Driving performance is one of the cornerstones of every organization and this statement is uncontested, however the moment we speak about performance management. that gets contested. Organizations have their own performance philosophies, management systems, and methodologies however seldom do they yield the very purpose of why they exist. 

This gap from reality has transitioned so slowly that many have failed to acknowledge, that they have drifted away from the very purpose. Let’s look back from where it all started. The beginning of (first) industrial revolution starting from mid 1700’s which went all the way to mid 1800’s saw the transition to a new manufacturing process where performance was a measure of goods produced per unit time. Over the last century, the level of complexity of measuring performance grew, but performance remained broadly around the measure of goods produced or services delivered. They did meet the need of the time then, but we over the last decade are standing at the point of threshold of an inadvertent change, which many realize but do not acknowledge.

The business case for a change in performance management is vested on multiple points and these also would highlight what you wish to address either together or one at a time. These are the 5 attributes to realize the need for a change.

• Dis-proportionate consumption of time. A published data speaks that a large consulting firm spent around 2 million hours every year driving the performance management, deciding ratings, conducting meetings and completing forms for 65000 employees. How can the time be best invested with people discussing their career and future performance (coaching, mentoring, unleash passion, unblock performance barriers)? In this finite time enterprises and their talents have, where are we investing our time on? Measuring performance or actually performing!
• Rear view mirror approach. The current state of performance management focuses on a retrospective performance of how one did in the past and what they accomplished. It clearly misses out the opportunity to fuel the passion for driving future performance. Look at most of the performance management practices, they measure you against the targets of the past and we all know in real time business scenarios, a goal setting may not get closer to reality. When the industry is getting every competitive, do you want to assess your talent on what they did, or would you invest in what they can actually do in future?
• The maze of ratings. It is near impossible that you at any point have not been through the rating system of performance management, say the 5x5/3x3 grid, the ABC’s or 123’s of ratings or words which eventually translate to a rating system. What does this say? Irrespective of the unique individuality and the unique challenges a talent faces, they will end up being in either one of the grids. This may work well for a part of an organization, but will it work for the whole of your organization? Any grid breaks the continuous spread in packets, for a talent, the challenge is not when the placement is evident in the grid, but for the one who is in the periphery of the grids, unfortunately they are then forced into one. When your assessment is finite, organizations should expect a finite outcome. Would we not be interested to unleash non-finite possibilities from our talents and for the organizations?
• The gap of perceived performance v/s actually performing. Employees are evaluated from the vantage point of the assessor's perception and one of the most comprehensive research on this was conducted by Michael Mount, Steven Scullen, and Maynard Goff and published in the Journal of Applied Psychology in 2000. Their study revealed that 62% of the variance in the ratings could be accounted for by individual raters’ peculiarities of perception. Actual performance accounted for only 21% of the variance. This in real life adds inconsiderate stress in the system to perform and also work on perception. This is an uncomfortable truth, when confronted, faces denial; But hand on heart, we all know the reality.
• Cyclicality by design constraints agility. When faced with challenging times (competition, legislation, pandemic et.al) would you wait for the performance cycle or rather address the changed performance needs right away? Owing to its innate design of reviewing the performance management in a cyclical time frame it limits the ability to invest in diverting the focus of organizations talent.

Where does one look towards to make the much-needed shift in performance management? Here is an expectation setting with these 5 thoughts to help you think, deliberate, design and deploy on what enables your organization to actually perform!

What does the future of performance management of performing organizations look like?

• It’s a culture thing! Performance management gives the power in the hands of few to make a decisive impact, either positive or negative on people, teams and organizations. This transition of power to the hands of every talent calls for a cultural transformation in itself. Organizations need to envision the future state and take all efforts to work towards it. This change calls out clearly, what was acceptable today, will not be relevant tomorrow. You need strong leaders and even stronger conviction to drive this cultural change.
• Fueling passion for performance. Are managers and individuals investing time in what it takes to be their better-self year over year? As mentioned earlier on disproportionate investment of time in running the performance management process, if a part of it is invested in fueling passion for performance that does better than the process itself. All it takes is having a conversation with an intent to drive performance for today and fueling the same for future, over and over again.
• Be real, be realistic, be relevant, be real-time. An ecosystem of driving performance to which every talent relates to, finds value in investing time in it, speaks of their current work and does this in real-time. What this state of performance management warrants a cultural transformation as the power is given in the hands of each and every employee. It’s giving the responsibility in the hands of the talent. If you reflect, the major point of contention amongst employees is around the performance management, how can you flip it to a point of encouragement?
• Shapeless! One not obsessed with any curve. Un-constrain the organization and their talent to let every talent be seen as what they bring on table. Irrespective of what organizations say of moving out of normal distribution, still there are other ways in which ‘close to normal’ distribution still gets enforced. A common comment I hear is ‘how does the graph look?’ after the performance assessment is done and I hope each one of us at different times have faced, asked or answered to this question. Do away with it. Performance cannot be bound by a curve.
• Being system wise, content foolish. Drive the organization and managers focus on the content (conversations, discussion, mentoring, coaching, supporting) than the regular tick in the activity of completing it in the system. Unfortunately, many organizations have those months where the entire rush (remember the 2 million hours!) is to finish the performance steps in the system, this turns down the very essence to a transaction between manager and employee. Rather the tracking, use technology to drive meaningful conversation and analytics to offer hyper personalization to every manager and talent.

Better said than done, the journey manifests in small steps for few while others make orbital jumps. This article as much it speaks for organizations in the journey to make the paradigm shift, it is equally relevant for organizations who want to start their performance culture and start performing! While we in our respective organizations strive to make the shift, it may even be a satisfying moment for few organizations to establish the fundamentals of performance over which their entire growth and performing journey stands.