In November 2004, I wrote a few words about high performance culture, and I remain convinced that the secret to maximising performance is to focus on all those ingredients which, mixed together, form the culture of the organisation (or part of it). One such ingredient is the process usually owned by the HR function, which seems perpetually to be under the microscope for possible reinvention – often called the performance management process, or simply appraisals. This month I’d like to reflect a little on this chestnut.

My students often choose studies of existing or proposed appraisal systems for their dissertations, and I am staggered by the amount of discontent that exists in managers and employees alike in all kinds of organisations. It has always seemed anomalous that HR should have a struggle to get managers to cooperate in the annual (or more frequent) fulfillment of performance reviews. After all, improved performance of people is surely in the interest of every manager. However, the clarity of this goal is frequently clouded by using the process for many other purposes. It may be the means of determining a person’s performance-based pay rise; of reviewing and resetting personal learning plans; of culture checking the application of company values; or of doing competency assessments. It may also be the main dialogue for discussing a person’s career and future development. I once facilitated an HR strategy session in which one of the concerns was how HR was going to ‘sell’ a new competency-based performance management system (‘rolled out’ from the USA). The concern was it would just be seen as too complex. Perhaps there is something badly wrong with the process if managers have to be trained in how to fill out the paperwork …

I cannot recall any studies that illustrate how an appraisal system has actually improved performance in an organisation. There is no doubt that individuals can and do get benefit from well-conducted discussions, receiving guidance as to development and discussing issues that may have otherwise lain dormant. When it comes to performance itself, the classic approach has several difficulties. Many people today work in teams where the team objectives are more important than those of any one individual. Moreover, it is very clear that the ease or difficulty of achieving preset job objectives varies considerably from person to person. And then there are ‘ratings’. How much collective HR time has been spent agonising over the number and wording of these!

I came to the conclusion many years ago that any benefits of ratings were far outweighed by their negative effects. The only benefit that could be articulated was as a systematic input to performance pay – but I never observed managers in need of such a shorthand in order to distribute their ‘pot’ in a way that seemed fair to them. The labelling that a rating provides has many problems; not least is the drift (especially in public organisations) towards a skewed distribution in favour of the higher ratings, plus a reluctance to tell anyone they might be lower than last year. The ‘forced distribution’ answer antagonises managers and never works for small units. Furthermore, a rating is an average – and all averages disguise the valuable detail that is the essence of the discussion. If we need a summary, and this is often helpful, a balanced narrative is much more helpful than a number. Ask what would really happen if we didn’t have ratings?

 Some readers will, like me, be self-employed and they are not subject to a formal appraisal system. Does this signify that there is no means of managing their performance? Far from it! Unlike the employee, the consultant is only as good as her or his last assignment. There is no hiding place when it comes to performance; it has to meet requirements, and be judged (as a minimum) satisfactory by the client, or else someone else eats your bread next month. So performance has to be self-managed, within an unforgiving an continuous culture of high expectation. All the characteristics of performance management – clear goals, quality delivery, timeliness, feedback, service satisfaction, growth of capability – are the daily concern of the consultant.

Working with several job-for-life organisations, particularly abroad, has convinced me that if there are no consequences for poor performance (and often few for good performance either), it is exceptionally hard – but not impossible – to motivate everyone to perform well and give their best. However, given a suitable balance of both kinds of consequence, are there any lessons for the organisational performance management process to be transferred from the life of the consultant? How about scrapping the traditional appraisal paperwork altogether? Have separate processes for any of the purposes listed in the second paragraph of this article that we need. Then for performance management perhaps we should concentrate on two things.

* First, help managers to understand what it takes to build their own high performance culture, and to be skilled in doing so.
* Second, help all individuals to self-manage their performance within this culture – to agree delivery goals with their clients (one of which will be their manager, another may be their co-workers), to design review and feedback systems to monitor them, and to use (where needed) a suitable coach as their partner in performance management.

We might find out some interesting things about the jobs people do and the value they add … and we can be pretty certain that performance will improve, constantly. And as a bonus HR will add real value to managers instead of irritating them.

Andrew Mayo is a consultant, speaker, writer and facilitator in international HR management, with specialisms in people and organisation development. He can be contacted on +44 (0) 1727 843424, at andrew@mliltd.com or visit www.mliltd.com

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