performance based on the traditional annual performance evaluation process, how effectively, if at all, do these organizations respond to these internal and external changes within the environments they operate? What are the consequences to changing slower and failing to change when environmental conditions change? It seems likely that these organizations can lose market share or forego market leading opportunities.

So let's go back to why organizations should manage performance. Organizations should manage performance to achieve organizational goals and objectives. This aligns very well with your statement that performance management leads to "succesful achievement of organizational initiatives." However, organizations should also manage performance to respond quickly to changing environmental conditions. Having bi-monthly meetings can be a mechanism to understand more about changing environments. This is especially true if the purpose of those meetings is inquiry, coaching, and mentoring.

That said, I agree with you that the most important part of performance management is clarification of expectations and communication. The context of performance management should include not just organizational goals and objectives but also discussion of changing conditions that may lead to significant opportunities, highlight changes in direction, and resulting in changes in goals, objectives, and initiatives.