Performance Management: Beyond Being Average

Reinventing formal performance management systems is a new trend in organizations – and rightfully so. Many, if not most, systems fail to meet their primary objective: to increase the organization’s performance.

The late Dr. Jerry Harvey, an often-misunderstood organizational expert and Professor at The George Washington University, outlined the argument against modern performance management systems in 1995 when he wrote the journal article “Prayers of Communication and Organizational Learning.” According to Harvey, there is no behavioral science literature or research confirming that performance appraisal systems improve organizational performance. In fact, these systems allow managers to hide behind policy and avoid having real conversations. 

Feedback offered through today’s processes is a mechanical-servo system, an approach for controlling another mechanical system. All servomechanisms are designed to maintain average. The problem is that humans, and human performance, are not mechanical. And, what successful organization is striving to be average? Organizations need to drive performance through conversation – candid truthful communications between 2 human beings.

 Many of today’s performance systems are based on bell curves – or other similar distribution curves. Bell curves reflect random occurrences. High performing organizations don’t achieve performance randomly. When you enable people to help each other and support common goals enhanced through genuine conversation, real performance in organizations is actually a bi-modal distribution.

 Many of the organizations ditching traditional performance management systems are focused in the right direction. They are emphasizing feedback instead of formality. They are recovering countless hours of wasted opportunity costs conforming to systems that don’t meet the objective.

 Those that get it right will emphasize conversations between employees and managers, as well as between peers. Conversations drive performance, not mechanical systems or processes.

 Today’s pay-for-performance reward systems are, more often than not, directly linked to the performance management system. There is empirical evidence that these reward strategies do drive organizational performance. This is often cited as a reason not to abandon current performance management systems.

 De-linking these pay systems does create a solvable challenge. Companies are beginning to figure this out. The bigger challenge is that if today’s performance management systems are built upon a false premise, are companies really maximizing their rewards strategy?

 I am proud to have studied with Jerry Harvey. Many may have misunderstood him. More often than not, I think he was right on target.