In 1968, Frederick Herzberg published an article entitled ‘One more time – how do you motivate employees?’, giving his watershed distinction between ‘satisfiers’ and ‘dissatisfiers’ in the ongoing debate about how to motivate employees at that time.¹ I am sometimes surprised that in 2004 many organisations still wrestle with the issue of performance management and are constantly re-engineering their processes. They experiment with ratings and without them, agonise about words, include and exclude value-driven behaviours, tinker with sections on potential, and sometimes incorporate entire competency frameworks as an integral part. And yet, do we have any evidence that our systems do actually improve performance?

I recall working with the European HR team of a US-based pharmaceutical group, facilitating a meeting on their HR strategy. A big item on their agenda was how to ‘sell’ to line management a new performance management system that was being ‘rolled out’ from the USA. I suggested they take a step back and ask: ‘Why do we need to sell it?’ Surely a system that is aimed at improving performance should be automatically welcomed? Why were they nervous? Because it incorporated a very complex set of competences at different levels that were new and they feared a backlash of how long it would take, excessive paperwork, and so on.

It would be good to listen to line management more, and to have more respect for their time than we often do. Of course, managing performance should be a continuous process. Nevertheless, the annual discussion is a key platform for taking stock. Appraisal and development reviews typically have two outputs: some summary of performance linked to a pay review and the determination of development needs.

Many organisations sensibly separate these into two distinct processes undertaken at different times. But they cannot be completely divorced, since development should be aimed at improved performance. Two dysfunctional outcomes are often present. The first is an obsession with final ratings. This is such an emotional area that organisations struggle to maintain a distribution. In one quasi public sector institution with which I work, 87 per cent of employees receive ‘excellent’ or ‘very good’, which bears no relation to the achievement of the organisational targets as a whole. So the result is a false sense of ‘performance’.

I have concluded – as have others – that the evils of ratings outweigh their benefits, and this ‘averaging label which hides the detail of real strength and weakness’ serves little purpose. Managers are quite capable of distributing a pot of ‘pay for performance’ without them, and will do so with more discrimination than being forced to do so by mechanical linkage to ratings.

The second dangerous outcome is that the completion of ‘personal development plans’ is seen as a measure of success in itself. It is certainly worth measuring, but it is only a step in the process. A better measure is the percentage of plans implemented. But even that is only a step. The fact that I did read the book or go on the course does not mean I changed at all. The real outcome is that my performance improved. That’s not going to be measured by anything as crude as a rating. Just as development objectives need to be SMART, so elements of performance improvement must also be specific and measured – in applied capability or in visible results. The loop here is often not completed. HRD may struggle with evaluation, but we need everyone, including managers, to understand the learning cycle and evaluation at least to Level 3 (behaviour change). The development plan is derived from the performance discussion, and so the first part of each year’s review should be these questions: ‘Did the learning plan work?’, ‘What are we now seeing as a result of learning that took place?’ and ‘Has it removed the “performance gap”?’

I have long been a devotee of a very useful algorithm, devised by Robert Mager and Peter Pipe, on analysing performance problems.² When we see a gap, we too easily jump to the conclusion that some training will be the solution. The authors show the multitude of other causes that may be at work – for example, issues around motivation, organisational or resource constraints, lack of clarity about what was expected or temporary personal problems. Training may be easily accepted by an appraisee who is not willing to open up about the real causes.

Of course, there are ‘softer’ purposes and benefits from an annual appraisal process as well, such as the opportunity to provide recognition, discuss broader issues about the working relationship, sort out any problems that have not been aired before and discuss futures. These are all essential dialogue, and in an open and trusting environment the reality of a performance problem will emerge. Nevertheless the organisation’s prime goal must see such discussions as a key part of constant performance improvement. I wonder if anyone does a real audit of whether that does occur? I suggest that an analysis of ratings does not give us the true answer; the truth, as always, is in the detail.

References
1. Frederick Herzberg, ‘One more time – how do we motivate employees?’, Harvard Business Review, 1968, republished in the collection Motivating People, January 2003.
2. Robert F Mager and Peter Pipe, Analysing Performance Problems, Lake Publishing, 1984.

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 at www.mliltd.com

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