Thursday, July 18, 2013

Performance Management vs. Employee Engagement

Performance Management and Employee Engagement are currently very hot topics among business leaders and human resource professionals. While these are actually two different concepts, they intersect in many important ways. Effectively managing can lead to higher employee engagement levels. There are those who believe that employee engagement efforts should replace performance management. I however, believe that if you focus on engagement to the exclusion of management, you and your business will not succeed. These two concepts can be mutually exclusive. You can have performance without engagement, and engagement without performance. The trick is to get both, and have one support the other.

In reviewing many recent articles floating around the web, it seems clear that there are many issues surrounding the management of performance, and how that might impact engagement. 
The difficulty with performance management is that many managers really don’t want to manage performance. They just want it to happen. They are reluctant to give feedback, and especially reluctant to confront inadequate performance. Why? There are many reasons, such as:

  • I don't know what to say
  • What if they quit?
  • What if I make things worse?
  • He's been here a long time, why should we deal with it now?
  • It will demotivate the employee
  • I hate conflict
  • Maybe if we ignore it, the problem will just go away
  • I don't think this person is capable of changing
  • I don't know how to fix this problem performance.
In theory, managers know they need to be managing performance. They know that they should be conducting annual performance reviews, and that they should be having regular discussions throughout the year with their staff about their performance, goals and company objectives. But clearly there's a difference between knowing you should do something and actually doing it. And when managers don't manage, the business suffers and so do their staff.
Employees and managers often perceive performance management systems to be more punitive than productive. And given how performance management is often handled, this isn’t a big surprise.

Criticism related to traditional performance management systems can include several factors: 
  • Traditional models don’t demand ongoing feedback and can limit honest discussion. The outcome of a traditional performance review is often used to inform decisions regarding an employee’s compensation and potential for promotion. Ongoing discussions don’t often occur outside of the time period for deciding raises, promotions, etc. This leads to wide gaps between expectations and performance, and often surprise at the annual review.
  • Performance reviews focus on the negative. The nature of traditional performance management is often the tendency to look for what is not working or to stress the weaknesses of the employee. While this is indeed important in order to clarify what needs to be done, it is equally important to add a development perspective to performance reviews, and to encourage input from employees in regard to their jobs.
  • Fairness and consistency in ratings or the judgment of performance cannot be achieved. While studies show that most organizations use rating scales in their performance appraisal systems, there are problems with this practice. First, it is difficult to make a distinction between levels of performance with the exception of the really good or really bad performers. Secondly, managers will attempt to manipulate and distort ratings to get a predetermined result. Or, despite wanting to rate fairly, managers can (consciously or unconsciously) bring biases into the process. The traditional ‘Exceeds, Meets, Needs Improvement’ rating scale (and all its variations) puts the manager in the position of being a judge. And that’s a position they often don’t want to be in. Refer to the above list of reasons for not wanting to give feedback. Managers may not want to confront less than desirable performance, or may fear how their employee will respond. The result is a process that is not meaningful and in fact, counterproductive to success.
  • Paying for performance does not always ensure good performance. A recent study by the American Compensation Journal concluded from its review of the evidence that "financial incentives may not necessarily improve performance quality." Money alone is not always the motivator we seem to think it is. Employees want more. They want meaning, challenge and input into their jobs. For some, rewarding their efforts does not result in continued effort, it may result in complacency and a sense of entitlement. Only using performance appraisals as a means to justify raises backfires.
Studies show that most companies overlook the importance of the human element. The relationship between employees and their manager is vital (and that relationship can drive engagement). A Gallup survey of both managers and their employees revealed that employees’ perception of both the company’s performance management process and their manager was greatly influenced by their relationship with their manager. It showed that really good managers provided their employees with:

  • clearly communicated performance standards and what good performance in a role actually looks like
  • regular feedback and communication on performance expectations, rather than only once a year
  • and helped employees understand that the purpose of the performance management system was to aid in their development; it was not just an activity required for pay or promotions

It’s imperative to ensure that both managers and employees understand the importance of performance management and the systems in place to track it and improve it. They need to know, from leadership’s perspective, how effective performance management impacts business success.

It can’t stressed enough the importance of manager accountability in this equation. Until you hold people accountable for this critical job function, the job of managing the staff will simply not get done. And when managers don’t manage, the organization will not get the results it would if the staff had clear direction and strong guidance. And without direction, guidance, and effective management, you won’t get engagement.

1 comment:

  1. In my opinion management can be referred as the backbone of any organization and everything in an company is dependent on how well the company is managed and employee engagement is the reflection of systematic management that how ell you are organized.