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Honest ‘Conversations’ replace traditional Performance Management

by Nicola Tyler 

Companies around the world are starting to question the efficacy of what we might term “traditional performance management”. Senior leaders report that they have abolished performance appraisal at their companies because it causes so many problems. It’s clear that performance management faces a substantial paradox.  On the one hand, employees and managers all acknowledge that it is often the most loathed HR practice; research suggests that most current performance appraisal systems do not work well.  On the other hand, accountability does matter.  Research shows that companies with performance evaluation systems have higher shareholder returns than firms without them.  Research also shows that, out of many HR practices, performance management and variable pay have the most significant impact on financial performance of organisations. Without accountability, employees don’t perform as well; they are unlikely to change and unlikely to perform better.

So, performance management faces a conundrum.  If we don’t do any performance management, accountability declines and performance lags.  Yet if we have complicated processes, employees become frustrated and again, performance lags. According to research by global HR guru Professor Dave Ulrich, the paradox of doing or not doing performance management can be (at least partially) resolved by focusing more on positive accountability through conversation more than process.  

Once we focus on dialogue, performance becomes much less about forms to fill out, procedures or policies, and much more about the conversation between a manager and an employee, or among employees on a team. Can a leader have a candid, thorough, positive, and specific performance conversation with their employees? This is where the key to effective performance accountability lies. Affirmative conversations of this type shouldn’t be occasional meetings in the diary but rather an ongoing process of regular interaction.  Over time, the employee gains a “growth mindset”, which means that the employee conversation emphasises learning – what can be improved more than focusing on what has gone wrong.  These conversations all focus on the future, not the past.  For example,

  • They tackle behavioural problems without judging the person.  
  • They validate the person and his or her potential more than casting suspicion.  
  • They focus on learning from both successes and failures rather than critiquing.
  • The conversation is not about the forms, tools, or processes, but about creating a positive relationship between leader and employee.  

Companies like Adobe and Accenture have successfully implemented positive performance accountability systems. At Adobe, employees are evaluated on the basis of what they achieved against their goals, rather than how they compare to their peers. At Accenture, employees focus less on their ranking and more on the value they create. When conversations matter more than processes, the focus is on value created rather than on chasing employees to complete HR forms. When these conversations focus on the positive and what is right, they build positive accountability. When employees take personal responsibility, they create more value.

A good business leader and manager will:

  • Focus more on what’s right than what is wrong.
  • Offer immediate and timely feedback and feed forward to employees.  
  • Help others feel better about themselves.   

In turn, employees who receive positive performance conversations recognise how their personal aspirations can be better realised by delivering organisational outcomes.  

It’s true that most employees do not like bureaucratic appraisal processes that monitor performance, belittle employees, and focus on what is wrong.  But accountability matters. Some trendsetters would go so far as to say that work teams should feel an obligation to act in line with company values, to be more deeply committed to outcomes. Without accountability people don’t improve, they lack a sense of purpose, and organisations miss their targets.  In South Africa we need to focus much less on performance appraisal as a bureaucratic, annual process. Instead, we must focus much more on performance accountability where leaders hold positive conversations with employees, mutually establish expectations, implement accountable reward systems, and follow up on performance. Perhaps we should replace the Performance Appraisal with a Commitment Contract or a Purpose Contract.

Nicola Tyler, is a highly respected strategic thinker. With over 20 years of experience in Strategy, Consulting, Leadership, Development and Coaching, she is an Associate of the Gordon Institute of Business, a Master Trainer in a full range of de Bono Thinking tools. Working both locally and internationally, she delivers her own “Strategic Conversation” methodology to senior teams committed to innovation and driving sustainable results. Nicola has shared the stage with world renowned thought leaders such as Tom Peters, Robert Kaplan, Ricardo Semler, Edward de Bono, Dave Ulrich, Martin Seligman, Richard Koch and Martin Lindstrom. 

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