How Are Your (Still) Managing Performance?

If you are like most people, you don’t enjoy the performance management process, but you do it because you know its importance for ensuring the success of the business.

Typically, performance management means doing three things:

  1. Ensuring people know what the business needs from them, and setting goals to make sure they can deliver.
  2. Evaluating people objectively to identify where and how they can improve.
  3. Linking performance to rewards such as career development, to keep people motivated.

All this is great, except for the part where there is little proof a causal link exists between the performance improvement process and actual performance. In fact, there is evidence to suggest that performance improvement programs and goal-setting are just as likely to have a negative impact on performance.

Damn heuristics!

We all carry a human flaw where we can’t always see the evidence before us.

It comes from heuristics, the mental processing of the millions pieces of information our brains are constantly subjected to. Heuristics are how, for instance, you know information from your boss should be trusted. Your brain makes an instant connection between your boss’s position and the information you received without you having to check new information each time you receive it.

Similarly, our trust in performance improvement programs is based on the various pieces of information we have already accepted, such as:

  • People naturally aspire to fulfil higher order goals (Maslow’s hierarchy of needs)
  • People respond to positive and negative reinforcement (BF Skinner’s operant conditioning)
  • People should be judged/evaluated in a uniform system using the same criteria (equity theory)
  • Rewards should favour the most talented and able (meritocracy)
  • Motivation increases in line with people’s desire for a reward (expectancy theory)

We draw the conclusion that if these are true, then whatever we apply these models to must also be true.

Brain efficiency however comes with many inaccuracies. Known as cognitive biases, mental mistakes arise when our brains’ short cuts oversimplify a problem, focus on one aspect while ignoring others, or wrongly attribute a cause or apply logic.

Mistakes about motivation

In his New York Times bestseller, Drive, author Dan Pink draws on decades of research that show human motivation comes from people having autonomy (control over their work), mastery in their area of expertise, and a sense of purpose.

However, not too many organisations are rushing to replace their performance management programs with ‘mastery’ goals, or changing reporting lines to increase worker autonomy. Our heuristics simply makes it easier for us to accept that motivation comes from the desire to achieve set goals.

Our love (or love-hate) relationship with performance management programs is particularly hard to break because of the number of cognitive biases that are potentially at play, such as:

  • Confirmation bias, when an event such as an uptick in a person’s performance, is seen as proof of something, when in fact it could be due to any number of other reasons;
  • Illusion of control, the tendency to overestimate how much control we actually have over outcomes;
  • Ambiguity effect, where the information we don’t have is ignored – why for instance many still believe if something can’t be measured, it can’t be improved, as if only quantifiable things can be done better;
  • Bandwagon effect, where we believe something works because everyone else believes it does;
  • Congruence bias, where we test narrowly rather than evaluate all the possible alternatives;
  • Status quo bias and/or sunk costs fallacy that make sticking to what we know/have invested in seem like a rational decision.

The more advanced we are in behavioural and neurosciences, the more we are able to understand our biases and can make better business decisions.

Time to challenge old assumptions

At this point in history, our management practices need to be challenged on the basis of more than biases alone. As the world continues to change, we also need to evaluate our management practices for relevance.

Work is becoming less uniform. The old approach of improving performance by rounding people out is losing its effectiveness and is an expensive drain on overall performance. In a dynamic environment, utilising an individual’s strengths achieves more than does fixing weaknesses. An identified weakness can be mitigated, whereas not capitalising on strengths can mean the difference between success and failure.

We live in times of constant change.

What activities employees focus on today will be good for the business tomorrow? It’s always been a question for organisations, but never before in such short timeframes. We are in an era where every industry is changing – only the speed and degree of change differs.

Structured work is giving way to work completed by collaborations across teams, departments and whole organisations, a trend that will only continue. It requires people to adapt to the context in which they work. This is a big shift from a few short years ago when all we wanted was for people to know how to do a job well.

As a result, the proportion of work that depends on ‘soft skills’ like critical thinking, flexibility and communication, has become at least as important as technical skills.

Careers are changing.

Dangling the carrot of career progression is increasingly unrealistic. With more work relying on creativity, ideas and knowledge, skill-based career progression is ever less likely. Technology is also taking over many skilled and semi-skilled functions that used to provide the stepping stones to linear career development.

The role of manager is changing too.

Being a manager is migrating away from its traditional intermediary role between the business and its people. Instead of relying on manager to, for example, coordinate between departments or ensure the will of the higher management levels are carried out, technology is removing barriers and collapsing the stages between work, production and customers.

Cloud systems, productivity software and leaner structures are some of the ways the traditional manager role is being replaced. You don’t need a manager to collate information on people’s performance and feed it back to them (in an uncomfortable and time-consuming process) if you can provide people instant access to performance data through technology.

It raises many questions about what organisations need managers to do as work changes. At the risk of oversimplifying, the answer is managers need to do the things that machines cannot; things such as creative problem solving and developing human relationships.

A new management paradigm is here

The agile and fluid, often cross-functional, not always wholly internal, teams that will become the norm of working will be heavily reliant on managers. Managers will not control the teams’ performance. Instead managers will provide them with the necessary resources to fast-track their progress from new team to high-performance team, including information, culture direction, access to other people, skills and training, objectivity, emotional support, and a check/balance against risks and errors that inevitably come with innovation and change. What used to be the peripheral parts of management will soon be its whole concern.

As managers, we need to help organisations adapt as new situations present themselves. We need to create an environment in which people can build on and best apply their strengths, and know how their work supports the organisation’s overall goals. We need to look at whether our unconscious biases or a world that has moved on, are causing us to produce suboptimal results.

Technology isn’t replacing managers, but it will need managers to work differently. And we can finally retire those uncomfortable, judgemental performance meetings that compare people on a standardised scale of theorised perfection, and just help people do their best work.

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