In the January/February issue of HR Magazine, Josh Bersin with Deloitte, makes nine predictions of “what’s in store for HR in 2015.” This is part one of a series of articles looking at each of these predictions.
The second prediction in this series is that performance management will be redefined - again, thus the title "Play it Again Sam." Over the decades, performance management has endured or enjoyed, depending on your point of view, changes that have affected the workforce in no small measure.
In 1911 Frederick Taylor came up with the concept of scientific management. This concept came out of his observations of inefficiencies in the steel industry. While this method did improve productivity, the work became monotonous and boring. Where have we heard THAT sung before? Charges arose that work had become dehumanizing and this led to investigations by Congress - no small measure indeed.
The pay-for-performance system has been around for many decades. “Sam” has played many versions of this performance management tool and its feasibility and effectiveness is still under scrutiny. It seems that one of the main issues with this system is implementing it in a fair way across the board. This even applies to rewarding top performers. According to a 2011 article on SHRMS’s website:
The 2008-09 recession and sluggish economic growth in its aftermath have caused employers to rethink their approaches to pay. One result: a renewed emphasis on rewarding top performers even if overall pay raise budgets are smaller. According to Myrna Hellerman, senior vice president at Sibson Consulting, much can be learned from best-practice companies where base pay increases must be earned, based on demonstrated individual achievement. Pay raises ‘are not an entitlement; the entitlement era is over,’ she declared.
Other characteristics of the new pay mindset include:
- If there is no base pay increase budget, some high achievers might still get increases.
- If there is a base pay increase budget, some will get nothing while significant amounts will be given to the highest achievers.
Yet, another widely used system began around World War II.
This system is the appraisal system. This system has been dubbed a “judging others” system. When humans judge other humans for whatever reason, there is plenty of room for bias, misjudgment, unethical agendas, and legal issues that can lend their voices increasing distrust. However, some say they cannot imagine what they would do without this system, still others want “Sam” to play the Funeral March for it.
Mr. Taylor may have thought that he had discovered the “be all – end all” of performance management. However, performance management is still the bane of managers at every level of the organization. Even as late as 2004, a study by SHRM states,
Performance management systems, which typically include performance appraisal
and employee development, are the “Achilles’ heel” of human resources management.
They suffer flaws in many organizations, with employees and managers regularly
bemoaning their ineffectiveness. A recent survey by Watson Wyatt showed that only
three out of 10 workers agree that their company’s performance management system
helps improve performance. Less than 40 percent of employees said their systems
established clear performance goals, generated honest feedback or used technology to
streamline the process. While these results suggest that there may be poorly designed
performance management systems in many organizations, it is typically not poorly developed
tools and processes that cause difficulties with performance management. Rather, difficulties
arise because, at its core, performance management is a highly personal and often threatening
process for both managers and employees.
Indeed, the report by Deloitte states that organizations are still struggling over how to change that tune and make repairs to our workplace appraisal system.
Deloitte’s study suggests that only eight percent of the companies participating in the study feel their performance management systems are worth the time and effort. Further, more than 70% of the companies are attempting to restructure their systems. These numbers are shocking. Is there no hope for a harmonious melody concerning performance appraisals? Herman Aguinis has been playing a tune that people are apparently beginning to listen to and it seems to work.
In his 2009 book, Performance Management, Herman Aguinis states, “Performance management is ongoing. It involves a never ending process of setting goals and objectives, observing performance, and giving and receiving ongoing coaching and feedback” (p. 2). Cargill implemented a program entitled “Everyday Performance Management” that seems to be paying off. However, even this is not a case of one size fits all. According to LeighAnne Baker with Cargill, every organization still has to rewrite the music and melody of this program to its own needs.
Will the right mix of judgment, fairness, reporting, and specification in performance appraisals ever be found? It is likely that Sam may play this tune again and again with many variations in tones, beats, and scales? Let’s hope the song becomes more harmonious and melodious as the workplace progresses.