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New Rules of Performance Management: Enhancing Your Company's DNA

August 16, 2012 - by Elaine Pulakos, Rose Hanson

More than 50 years of research has attempted to improve performance management (PM) systems by changing every element of the process: what’s rated, who makes ratings, how often feedback is given, what documentation is required, and what rating scale is used. Unfortunately, none of these strategies have been shown to consistently lead to higher performance. The quest to develop the “perfect” performance management system has caused us to lose sight of what effective PM really is all about: building a high performance culture and driving employee engagement.

Rather than continue to invest significant resources—both time and money—into formal PM systems that have not delivered results, we need more fundamental change for PM to achieve its potential. Such change must be woven into the very fabric of an organization’s culture. It begins by teaching managers and employees how to perform the behaviors that really matter and then holding them accountable for demonstrating these behaviors on a daily basis.

Based on extensive practice and research, we have created three new rules for changing your organization’s DNA to drive high performance and engagement.

Rule 1: Shift Your Mindset

The promise of PM can only be realized if there is a fundamental shift in our collective mindset about what PM is supposed to accomplish. It is important, therefore, to distinguish PM from performance appraisal. While performance appraisal is concerned with the formal process of evaluating and documenting performance?often just once a year?PM is an ongoing process that happens on a daily basis. Performance appraisal happens outside of work while PM is integral to the work. The key behaviors that drive effective PM are:

  • articulating the organization’s mission for employees and helping them see how their day-to-day work fits in
  • setting clear expectations and providing feedback on an ongoing basis?not just once or twice a year?to let others clearly know where they stand
  • providing opportunities for growth and development through real world experiences to help employees build knowledge and skills and operate more autonomously

Inducing a collective mindset shift begins with communication from senior leaders, but it must cascade down through every level of the organization. Constant repetition and reinforcement of key messages is needed for the shift to become permanent. In addition, the organization must ensure its processes support rather than detract from these messages. A thorough review of the organization’s current PM system is critical to identify what should be continued, scaled back, or stopped altogether to reinforce the new mindset.

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