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Technology Driven Performance Management

Gail Sturgess compares the core strategic differences between traditional and new era performance management systems, showing that the latter is more developmental in approach, linked closely to business goals and performance, and geared to early identification of problems. She also highlights the benefits of automated new era performance management.

by Gail Sturgess

Many organisations don’t have performance management in place; and those who do have some form of the Balanced Scorecard in place, seldom cascade the scorecard down to the team level. Why is this so?  Are we missing the boat here somewhere? 

Why is it that we have this disparity between people performance and business performance?  Modern research and the Human Capital Management Maturity Model suggest differently.

Traditional performance management
The origins of the traditional performance management system can be traced back to the 1940’s. The performance management process was primarily developed and introduced by HR to enable management to justify remuneration and/or bonuses paid to individual employees.

Central to traditional performance management is the performance appraisal - the process is as follows:

• It is generally based on a review of how a person completed their job for the prior year – from the viewpoint of their manager.  That is, it is “backward” looking.
• A “score” is generally applied that could impact either pay or bonus, or both.  That is, the emphasis is more “stick” than “carrot”!
• There is some relationship with training, however, the training is generally not focussed on the core skills needed for the job. That is, the training is “just in case” rather than “just in time”.
• It is sometimes applied as an assessment of an employee for promotion.
• It is typically conducted annually, but more recently one sees it conducted half-yearly or even quarterly.
• It is generally a “paper-based” system, or more recently (and particularly with HRIS systems that focus around payroll), a computerised system, but based on the “paper-based” principles, workflow and deliverables.
• Where HR is the custodian, there is generally a process in place – paper-based or otherwise.
• Where HR is not the custodian, the process is inconsistent throughout the organisation, in terms of application, approach and results.

The core problems with these “paper-based” systems are:

• They are generally not goal oriented, and where they are goal oriented, the goals are fairly narrowly defined and are certainly not linked or cascaded up to business goals.
• They are very subjective – even the more modern 360° reviews. They are based on one person’s opinion of another and the basis for that opinion is generally poorly defined or not defined at all.

That may work for some, but for others it does not work at all. In general, there are no winners in this process, except the HR custodian who is reviewed against how well performance management (performance appraisals) were applied, and not on how they improved business results. 

Managers generally hate the performance appraisal process and go through the process mostly because they have to. Employees, except those who come out tops, usually hate the process as well, as they are aware of the impact on their overall remuneration and they have little faith in the process leading to improvement (skills, promotion, growth and development) for them.

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