We recently conducted a comprehensive research study on managerial effectiveness with the University of Ottawa. Our research revealed that corporate support services—the systems put in place to support managers—are generally viewed as being unsupportive. In fact, only 56% of managers agree that corporate support systems help them be more effective in their work. Performance management systems were among the worst scoring.
Only 31% of managers agreed with the statement that performance management systems are effective and consistently applied. These critical systems, which determine how an organization assesses managerial performance and pay, are generally considered to be unfair and ineffective. No wonder employee engagement is at an all-time low.
How can we let this happen in our organizations?
Ironically, the very thing that causes performance management systems to be viewed as unfair, is a desire on the part of organizations to be objective. The misconception that performance management systems should be objective is the twelfth and final fallacy on our list of The Top 12 Fallacies That Get In The Way of Organizational Performance.
The Problem With Objectivity
Say you have two people with very similar roles who have been given the same objective. One person exceeds the objective by 50% and one underperforms by 50%. The question is: which one did better? In a completely objective system, you would say that the person who performed 50% above their objective did better.
But that might not be the case.
Perhaps they were in a territory, or in a particular situation, where everything went really well without them having to work very hard. On the other hand, the under-performer may have encountered extenuating circumstances beyond their control that prevented them from performing as well. They may have worked harder than any of their peers simply to get to 50% of their target. In the manager’s judgment, the individual who performed lower may be the one they should reward because they worked harder or did an excellent job of resolving the issue, or laying the groundwork for future success.
The Annual Performance Review
Traditionally in organizations, managers set objectives for their employees at the beginning of the year. They then have a meeting at the end of the year to provide feedback on their work and may or may not award them a merit and/or cost of living raise. Typically there is a bell curve, so only 2% of employees can be the highest performing, 18% can be high performing, and the rest must be average or below average. Generally, a form has to be filled out and the various aspects of the evaluation scored and tallied, the total of which are meant to give an objective rating. Though well intentioned, this system takes away the use of judgment from managers.
A Better Performance Management System
In a more effective system, objectives are given at the beginning of the year. Then throughout the year, there is a feedback system where the manager continuously gives feedback to their direct reports, receives feedback from them, and continues to coach and support them. Our “4 Tips To Host Better Performance Management Meetings” details how to facilitate this feedback system.
When organizations attempt to make performance management systems objective, they tend to fail because total objectivity is simply not possible. There is no one measure that fits every situation and every employee. It’s far better to allow managers to use their own judgment to delegate objectives, give feedback, provide coaching, and assess how well their direct reports have performed.
