HR Perspective with MEMORY NGUWI
WHENEVER I have the opportunity to present to HR professionals, I often ask whether their performance management systems are working. Almost 99 percent of those say their systems are not working. More than half indicate that they do not have a functioning performance management system at all. Those who have often admit that it adds little value to individual or organisational performance. Over the years, through consulting, research and helping organisations design performance management systems, I have identified several issues that HR professionals need to address.
Job performance has two important dimensions: task performance (results) and contextual performance. Task performance refers to the results or objective outputs an employee is expected to deliver. Contextual performance refers to behaviours that support effective individual, team and organisational performance. For example, collaboration is an important aspect of contextual performance in roles where employees must work together to achieve results. Other relevant behaviours may include helping colleagues, sharing knowledge, taking initiative and supporting team objectives. The key is to identify and assess only those behaviours that genuinely contribute to effective performance in a particular role. Not every behaviour is equally important across all jobs.
We have decades of solid scientific research in psychology showing that goal setting can improve performance. The challenge is that many organisations complicate what should be a relatively straightforward process. My recommendation is to have between five and seven high-priority goals for every employee, from the CEO to the lowest level of the organizational hierarchy. The more goals you add, the greater the risk of diluting attention and effort.
Aim for a one page performance appraisal form. For each goal, capture only three things: the goal, the KPI or performance measure, and the target. Always start the goal statement with an action verb. Goals can have quarterly or annual targets.
Start with organisational goals owned by the CEO and cascade them to departmental heads, section heads and eventually individual employees. Every employee should understand how their goals contribute to higher level organisational goals. For large teams performing interdependent work, team performance goals may be more appropriate than individual goals.
Research indicates that participation in goal setting is not necessarily a requirement for goals to improve performance. Goals assigned by managers can also be effective. What matters is that employees understand the goals, accept them, have the capability and resources to achieve them, and receive appropriate feedback. Managers must explain the rationale behind each goal and how achieving it contributes to departmental and organisational performance. Employees should never be left wondering why they are pursuing particular targets.
Feedback is important, but more frequent feedback does not automatically translate into better performance. Poorly delivered feedback can actually undermine performance. Give employees enough time between feedback sessions to implement what has been discussed and demonstrate improvement. Feedback should focus on performance, not personal attacks. Negative feedback delivered as a personal attack can remain in an employee’s memory for years and damage the relationship with the manager. The purpose of feedback is to help employees improve, not to humiliate them.
One practice I regularly question is the arbitrary allocation of weights to performance goals. In many organisations, managers simply assign percentages without a defensible framework for determining the relative importance of each goal. I have not seen sufficiently convincing evidence that the routine use of arbitrary goal weights improves employee performance.
If your organisation decides to use weights, develop a consistent framework that reflects the relative contribution of goals to organisational results. Avoid leaving individual managers to invent weights without clear principles. The relative importance of goals should be determined through a defensible process rather than arbitrary judgement.
This is one of the most poorly designed aspects of performance management systems. For objective performance measures where a higher result is better, a simple starting point is to calculate an achievement ratio. The formula is:
Achievement Ratio = (Actual Performance ÷ Target Performance) × 100
Calculate the achievement ratio for each goal and, where the measures are suitable for aggregation, average the ratios to determine overall goal achievement. Measures where lower results are better, such as costs, defects and accidents, require a different scoring approach. You must also establish rules for exceptional results and targets that should not be exceeded.
For contextual performance, develop clearly defined behavioural anchors. Employees and managers must know upfront what good and poor performance look like. This reduces ambiguity and improves consistency in assessments.
For behaviours that can be observed by several people, I recommend considering 360 degree assessments involving supervisors, colleagues, subordinates where applicable, and other relevant contributors. I prefer excluding self ratings from the final score because they introduce an additional source of potential bias. However, the assessment must be properly designed, and the different raters must have sufficient opportunity to observe the behaviours being assessed. Technology has made collecting and consolidating these assessments much easier.
From my experience, quarterly performance reviews offer a practical balance between monitoring performance and allowing employees sufficient time to deliver results. Agree on annual goals at the beginning of the performance cycle and break them down into quarterly milestones. In Quarter 1, Quarter 2 and Quarter 3, assess progress against the agreed targets, identify performance gaps and agree on corrective actions. In Quarter 4, conduct the final assessment and consolidate performance for the full year. This approach gives managers an opportunity to address performance problems before the year ends instead of discovering them during the annual appraisal.
The purpose of a performance management system is not to produce appraisal forms, calculate ratings or satisfy an HR policy requirement. The purpose is to improve individual, team and organisational performance. If your performance management system does not help employees understand what they must deliver, track their progress, identify performance gaps and improve their results, then it is not serving its purpose.
My advice to HR professionals is to simplify your systems. Focus on a few important goals, measure results objectively, assess relevant contextual behaviours, provide useful feedback and hold managers accountable for helping their teams perform. If you get these fundamentals right, you stand a much better chance of developing a performance management system that actually adds value to the business.
l Nguwi is managing consultant at Industrial Psychology Consultants (Pvt) Ltd. Email mnguwi@ipcconsultants. com