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Performance Management

Deliver results and build a stronger company


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www.qvartz.com
WHITE PAPER 2016 3

Published by QVARTZ, May 2016


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CONTENTS
Strategy sets direction; results are delivered by people ....... 6

Deliver results and build the company ...........................................8

The performance management "machine room"...................... 11

We want to get it right; where do we go from here?............. 16


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Strategy sets direction; results


are delivered by people
Performance management helps you translate your strategic goals to
action and results delivered by the people in your organisation

Performance management is a business process that trans- you about rolling forecasts and budget allocation; ask some-
cends the organisational hierarchy and has the ability to one from HR, and they will tell to you about feedback and
create the organisational "buzz" that keeps everyone personal development plans. Ask someone in the line, a lot
focused on the things that matter the most. The essence of of them will tell to you about objective-setting, performance
performance management is easy to grasp, but getting it appraisals and bonus schemes. Unfortunately, a lot of them
effectively embedded in the organisation as a value-adding will also talk about performance management as a process
process can be difficult. You will need to define a set of that has been imposed on them from somewhere else, which
principles and a process that matches the needs (and capa- is time-consuming and the source of a yearly motivational
bilities) of your organisation. The key to getting the most speed bump, the symptoms of which are disappointment
from performance management, however, is not in the and cynicism. In other words, organisations struggle to real-
system or the choice of rating scale, but in how successful ise the full potential of performance management.
you are in positioning performance management as a key
element of everyday leadership The challenges of getting performance management right
are so pervasive, that they have given rise to whole books
Performance management means different things to differ- with titles such as "Get rid of the performance review", and
ent people. Ask someone from Finance, and they will talk to when we laugh at the substantial number of Dilbert comic

The four performance questions


What am I accountable for?
Why is what I do important?
How am I performing?
How should I develop to improve?
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strips on performance reviews, our smile often stiffens as we We have made performance management complex
think "thatcouldhappen here". In some organisations, per- However, we have a way of making things difficult for our-
formance management in the classic sense has been aban- selves for perfectly good reasons. We want to be able to
doned altogether to make way for a more ongoing feedback compare the performance of employees, so we invent a rat-
culture (and generally higher wages instead of bonuses). So, ing scale, which in turn drives the need for defining objec-
if performance management is such a perilous road to take, tives, KPIs and targets in terms of the rating scale. As if that
why take it at all? Could we not just skip it? Yes, we could. was not enough, we go and link it to talent programmes, ca-
However, as one leader put it with a wry smile: "If we were to reer progression and bonus schemes. Everybody becomes
abandon every process that we do not master, we could end so focused on the score that inflation sets in, and so we in-
up with very few processes left". The upside of getting per- vent calibration to ensure that scores remain differentiated.
formance management right is such a powerful force in de- We now spend a fair amount of time training to set SMART
livering results, driving motivation and developing the peo- objectives, give feedback and create personal development
ple in your organisation. plans. And we enter it all into a performance management
system that we use so rarely that even if it had been designed
Performance management is simple with an acceptable level of user-friendliness, we would still
One thing that is so paradoxical about performance manage- have to learn it over and over again each time we use it.
ment is that it is so simple and so complex at the same time.
The essence of performance management is simple: We "IF WE WERE TO ABANDON EVERY PROCESS
want to align, drive and develop the performance of individ-
THAT WE DO NOT MASTER, WE COULD END
uals towards the goals of our organisation. This can be
achieved by ensuring that everyone in the organisation have UP WITH VERY FEW PROCESSES"
concrete and specific answers to the four performance ques-
tions at all times: Getting performance management right
So how do you get it right? The answer, of course, is: It de-
What am I accountable for? pends. It depends on what you have already done and suc-
Why is what I do important? ceeded with i.e. your organisation's performance manage-
ment maturity level. And it depends on what exactly it is that
How am I performing?
you want to performance manage i.e. your performance
How should I develop to improve? management scope. There is no one-size-fits-all. Therefore,
whether your performance management idol is General Elec-
If we look at the four questions and imagine a conversation tric or Atlassian, you will do well in making a solid assessment
between a leader and one of his or her direct reports, it of how far you want to go, and how far you are able to go.
seems feasible to find specific and concrete answers to these For most companies that have been successful with perfor-
questions. That is, if we assume that the leader knows what mance management, it has been a journey to get to where
he or she is accountable for in the first place and is able to they are today. You need to build your roadmap and plan
translate that into contributions from team members. With your performance management journey too. That being said,
these four questions, we should be able to execute perfor- there are many things to learn from the experience of others.
mance management across the organisation armed with
nothing else than a pen and a piece of paper. A monthly 1:1
between leader and direct reports would enable us to stay
up to date on the answers.
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Deliver results
and build the company
Performance management is about delivering results now, and building
a stronger, better company for the future

The purpose of performance management is to deliver re- specific and measurable targets for the how you can and you
sults and to build the company. What exactly "results" mean should.
and what it is that you want to build is, of course, specific to
your company. The scope of performance management may Depending on the culture and goals of your company, you will
therefore be very different from company to company. want to make explicit the relative emphasis and importance you
place on the what and the how. Unless it is clearly stated other-
The what and the how wise, we experience a strong gravitation towards the what. To
Some companies focus strongly on the what that is, on the re- some, this makes perfect sense what good is it to excel in living
sults. The what is probably best characterised as what we would our values, if we fail to deliver results? To others, the reverse ar-
call tangible results things that we can set clear targets for and gument makes more sense if we cannot deliver results without
which we can measure. Things like revenue, costs, quality, cus- compromising our values, then we have failed. Some companies
tomer satisfaction, milestones, returns, etc. go results first, others go fifty/fifty and yet others place such
an emphasis on values that they become pass/fail criteria.
Other companies also include the how in performance manage-
ment. They focus not just on what you have delivered, but also
on how you have delivered it e.g. on living the company's val-
ues and on leadership. The how is usually less tangible than the
what, and it is therefore assessed on a more qualitative and of-
ten subjective basis. That is not to say that you cannot create

FIGURE 1: The GE "9-box". Overall performance score (1-5) is symmetrical e.g. if you are "Below expectations" on either the what or the how, you get a 2 (="Improvement needed")
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The symmetric 9-box model often attributed to General Elec- year. Alignment in this case becomes more of an alignment
tric is a great example of how to make explicit the relative of individual conduct to the company's defined standard.
importance of the what and the how (see illustration on p. 6).
Drive
No matter if you are strongly focused on the what or have Driving individual performance means to ensure and facili-
chosen to include some or many elements of the how, you tate progress on what they have set out to do. Although
will want to align, drive and develop the performance the there is a wide variance across different companies, we find
contribution of individuals to your organisation's goals. this to be at one time the most essential, the most misunder-
stood and the most neglected part of performance manage-
Align ment.
Aligning individual performance essentially means that we
want to ensure that people use their time and efforts on the It is essential, because objective-setting and performance re-
things that matter the most. Alignment must start with a views are only the endpoints of performance management
clear direction from above otherwise, what are we aligning it is the everyday leadership that ensures focus and progress
with? on the things that matter the most. As one client put it: "We
used to say that what gets measured gets done. Now we
In most companies, the organisational direction at the high- know that that is not entirely true. It is what gets discussed
est level is set by the Board and Executive Management. A that gets done".
combination of Executive Management, the Strategy Execu-
tion Office (SEO) and Finance translate the overall direction It is misunderstood, because many think of driving perfor-
to specific objectives and targets. Objectives and targets are mance as having something to do with whipping people to
then allocated to business units or regions, depending on the deliver ever more and faster and generally making them mis-
organisational structure. This is the starting point for a top- erable. It could not be more wrong who would not want to
down process of cascading, translation and alignment have clear and compelling answers to the four performance
throughout the organisation. At each level, leaders cascade questions? Building the habit of frequent interaction around
and translate their own objectives to objectives for their di- what we do, why we do it, how we are doing and how we can
rect reports. do it even better is motivating! Even when driving perfor-
mance sometimes means giving negative (i.e. constructive)
Alignment is not a 100% engineering-like exercise. Any at- feedback.
tempt to make it so will lead to a counterproductive increase
in complexity. At every level, the leader should strive to en- It is neglected, because for many leaders this requires build-
sure that the sum of the objectives of his or her direct reports ing new skills and acquiring a new habit, which is difficult to
add up to his or her own objectives. But at the same time, the do. Setting clear goals and following up is new to many of
leader should not succumb to the temptation of creating ob- them. Working with performance in a large organisation, one
jectives and targets for measuring and controlling everything leader stated it clearly when she said: "We have a tendency
their direct reports should do. Focus should be on the few to compensate for poor performance instead of confronting
things that matter the most to the success of the team, the it".
organisation and the company.
"WE HAVE A TENDENCY TO COMPENSATE
Aligning on the how (e.g. values and leadership) is also a top-
FOR POOR PERFORMANCE INSTEAD OF
down process, but it works in a different way than the more
strategic or financial business cycle. When it comes to the CONFRONTING IT"
how, the standard, the ideals or the code of conduct is typi-
cally defined and described at the highest level of the organ- Develop
isation, but it is more static in nature than the what. That is, We have already stated a belief that is fundamental to the
we do not change our values and ideals for leadership every understanding and application of performance management:
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Strategy sets the direction; results are delivered by people. Performance management is an integrated part of
We can add to this: If you develop your people, you develop everyday leadership
your company's ability to deliver results. Performance management is not really a Finance process.
Nor is it an HR process. Finance may have a say in setting
Development is another area of performance management targets at the highest level. HR may play an important sup-
that is grossly neglected. In our work, we find that this can porting role in ensuring that leaders adhere to the same
typically be attributed to two main factors: Lack of im- standards. But more than anything, performance manage-
portance and lack of imagination. Both of them lead to a de- ment is a key element in and an integrated part of everyday
crease in employee satisfaction and higher costs. leadership. At least it should be.

Lack of importance is plain and simple failure on the part of We too often see that performance management is regarded
a leader to see the value of developing the team members' by leaders as a time-consuming process mandated by some-
ability to deliver on their objectives (and plan and prioritise one else. Something to be complied with. Sometimes this
accordingly). This is often due to a perception that we are perception is fully understandable, as it is created by well-
too busy (with more urgent things) to spend time on devel- meaning specialists that over-engineer the performance
opment. management process and systems that (are supposed to)
help leaders.
Lack of imagination occurs because many of us still think that
development equals classroom training. A lot of classroom Given that we accept that results are not created by organi-
training is useless (see David Maister's excellent article "Why sation charts, by PowerPoint slides, by office furniture or
most training is useless"), but classroom training is not the even by all the assets we own, but by people, we should will-
only way of developing people. Some companies adhere to ingly accept that we do need to align, drive and develop in-
the 70-20-10 rule of developing: 70% on-the-job training, dividual performance to organisational goals. Before we look
20% books and self-study, 10% classroom training. And this into the performance management "machine room", we
is not only because it saves costs; it is simply more effective. should remind ourselves of the words of Dee Hock, the
founder and former CEO of VISA:
To be successful in developing employees, we should take as
our starting point the employees' objectives, and then ex-
"SIMPLE, CLEAR PURPOSES AND
plore what skills or competences the individual employee
needs to develop further to improve his or her ability to de- PRINCIPLES GIVE RISE TO COMPLEX
liver on the objectives. And we then have to think above and AND INTELLIGENT BEHAVIOR. COMPLEX
beyond classroom training of skills; If Alice is going to be suc- RULES AND REGULATIONS GIVE RISE TO
cessful with a cross-organisational project, she can develop
SIMPLE AND STUPID BEHAVIOR"
her ability to lead without authority by being connected with
someone who has been successful with that and who can
provide her with sparring (she does not need a Prince2 cer-
tification to do that). If Bob needs to improve his oral com-
munication skills, he could hook up with someone who would
give him feedback on a few specific improvement areas be-
fore and after the situations in which Bob is presenting (he
does not need to go to a presentation course for that).
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The performance management


"machine room"
The essential components of the performance management process

The performance management cycle them between team members) or translated (i.e. by translating
At the highest level, performance management can be de- them into a set of objectives that will produce the desired out-
scribed as a business process consisting of a cycle in three come), or both.
parts: Objective-setting, follow-up and performance review
Objectives are not just objectives, but are made up of objectives
It is a cycle because the review of one cycle feeds into the that describe the intent, key performance indicators (KPIs) that
objective-setting part of the following cycle. Most companies describe how we are going to measure progress, and targets
that we have worked with follow a yearly performance man- which are then the "number" i.e. the quantification of what
agement cycle, but this is not the only way to do it. In some needs to be accomplished. Entire volumes have been written on
companies, the cycle is half a year or even a quarter. the topic of objective-setting, but (at least) two things are of
particular importance: At each level, the objectives must add up
Objective-setting to deliver the intended impact at the level above, and every per-
son must understand the intent of the objective and how it fits
At the beginning of the performance management cycle, we set
into the larger scheme of things.
the objectives for the next cycle. In an ideal world, objective-set-
ting is a top-down process, which has its outset in the compa-
And of course, objectives must be SMART i.e. Specific, Meas-
ny's business planning cycle. At the highest level, objectives are
urable, Achievable, Relevant and Time-bound (or any of the
things like revenue, costs, return on invested capital, etc. This
other popular definitions of the acronym). Note that we see a
starts a top-down process of cascading and translation of ob-
tendency to go overboard on the Measurable part. Measurable
jectives down through the organisational hierarchy. At each
does not mean that we have to be able to pull a number out of
level, objectives are either cascaded structurally (i.e. by dividing

FIGURE 2: The performance management cycle


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a report it just means that we have clearly defined the success should be devoted to it, and what support is needed to
criteria and how we are going to determine (levels of) suc- achieve it? How can we measure improvement, and where
cess. Objective-setting addresses the two first performance do we see the result? This addresses the fourth performance
management questions: What am I accountable for? and management question: How should I develop to improve?
Why is what I do important? The personal development plan can also be used to address
improvement on the how whether it be on values, on lead-
In reality, objective-setting becomes a bit more difficult as ership or on something else.
leaders at the highest level set or receive their objectives late
when we try to set objectives in a dynamic business environ- Follow-up
ment (e.g. the market slows down or speeds up, unforeseen The largest part of the performance management cycle is fol-
opportunities or crises demand our attention, etc.), when we low-up. Even if you run a half-year or quarterly cycle, the bulk
have to set goals for teams of people that have the same job of the cycle is about follow-up as part of daily work. Follow-
description but different levels of experience and efficiency up addresses at a tactical level the two performance ques-
and much much more. tions: How am I performing? and How should I develop to
improve?
No matter the situation, objective-setting should be com-
bined with thorough management of expectations. What is Follow-up can be scheduled as periodic 1:1s, e.g. on a monthly
"expected" performance? It must be clear how performance basis, ad-hoc sessions, or both. We typically distinguish be-
will be evaluated and what can trigger adjustment of targets tween planned and ad-hoc sessions and between formal and
(if anything). informal follow-up sessions.

It is common to use the time of objective-setting to create a When and how to follow up depends on style, preferences
personal development plan. Based on your objectives, your and the topic at hand. Some prefer to get feedback on an
capabilities and your career path, what are things that you ongoing basis; others prefer the planned and formal setting.
should develop to improve in the coming cycle? How should
those capabilities be acquired, how much time and effort

FIGURE 3: Follow-up dialogues takes many forms depending on topic and personal references (the leader's and the employee's)
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Independent of preference, follow-up should balance the In some companies, the performance review of one cycle and
positive and the negative. What this means is best captured objective-setting for the next cycle are combined. In others,
as "give negative feedback when there is a need and positive they are separate sessions. Some companies require employ-
feedback when there is an opportunity", and it should always ees to prepare a review of their own performance before the
be qualified feedback that is, it should be based on con- review itself, while others leave it up to the leader. There are
crete observations and facts no matter if it addresses the many variations in between.
more tangible what or the typically more intangible how.
The intent is to review the preceding performance cycle and
Again, there are volumes to be found on giving (and receiv- to look forward. It sums up the answers to the two last per-
ing) feedback. Two things should be stressed: Feedback formance questions for the full performance cycle (How am
should always be followed by forward looking actions (i.e. I performing? and How should I develop to improve?). As
make it specific what to do from here), and you must follow such, the performance review should be a positive occasion
up often (this is one of those instances where less is not to look back as well as forward.
more).
Why is it then, that in so many companies, the performance
To most (at least in a Nordic setting), follow-up and feedback review is associated with disappointment the complete op-
is an acquired taste, and it requires a lot of discipline to get posite outcome of what was intended?
into the habit. Once established, the habit of frequent, bal-
anced, qualified and constructive follow-up is a key enabler One of the reasons is the failure to manage expectations
for being successful with performance management. through frequent follow-up. This leads to surprises for both
the employees and the leaders. Employees may be surprised
"THE HABIT OF FREQUENT, by what they see as a harsh, disproportionate or poorly qual-
ified assessment of their performance. Leaders may be sur-
BALANCED, QUALIFIED AND
prised by the employees' surprise, and so on. Either way,
CONSTRUCTIVE FOLLOW-UP IS A KEY what follows is a review where too much time is spent on
ENABLER FOR BEING SUCCESSFUL WITH discussing (and even arguing about or negotiating) the as-
PERFORMANCE MANAGEMENT" sessment of the past year's performance instead of on the
constructive and motivating forward-looking conversation.
Because good follow-up and feedback is an acquired skill for
There are faults to be found at both sides of the table, but in
most of us, it must be trained and sustained. More than so
the end, it falls back on the leader's failure to set clear and
many other things, the will and skill to establish this habit is
something that flows top-down in the organisation. In this stretched targets and to manage expectations through fre-
quent, balanced, qualified and constructive follow-up. We
respect, follow-up and feedback is closely linked to the com-
have seen many examples on the part of the leader of what
pany's culture a company that embraces an open and hon-
est feedback culture may find it easy, while a company that one of our clients termed the "5x5" five minutes of prepa-
ration five minutes prior to review. On the other hand, we
does not at the outset have this culture may find it hard at
also see employees going into the year with a statement like
first. However, the determination to drive frequent follow-up
"if at any point I am not exceeding expectations [or equiva-
as part of everyday leadership may have positive effects on
lent] then please say so".
the company's culture that goes far beyond performance
management.
"GIVE NEGATIVE FEEDBACK WHEN THERE
Performance review IS A NEED, AND POSITIVE FEEDBACK
Although it is less than 1% in time and effort, the performance WHEN THERE IS AN OPPORTUNITY"
review is the part of performance management that attracts
the most attention. This, unfortunately, is most often due to
our failure to take care of the preceding 99%.
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Of course, there are also ways in which the process and prin- Calibration becomes a problem when it is mismanaged.
ciples prescribed by the organisation can set the leaders Some companies apply a more or less strict "bell curve" to
and/or employees up for failure. Common pitfalls include the distribution of performance scores. The bell curve is
putting too much focus on "the math" by using a lot of num- based on an American study from the 90s and in short, it tells
bers and assigning weights to objectives leaving very little us that for a large population, performance should follow a
room for "leadership judgment". This is the engineering (or normal distribution (a "bell curve"), with most people per-
accounting) approach, which is dangerous, because it re- forming average, fewer people performing good or bad, and
quires you to be absolutely sure that the numbers describe very few performing very good or very bad. A problem arises
when this principle is applied to too small populations (e.g.
the truth, the whole truth and nothing but the truth, which is <30-50 employees) or applied too strict. Another problem
very rarely the case. We have seen numerous examples of arises when leaders use "the process" as an excuse to hide
organisations that go overboard in numbers, requiring lead- behind when giving scores to their employees: "you know
ers to score each employee on proficiency in a range of skills Bob, I would have given you a 4, but HR forced me to give
and competences as well as on performance on objectives. you a 3".
Before you know it, you spend so much time discussing a lot
of more or less irrelevant numbers, and not enough time dis- An alternative to the strict calibration is to review the perfor-
cussing the few very important parts of performance and de- mance scores that leaders give to their employees. If a leader
velopment. We recommend going with fewer, more relevant repeatedly awards high scores to employees, there are three
objectives rather than going for a large number of less rele- possible explanations:
vant numbers.
1) The leader is unable to set stretched targets
Another process pitfall is the by now infamous calibration, 2) The leader is too generous in performance scores
which some organisations do in connection with performance 3) By some miracle, the team repeatedly outperforms
reviews. Calibration is a perfectly sound concept, which is ap- stretched targets
plied with good reason: To ensure differentiation between
good and bad performance. The problem is that calibration is In the first two cases, there is basis for a discussion of the
so often mismanaged, and that the mismanagement leads to leader's performance on leadership.
disappointment and cynicism among employees.
Adjacent processes
Calibration is good, because it helps us ensure that we apply Performance management itself is simple. It is about having
the same yard-stick when we assess performance. In the sim- clear and compelling answers to the four performance ques-
ple case, we propose to give both Alice and Bob a score of 3 tions, and it could be managed on a piece of paper. As we
(average); but if we compare the targets we set for them, the stated, we made it complex the moment we invented the
conditions under which they were to fulfil the targets and performance score. But we did that for a good reason we
their results do we then think that this should be so? Should wanted to compare performance, and we wanted to be able
Alice get a higher score than Bob or vice versa? to differentiate between good and bad performance. We use
the performance score for more than just performance man-
Calibration may help us to differentiate. If we do not differ- agement.
entiate between good and bad performance, we undermine
the performance management system. Then everything be- We use it for incentive pay. That is, we want to influence or
comes "Fine. OK". Without focus on ensuring differentiation, stimulate people's focus and behaviour by rewarding them
many leaders are tempted to let their scores "slide to the for performing well on the goals we have set out. Each com-
right" (on the rating scale). This is quite natural after all, pany has their own incentive system, but in most companies,
high scores will make employees happy, and will save you it includes an element of performance-based bonus.
the hassle of arguing why they are not getting high scores.
WHITE PAPER 2016 15

We use it for talent management. We use performance "YOU KNOW BOB, I WOULD HAVE
scores to spot talent, or to identify areas where we need to
GIVEN YOU A 4, BUT HR FORCED
set in to ensure that we build or improve an adequate talent
pool. In this way, performance management can also have a ME TO GIVE YOU A 3"
direct or indirect influence on your career opportunities.
No surprises
It is important to remember that to most of the people in Good performance reviews have no surprises. Your perfor-
your organisation leaders and employees alike there is no mance management process and principles should be
distinction made between performance management, bonus simple, but clear. Once that is in place, the most important
schemes, talent management and other adjacent processes. element for successful performance management (and per-
It is all performance management or performance review. formance reviews without surprises) is frequent, balanced,
qualified and constructive follow-up.
Therefore, even if performance management in itself is simple,
we need to carefully build and maintain the performance man-
agement "machine room" to ensure that it becomes and stays
an enabler for delivering results and building the company.

FIGURE 4: To be successful with performance management, we have to make it an integrated part of everyday leadership and the way we work
16 WHITE PAPER 2016

We want to get it right;


where do we go from here?
Create a strong, shared and fact-based foundation for your
performance management journey

It starts from the top leaders at every level of the organisation typically supported
Successful performance management can only start from the top by HR). An easy way of explaining the full scope of performance
of the organisation. Top-level leadership must lead the way. They management i.e. the integration of business performance man-
must make the choice to make performance management a priority agement and people performance management is to say that
in everyday leadership throughout the organisation. They must cre- business performance management helps your organisation re-
ate a clear and compelling "core story" about why the organisation peatedly set the right goals, and people performance management
needs performance management and what they want to achieve helps your organisation deliver the results. To gain a sustainable
with it. They must define the scope of performance management competitive advantage, you need both. Since clear direction is a
and the relative importance of the what and the how. They must prerequisite and the starting point of the performance manage-
state the few, simple and clear principles for how to go about per- ment cycle, an organisation must have control over its business
formance management. But most importantly, they must walk the performance management before it can make any strong moves
talk. They must actively engage themselves in performance man- on people performance management.
agement of their direct reports to show and lead the way.
Never start with systems
An early step in making this happen is to ensure understanding and There is a tendency to become preoccupied with perfor-
agreement on performance management as a strong "machine" for mance management IT systems. We can only
strategy execution. To support this discussion, we sometimes dis-
tinguish between business performance management (the process
governed typically by Finance at the highest level of the organisa-
tion) and people performance management (the process driven by

FIGURE 5: To achieve sustainable improvement to business performance, we must master both dimensions of performance management
WHITE PAPER 2016 17

speculate that it is rooted in the need to demonstrate pro- Create a strong starting point for your performance
gress and tangible results and it is tempting to translate the management journey
demand for strengthened performance management into a Performance management is a business process that spans
project that implements a performance management system the entire organisation. A lot of people will have opinions
(think of the scene with "the machine that goes bing" in about what performance management is, about how you are
Monty Python's "The Meaning of Life"). doing on performance management and about what is
needed to improve it. There are a lot of opinions, and if your
However, there are a lot of decisions to be made, an entire company is like many of the ones we have worked with, they
mindset to be established and a habit to be created before are just that opinions. Very few of them are fact-based and
we are able to determine what we want from a performance shared views. If you ask HR, they will point to leaders in the
management system. If you do not know what you want from organisation or to the IT systems for improvement. If you ask
performance management, then a system provider will tell leaders, they will point to lack of support from HR or cum-
you. And guess what, it somehow always includes a lot of bersome and time-consuming processes. And so on.
features that you did not know you needed, and which hap-
pen to be part of that system. This is not to say that system While different opinions can be stimulating to an initial debate,
providers cannot help you they can, and they have experi- in the long run it can be a hindrance to coordinated action and
ence from many different companies. They just cannot and progress. To establish a strong, shared and fact-based foun-
should not take from you the arduous task of making the dation for the performance management journey, you should
range of important decisions and commitments needed to assess the current state of performance management in your
be successful with performance management. organisation and its readiness to take the next step.

FIGURE 6: Performance management maturity assessment on five dimensions


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Performance management maturity assessment The maturity assessment can seem daunting when you
To assess the performance management maturity of an or- consider large organisations. But in reality, it is a manageable
ganisation we explore five different elements of performance task to conduct interviews across business units and organi-
management in the organisation: sational levels and the larger and more diverse the organi-
sation, the more important it is to get this performance
Buy-in and ownership maturity assessment right. What white-collar workers in HQ
Do leaders and employees buy in to performance think of performance management is probably different from
management as an enabler of organisational per- what they think in a regional office, or what blue-collar work-
formance? ers think in an off-shore environment. The performance
Do leaders at all levels take ownership of perfor- maturity assessment does not have to start entirely from
mance? scratch. Most often there is valuable data to be found in al-
Execution ready existing engagement surveys.
Do leaders have the skills needed to effectively ex-
ecute performance management? The important thing is to get to a point where it is possible
Do leaders execute performance management as to get key stakeholders on board and to understand, agree
an integrated part of leadership? on and commit to where we want to take performance man-
Line of sight agement and why.
Are value drivers being cascaded and translated
from the strategic to the individual level? It is refreshing
Is there a clear line of sight from individual objec- It is refreshing to experience when executive leadership
tives to team/business objectives? teams broaden their view and begin to see performance
Motivation management as what it should be: a positive enabler for de-
Are we balancing key motivational drivers: personal livering results and building a better, stronger company.
development, recognition/feedback, career oppor-
tunities and rewards? It is refreshing to experience when Finance and HR look up
Process and systems and realise that what is needed to be successful with perfor-
Are processes simple, transparent, and perceived mance management is not more numbers, a new scale or a
as fair and value-adding? new process for calibration, but rather simplicity, clarity and
Are tools intuitively simple and easy to use? empowerment of leaders.

The maturity assessment should be conducted as a combi- It is refreshing to see leaders and employees become ener-
nation of qualitative analysis (i.e. interviews) and quantitative gised by monthly 1:1s that address both the good and the bad
analysis (e.g. survey). This ensures that both the insight to and ensure that both parties are up to date on the answers
build hypotheses and the numbers to confirm or reject them to the four performance questions.
are present. This combination makes a very strong tool for
pinpointing strengths and key areas for improvement. It is refreshing to see engagement scores and results move
in the right direction.
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Performance management is simple.

It is about providing clear and


compelling answers to the four
performance questions at every
level of the organisation:

What am I accountable for?


Why is what I do important?
How am I performing?
How should I develop to improve?
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CONTACT
Anders Brahe:
anders.brahe@qvartz.com
+45 42 12 01 15
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www.qvartz.com