Performance Management is relevant. I still think we should ditch performance appraisals.

Updated: Jan 19, 2020

Friends, as I launch a new adventure leaning into the talent development profession, I’ve considered the topic that would most easily catch your attention plus provide a starting point for the rich dialogue I hope we’ll have about all things talent development. When I say “lean in to the talent development profession,” my hope is that I’m providing insight / challenge / thought provoking ideas / development on topics pertinent to our field. I’ve led teams in the talent development space since, dare I say...1998. I’ve realized one of my primary passions is developing people, those who I serve as a boss and lately, those in the talent development industry who desire to make a difference in their organizations.


I hope that you’ll stick around and lend your insight / challenge / thought provoking ideas / development, too. There’s plenty of room for discussion and learning.


The Dreaded Performance Appraisal


Our first topic is one that we bat around frequently these days—performance management. In particular, let’s begin with the dreaded performance appraisal (PA). Cue Darth Vader’s Imperial March[i]. My stance (if the title of the post hasn’t already given it away) is that we have way over-engineered this conversation, and it’s a pain for leaders, us Talent Folks and especially employees. Consider how much easier this conversation would be if we kept it simple, tied to job expectations and conducted them frequently. Think about your own nerves when it’s time for an appraisal. It’s difficult for us as leaders to deliver them. But we’re employees, too. It’s also nerve-wracking to receive them. Even your superhero HR professional with nerves of steel gets nervous. It’s ok. It’s natural. In fact, there has been a great deal of research in the recently discovered world of neuroscience that our brains are quite social, and that it considers work, where we spend so many hours of our daily lives, more than a job. Imagine that. Our brains perceive work as a social system and thus, we interact with others accordingly[ii]. For example, when my boss sends an appointment for my appraisal, I get nervous. I do this stuff for a living, and I still get nervous. My boss is kind and caring, and I still get nervous. I bet you do, too. Many of us have just learned to live with the process as a “necessary evil” of the workplace. Nonsense! If the performance appraisal process was working, that would be one thing. But it’s not. It’s time. It’s time to ditch the old process and re-engineer it to support both business and employee success.


In this first article, I’d like to explore why we bother with performance appraisals and why we should keep bothering with them. In the next post, I’d like to continue the discussion exploring whether the long-lasting practice of traditional annual performance appraisals is the right approach. And yep, I can already tell you that I’m going to suggest we move along to new thinking. First however, it’s important to be grounded in the why. Always know why you are suggesting a particular solution. Get down to the root cause, so that you can keep it simple. As a side note, I’m going to typically always advocate for the simplest solution that drives the business results you’re seeking

Why Bother? Performance Management Should Drive Business Objectives

Here’s the bottom line: as Talent Folk, we facilitate the performance appraisal process because 1) it drives business performance and 2) it’s a key strategy to how we recognize and reward employees. That’s it. If you have other processes or objectives wrapped up in your performance management process, strip them out. Please hear me: I’m not advocating that topics such as development and potential conversations are not important. Rather, I believe that obscure, difficult or administratively burdensome processes are a surefire way to incent your customers not to engage, even after they show up on “the list.” You know what list I’m referring to: The one that lists all the leaders who haven’t completed PAs for their employees. It’s a tactic we’ve all used, and typically with little success. So, let’s file the list in the appropriate recycle bin, and get back to the basics.


1. We bother because performance management drives business performance


I often chat with talent folks, and we get to talking about what’s happening in their talent worlds. And you know what I sense, that many of us have forgotten that we work for a business. We love the theory and methodology behind what we do. Awesome! We need to be passionate about that. But we also need to be able to connect the talent support we provide to the money-making, results-driven business objectives of our customers. The purpose of business after all is to bring in a profit. And the purpose of performance management is to drive and improve productivity, so that profits continue and increase. Leaders give advice, support, correction and direction so that employees will perform better. The end. There’s no other or better reason for a leader to spend time on performance management activities. I would rather you get back to the basics of why we do things in the talent space versus carry on with current practices because it’s what we’ve always done. I’d like to see talent gurus assisting leaders in proactively addressing performance risks, as they keep an eye on how teams are performing. Or what about helping them lean in to elevate the performance of already high-performers?


Let’s keep it real. How many articles or white papers have you read that cite the importance of talking shop with your customers? Yet in a discussion with the executives you support, can you directly link the performance of the employees in your division to the bottom line? I recently googled:

  • “performance management business metrics”

  • “business calculation for performance management”

  • “driving business with performance management”

  • “performance management ROI”

One article talked about the ROI of employee productivity. Just one. Some links suggested articles on how to calculate a performance management score. /sigh. Other links reinforced the importance of performance management goals, especially those cascaded down to employees. /double sigh. Case in point.


You will likely have to specifically connect the dots for managers on why it’s valuable to spend time on talent activities, such as performance management. That’s ok. Take it down to the foundations of supporting individual performance multiplied by the many employees in your organization. Even a handful, performing their roles more efficiently, producing more widgets, code, financials, customer calls, drives additional revenues or reduces costs. Both are key to that P&L—profit & loss statement. You may have to take it down a step further, making it plain how clear expectations and objectives followed by ongoing feedback create the environment for employees to understand their success measures and how they are doing along the way. Cascading a goal, then meeting about it a year later is not satisfactory performance management. We know that. Help your leaders know that, too.


Most of you, Friends, know the business drivers important for your customers. That’s a great place to begin. You don’t need to create fancy dashboards or charts to make your point. Utilize the metrics and dashboards your customers use, pointing out specifically where leaning in to performance risks, setting clearer expectations or investing in the performance of a team or individual might impact those numbers. Here are a couple of examples:

  • Average Handle Time is a metric most call centers use to measure effectiveness. Coach leaders to set clear expectations for average handle time for their Customer Care Representatives and following-up by listening to a call or two with them to identify points in the call to tighten up or repeat with future customers.

  • Percentage of projects delivered on time and under budget is a common metric for project management teams. Conducting post project performance discussions pinpoint when in the project timeline a delay became apparent and offers leaders a prime coaching and accountability opportunity.

Remember, simple wins the day. Days are full and leaders have more on their plates than they can feasibly tackle. Help them keep performance management relevant, with a simple, yet effective connection to business objectives.


2. We bother because performance management informs reward and recognition


The second key reason we bother with performance management is to allot compensation and make reward decisions. A performance appraisal (PA) is a score for the year. That score is a factor in the equation that is merit allocation, for example. Most organizations engage a merit process annually that rewards employees for their performance from the previous year. Mature compensation teams engage multiple variables into the equation for merit allocation, such as budget, team equity and market value. The PA score is one such variable and typically heavily weighted. Salary and headcount budgets are finite, just like all other business budgets. Businesses strive to balance the need to reward and recognize the employees who fuel organizational growth with other investment needs, such as capital growth and R&D. Thus, we use the performance appraisal as the score to help leaders identify where above average performance earns an above average merit increase or where sub-par performance earns less of the budget allowance. It’s a difficult juggle and one where the proverbial rubber meets the road. I’m sure most of us have coached through tricky discussions with leaders who haven’t held those one or two employees accountable with performance clarity throughout the year and now those employees are confused, angry and disgruntled about their merit increase. It’s tough to have difficult performance discussions, but it’s important. And it’s our privilege to help leaders keep it simple and to remind them about why performance discussions are key to running productive teams and meeting business goals.


Now I’m not convinced that the long-lasting practice of traditional performance appraisals is the right approach. In my long tenure as employee, leader and talent professional, I have not found that the once-per-year discussion has been an ideal way to drive, improve or correct productivity and overall performance. But let’s pause, and we’ll pick up this topic in the next post. For now, keep it simple, Friends.


Talent Development Insights

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The purpose of these surveys is to learn how companies and talent professionals approach various talent development activities. Your answers are anonymous.


Please note: I ask for company information at the end of the survey to segment and analyze data a bit. I am not a statistics or analysis pro, but I do value data as it shows trends that deepen our insight. We're keeping it general, so brief answers are great.



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Endnotes:

[i] It’s a Star Wars reference.

[ii] Rock, David. “Managing with the Brain in Mind.” Strategy + business, issue 56, Autumn 2009. https://neuroleadership.com/portfolio-items/managing-with-the-brain-in-mind/ accessed April 2019