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Why Don't Most Companies Manage Performance Well?

Why Don't Most Companies Manage Performance Well?

David Wentworth | i4cp

October 08, 2010

Identifying and addressing poor performance is also important. Using targeted development plans to resolve performance issues is a successful strategy, one that requires skilled management. Another essential for effective performance management is the ability to identify high performers and reward them appropriately.

None of this implies that there is a “quick fix” to performance management. It may start with excellent supervisor training, but there always seems to be a certain amount of “pain” to go with the performance management “gain.”

For example, respondents from high-performing companies are actually more likely than those from low performers to say their employees find the process too time consuming. In other words, there are no good short cuts. When an organization puts in the effort to align and cascade goals, provide ongoing feedback and have frank, substantive conversations with employees about performance, it can take a lot of time. But that effort seems worth it, as companies that do it the right way are more likely to succeed in the marketplace.

Ongoing feedback, for instance, may take longer but can help eliminate any discomfort or confrontation that year-end conversations bring. If employees are aware all year long how they are doing and what their manager’s perspective is, there are no surprises at annual review time. As a member of i4cp’s Performance Management Accelerator put it, “If the manager is doing their job all year long, performance reviews should be easy.”

i4cp’s 4-Part Recommendation:

1. Train managers to deliver effective performance management. Arming managers with the ability to properly develop goals, give and accept feedback, write up appraisals and provide motivation will greatly improve the overall performance management process. Training on how to actually conduct the appraisal meeting is also critical.

2. Differentiate and reward top performers appropriately. Use the performance management process to identify the true superstars in the organization. Then reward those people accordingly. If the top merit increase in your organization is 5%, and the average employee receives 3.5%, then there really is not much separation and you risk losing top talent.

3. Address and resolve poor performance. Simply rewarding high performers and ignoring low performers will not suffice. Similarly, culling the bottom 20% and replacing them would be a costly endeavor. Instead, identify the factors leading to the poor performance. Perhaps there are development opportunities that could help or conflict issues that can be resolved. Given the proper direction, a low performer can often become a high performer. If termination or similar actions are necessary, those decisions are made easier by examining all of the possibilities first.

4. Encourage continual feedback. Waiting until the end of the year to tell an employee how they are doing helps neither the high- nor low-performing worker. Low performers never get the course correction they may need to turn things around, and this can lead to an ugly appraisal meeting. High performers also benefit from ongoing feedback. The recognition of work well done can keep them engaged and on track.

For many more i4cp insights on performance appraisals, look to our Performance Management Knowledge Center.

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