Quite a lot companies and organisations struggle with performance management: 40% of employees are not open to it, the ROI is below par … But: the glass is half empty or half full. Vlerick and Chair Partner Hudson decided to take a closer look at the half-full glass. They identified six factors which do make performance management work, illustrated every factor with an inspiring example from the business world, and compiled their findings in the paper ‘Trends in Performance Management’.
In the paper, you pose that very few companies succeed in implementing performance management effectively. Why is that? What is going wrong?
Professor Koen Dewettinck: ‘Companies often have unrealistic expectations about performance management: they want it to enable them to simultaneously deal with underperforming employees, improve result-orientation, stimulate employees, etc.’
Hannelore Blondia (Talent Management at HR consultancy Hudson): ‘Too often, performance management is also seen as “something that is imposed by HR”. It’s not linked to the business enough, there is too little commitment or buy-in from the employees, so it gets bogged down in a cumbersome, administrative process they just have to plough through. And that’s a shame. If you really want to make performance management work, you have to strategically anchor it in your organisation, as is the case with remuneration, where this is done to a much greater extent. Companies have to ask themselves the question much more: why are we doing this, what do we want to achieve with this?’
KD: ‘Absolutely. Performance management can only work if you as a company make conscious choices, taking into account your core values and corporate culture. In practice, though, we really do see too little creativity in the way an organisation gives shape to such performance management. That’s why I hope that the examples in the paper will inspire HR managers, business managers and managers in general to give “their own twist” to it.’
One of the key factors for effective performance management is the role of the people manager. Why is this so important?
KD: ‘I would first like to qualify the term “people manager” in this context. We have broken down “the” people manager into five dimensions: the manager 1) who coaches, 2) who shows involvement, 3) who informs employees, 4) who involves them in the decision-making process and 5) who is an example. Our research shows that the first two dimensions, in particular, appear to have a positive impact on the performance of employees – while this is actually where managers score lowest. The people manager is important here because of their empowerment: they inspire, they engage their employees and are able to distance themselves from the rigid process mentioned earlier.’
HB: ‘But the responsibility doesn’t just lie with the manager; employees, too, have to be made partly responsible and, in fact, need to be the pilot of their own career and development.’
But not all managers are open to this …
KD: ‘… because not all managers are people managers. With increasing digitisation, in particular, we see more and more technical profiles climb the ranks in an organisation and automatically be given management responsibility of x number of people. The role of people manager is thrusted upon them, a role they are not suited to and may not even have asked for. And what do they do when they have to roll out a performance management scheme? They first work out a rigid process, a “one-size-fits-all” that doesn’t work. This has to and can be done differently. That’s why we give the refreshing example in the paper of how Facebook allows its managers to grow based on “dual career tracks”: a “nerd” doesn’t have to take on a managerial role, but is on an equal level as someone who does have people skills and manages a whole department.’
HB: ‘At Hudson, we also strongly believe in these dual career tracks. Not only do we support quite a lot of clients in mapping out this expert ladder with associated remuneration. Our 5+1 compass weighting methodology is also developed according to this principle; in other words, expertise and complexity are criteria that weigh heavily in determining the weighting of a position. In concrete terms, this means that expert positions can be at the same level as managerial ones.’
Is performance management by definition not something for bigger companies? Or is it also useful to SMEs?
HB: ‘We get asked for guidance on performance management schemes a lot by SMEs who don’t have the critical mass needed for this. And it doesn’t necessarily have to cost the earth or be particularly time-consuming. Our advice is always: “keep it simple”. Talk to your people and start with small points for improvement.’
KD: ‘SMEs are versatile. It’s often easier for them to pick one idea, for instance, an original way to express appreciation, to motivate their employees and involve them in the next step towards greater openness, interaction and creativity.’