Command performance

Nearly all HR professionals believe there is now more emphasis on performance management, says CIPD poll

We live in interesting times. Especially for performance management. Amid cries of “no reward for failure”, Wall Street banks are due to pay out a record $140 billion (£85 billion) in bonuses this year. In the UK, at Goldman Sachs (where bonuses are estimated to be 46 per cent higher this year than last), vice chairman Lord Griffiths says, “We have to tolerate inequality as a way to achieve greater prosperity and opportunity for all.”

A recent CIPD poll found 96 per cent of HR respondents agreeing that the economic crisis makes the management of key talent more important than ever, with 92 per cent believing there’s now more emphasis on performance management generally. In a sluggish labour market, organisations have to optimise the talent they have, while rising unemployment puts pressure on individuals to perform. 

According to the CIPD’s research, 92 per cent thought that closer scrutiny of poor performance accounted for the rising interest in performance management. Meanwhile, the continuing climate of cost-cutting no doubt explains why 90 per cent say organisations have to be more creative in rewarding good performance through non-financial incentives. 

The fat-cat financiers are clearly in the minority. Any organisation, if it’s to survive the downturn and live to see – and thrive in – the recovery, has to both measure and motivate its people. Now is no time to either tolerate freeloaders or ignore commitment. As Irving Berlin said, “Talent is only a starting point. You’ve got to keep on working it.”

Performance management means people knowing what they should be doing, what they’re good at, where they need to focus, where they need to get better, how they get better and what support they have to do that. It’s collaborative; employee and employer discussing past and current performance and sharing expectations for the future. It’s neither a diplomatic euphemism for the disciplinary process nor merely the ritualistic annual appraisal. It’s a culture not a process, continuous not an event, and a management – not an HR – tool.

Indeed, just as line managers are pivotal to the success of performance management, it is the most useful weapon in their armoury, certainly if they are to achieve Smart objectives. However, I can empathise with those told that, on top of all their other responsibilities, they must now also “own” performance management. What’s HR doing? 

Well, hopefully our job: training and coaching line managers in performance management, continuously supporting them with it, and rewarding them for it. Oh, and persuasively selling its myriad benefits, to and for them. Effectively managing their employees’ performance should make line managers’ lives easier and make them look better. Arguably the biggest benefit, if not the most altruistic one, is that a high-performing team is a critical measure of the line manager’s own success.

HR has one other vital role: keeping the implementation as simple as the concept. Too often, the systems and the forms, rather than enabling performance management, impede or even replace it. Successful organisations recognise that the conversations are far more important than the software or the paperwork. This is one incentive where the payback should more than justify the payout.