Navigating the rough seas of performance management

HR Magazine, December 2009
By Philippa Youngman

“Will it make the boat go faster,” is the famous guiding principle the late Sir Peter Blake articulated for his 1995 Americas Cup winning team. One of the key ingredients in the success of that campaign was the ability to focus everyone’s activity on that vision. How can you achieve the same focus on performance in large and much more complex organisations?

Sir Peter transfixed the country and turned us all into ardent sailing fans, earning himself a knighthood in 2000. Much of Sir Peter’s contribution was his leadership – an ability to focus the performance of every individual in the group on the overall goal. From the humblest maintenance worker to the skipper Russell Coutts, everyone judged every action by how it could contribute to making the black boats get across the water quicker. What’s more it worked!

This seems achievable with an inspiring leader, who has a clear vision and a team small enough to relate with individually every day. In large complex organisations the work needed to achieve the same alignment seems nigh impossible.

The disconnection between overall corporate goals and an individual’s delivery can be huge - the result is losses in productivity.

A 2006 study by US-based Inc Magazine found employees spending an average of 1.86 hours per eight-hour day on activities other than their job function! They estimated that based on this average that US employers were losing over $500 billion in lost productivity every year.

A more recent study was released by UK IT services company Morse in October. They commissioned an independent research company to survey 1,460 office workers about their online activities. They admitted to spending an average of 40 minutes per week on Twitter, Facebook and other social networks for personal use.  That equals over one week of work time over a year or over a £1 billion annually for British employers.

The discussion regarding online activity in worktime and how organisations may wish to manage is something for another day, but issues with productivity would be similar in Australian and New Zealand organisations.

Addressing this risk in a typical organisation is not simple. It takes vision, strong and inspiring leadership and resources. A key part is also developing better ways to monitor, measure and acknowledge individual performance.

Common practice for performance management in many organisations is falling short. Typically they do a “temperature check” of individual performance midway through a performance year. This helps them “moderate” performance scores or ratings to build a bell-curve distribution of performance ratings of achievement, or some similar form of forced –ranking. 

Most of this activity is around “overall performance” and a “score” with no real knowledge of what individuals are actually doing to achieve that. There is disconnection between overall goals and individual activity – no understanding how individuals are contributing to ‘the boat going faster’.

An obvious issue with some corporate aspirations are that they lack coherence and inspiration. "If we took the mission statements of 100 large industrial companies, mixed them up while everyone was asleep, and reassigned them at random, would anyone wake up tomorrow and cry, 'My gosh, where has our mission statement gone?'" say management writers Gary Hamel and CK Prahalad.

When corporate goals are well thought through there are still barriers to them getting through.

Companies are often working on the basis that strategic goals are filtered by senior management, and then middle management, so that individuals at the coal face are able to understand how what they do on a day-to-day basis actually contributes to organisational success. But strategic goals are nearly always conveyed to employees through reasonably informal verbal communication – in the same way that an organisations “values” are.  The more filters it has to go through to get to everyone, the more likelihood of distortion through a ‘Chinese whispers’ effect.

How can this situation be addressed, and how can HR contribute? Effective performance management (PM) systems are one contribution the HR team can make.

An ideal PM system should enable an individual and a manager to sit down to agree their individual goals for the year, and actually see how those goals will contribute to organisational strategy. They would be able choose from a tree of objectives connecting up the organisation’s strategic goals set by the executive group or board.

From the other end, a board or CEO should be able to view at any time during the year, a summary of each strategic goal and the contribution level of each business unit, team or individual based on cascading  goals and activities.  This would reduce the need to perform any moderating or adjustment of performance ratings at the end of the year.

This kind of approach is live, a real gauge of individual performance against overall goals and vision. It is the difference between reading about the yachting in tomorrow’s newspaper, or watching it live with those animated graphics to show exactly what is happening.

As HR professionals we need to be more focussed on the fact that the most important thing about providing information to CEOs and other senior managers is speed and quality.  As Andy Lark, a Kiwi who is in senior management at US computer firm Dell, was quoted Unlimited Magazine saying, “The average CEO is estimated to dedicate just nine minutes to every decision.” So any information about the performance in an organisation must be real-time and not take so long to be assembled that it is out of date before it even gets to them.

The speed of business has accelerated a lot and continues to do so, as HR professional we must adjust. To get a share of the executive mindset HR needs to be offering tools and approaches that are different, add more value to data and make it easier for decisions to be made.

Online PM systems provide a wealth of information without the HR team having to do anything except make sure it is well set up and implemented. Modern internet technology helps line managers and staff communicate painlessly and in a consistent way. It delivers better information, more often, in a way that is easier and more enjoyable for them. Ultimately it contributes to a better result for the organisation.

We all aspire to an organisation as motivated and connected as Sir Peter Blake’s victorious America’s Cup team. As HR professionals we can make a contribution by using process and technology that ‘shrink’ organisations so everyone understands what has to be achieved and how they contribute to that.