The Pandemic Has Triggered a Need to Rethink Performance Management

Howard Risher has 40 years of experience as a consultant and HR executive with clients in every sector. He has published frequently in HR journals and websites.  He is the author or co-author of six book and a growing list of ebooks. The most recent is Building the Workforce Government Needs.  He has a quarterly column in the IPMA HR News.

For years the most prominent failure in workforce management or at least the one that got the most attention has been the way employers, public and private, manage employee performance.  Going back more than a decade it was a hot topic in management journals.  It has even been discussed in popular culture magazines like Vanity Fair (“Microsoft’s Lost Decade”, 2012).  Articles prior to COVID often called for abandoning year-end ratings.

But the pandemic and the sudden shift to working remotely has changed the work experience in every sector.  Distance makes close supervision impossible.  At the federal level, the annual employee survey from late 2020 showed increased levels of employee satisfaction – which is likely to be attributable to the increased autonomy.  Now as the pandemic winds down managers and employees will need to define a “new normal” that works for them. With the increased autonomy there is likely to be agreement managers and employees need to discuss performance plans and results frequently. HR offices need to document how employees are doing in the new environment.

In government, a largely unrecognized aspect of the problem is that “performance” has been addressed by two distinct groups of practitioners with minimal overlap. At the highest levels, the focus is on agency mission and vision statements, strategic planning and goals, evidence-based decision-making, and reporting systems. There is also a separate group of specialists who focus on employee performance. 

In business, performance is managed based on inter-linked goals. The practice is close to universal. It’s illustrated in textbooks with the goals at each job level linked to the goals above and below.  Relying on cascading goals melds the concerns at each level.  It enables employees to understand how their efforts contribute to higher-level goals.  Moreover, in business, performance metrics are communicated frequently, sometimes daily.  It’s a natural subject of conversations. When an employer is successful, everyone benefits, if only in increased pride and job security.

Tennessee’s recent reform has become a model.  When the state-initiated reform in 2011, a goal was improved performance.  It was clear from the start that the newly elected Governor, Bill Haslam, with his business background, was the champion for reform.  The state committed to managing performance-based on S.M.A.R.T. (specific, measurable, achievable, relevant, and time-sensitive) goals and outcomes. The intent was to have a system that reinforced employee accountability.  Specifying its use in law made it a management priority.

Working remotely makes it important for managers and employees to discuss and agree on planned performance levels, supported where possible with metrics.  Historically performance management started with industrial engineered standards.  That was too often combined with mutual distrust.  In hindsight it also resulted in a work environment where all employees had to do was satisfy minimal performance expectations to stay out of trouble.  Today we know that empowered, skilled employees can perform at significantly higher levels.

But business and government have both been dissatisfied with the traditional approaches to managing employee performance.  The problems in business are not appreciably different from what is often cited in public organizations. Before the pandemic, business surveys showed less than a third of respondents believed current approaches effectively support the delivery of planned results.  Less than 10% believe their manager is highly skilled and committed to developing fair and equitable evaluations. Companies are always looking to improve results.

Better Answers Are Available

For years, arguing to abandon the year-end appraisal ritual was discussed in the business literature but before government gets on this bandwagon, decision makers need to be cognizant of the differences between the two sectors that make the problem different in government.

  • First, in business performance management is far more than simply completing appraisal forms. Business strategy, goal setting, and the large financial rewards for business success are driven by the CEO and boards of directors. It’s not an HR-driven activity.  The forms and ratings could be eliminated but the management of performance would still be a priority.  Successful careers in business depend on a consistent track record of achieving and surpassing goals.  Employees understand its importance.
  • The potential financial rewards in business are significant for a large segment of the workforce. Incentives and the possible income from stock ownership represent a high percentage of total compensation down into the ranks of managers and professionals. That gives them a common “team” focus and drives behavior.  Salary increases and ratings are far less important.
  • In business, individual ratings and salary increases in business are generally confidential. Of course employees talk to co-workers, especially when they are dissatisfied, but it’s far less common for the discussion to extend beyond immediate friends.  Poor ratings and the steps that follow are also confidential.
  • Businesses celebrate high performance. Public employers tend to focus on the poor performers. The critics of government and civil service at times dominate the discussion arguing against the protection of poor performers. Exceeding performance expectations gets far less attention than not meeting expectations. That’s been true for more than a century.  When the culture changes to focus on success, its far more positive.

Business executives, managers, and professionals have ‘grown up’ in an environment where performance planning and goal setting are effectively universal. It’s an entrenched practice.  Discussions of performance and operating problems are common at all levels.  The discussions may be brief but in some work environments exchanges are repeated throughout the day. It’s basic to a performance culture.  Eliminating year-end ratings does not affect the shared focus on performance.

Everyone in business understands and accepts the importance of performance management.  The focus in business is on developing better practices to guide and improve team and individual performance.

Despite the problems, the evidence arguing for the continuation of performance appraisals and ratings is compelling.  Everyone needs feedback to improve performance.

Employers have a ‘best practice’ need to identify the star performers as well as the few employees whose performance is unacceptable. Both warrant special attention.  The recognition and rewards for high performance are – or can be – motivational when managed fairly.  The best performers are routinely celebrated in many fields.

No one starts their work-life expecting to be a failure. When an employee’s performance is unsatisfactory, it’s important to understand why it happened – it could be inadequate training, poor job ‘fit’, family problems, or perhaps an ineffective manager.

Where the fault is clearly the employee and his or her attitude, it commonly affects the work experience of co-workers and their performance. It can also affect the performance of the work unit.  It’s a mistake to ignore the problem.  When termination is warranted, the law requires adequate warning and documentation.

Research provides solid support for performance management when it’s based on manager/subordinate agreement on what’s expected.  Leaders should restate its importance frequently. Occasional group discussions can help to identify needed change. When it all comes together, the gain in productivity is sometimes in excess of 50%.  The end of the pandemic makes this an ideal time to shift the focus to the high performers.

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In government, a largely unrecognized aspect of the problem is that “performance” has been addressed by two distinct groups of practitioners with minimal overlap.


New, Old Answers

There are virtually no new ideas.  The key is making a commitment to what we know works.  That is especially important today because of the costly impact of the COVID crisis, the strain on budgets, the need to address post-pandemic problems, and what promises to be a long-term problem – not becoming able to replace retiring workers.  The need ‘to do more with less’ is here.

A key difference between the private and public sectors is the leader’s focus on workforce performance. It’s common to find elected and appointed officials have little or no experience managing large employee groups.  Many previously practiced law.  Tennessee is one of the notable exceptions.  Former Governor Bill Haslam had a long career in business executive positions and he of course led one of the more successful reform initiatives.  Where leaders do not have similar experience, adding a strong Chief Management Officer will be important.

Metrics should play a role but while relevant for ‘production’ jobs and at higher organization levels, there are few white-collar jobs where data can capture all the important results accomplished. Their value here is supporting appraisal decisions.  Judgment is generally relevant to evaluating jobs that involve discretionary actions. 

Expectations should also reflect the individual’s experience.  Performance expectations for an experienced employee are rarely appropriate for new hires even if they have the same title.

The old – and here it’s over a century old – approach to performance management dates to the era of time-and-motion studies when industrial engineers determined expected performance levels. Then employees were expected to do what they were told and to meet at a minimum the performance standards.  It was in that era that pass/fail — satisfactory or unsatisfactory — rating policies were first used and employers simply continued that practice.

It’s been common for employers to base ratings on a five-level rating scale. It’s also common to see badly inflated ratings — 80% or more rated as a 4 or 5.  That’s more common when generic, somewhat vague criteria – e.g., creativity and innovation adaptability, communication – are the basis for ratings. With vague criteria, managers are uncomfortable justifying ratings, and granting inflated ratings is the easy answer. Lake Wobegon exists only in fiction, however.

A better answer is the use of a three-level scale — the stars, the poor performers, and the majority who are performing as expected.  When three-level ratings are used, roughly 75-80% of the workforce are typically in that “met expectations” group. 

The importance of recognizing the star performers – assuming high improved performance is a goal — argues against using pass/fail policies. Studies show performance discussions decline when those policies are adopted.  Added to that, when the best performers are not recognized, it affects their morale and their commitment.

Today the pandemic experience shows performance planning and delegation are essential and can work in any virtually work situation. Objective setting does not fit every job but all employees should be able to state what they are expected to accomplish, what for their position is outstanding performance, and what is minimally acceptable performance.  When individuals are involved in defining objectives, they are more committed.  They want to be seen as a valued contributor.  The pandemic, working remotely, and the increased autonomy now makes goal setting and agreeing on goals or expectations the only alternative for many jobs.

Training in setting objectives is essential for both managers and their subordinates. Both should have coaches available to help.  In Tennessee’s reform, the state invested three years in training and coaching managers and supervisors.  It paid off – agency performance improved and the state is now high on the list of best places to work.

Focusing on performance relative to objectives involves a look back over the year ending. Many companies now combine that with a look forward with discussions of the skills and competencies important to the job, along with employee developmental needs and career plans.  It makes the conversation easier and more positive.

A new, old idea is the “professions model” with informal teams in each job family responsible for identifying best practices. The teams are led by a ‘head of profession’, create communities of practice, participate in recruiting, identify essential competencies, plan development programs, etc.  Their involvement ensures better buy-in for policy changes.  Experience shows they raise the expectations for their co-workers.  A similar idea has been used in government for years with teachers and law enforcement.  It’s also similar to the way healthcare specialists are managed.

The professions/community teams are in the best position to decide how performance should be managed. They understand the operational issues.  Their involvement provides assurance the basis for managing performance is credible and relies on jargon that facilitates discussions.

Performance management works best when managers and their people discuss and agree on the objectives. Furthermore, in today’s ever-changing environment, they need to periodically review and possibly adjust objectives throughout the year.  Relying on fixed performance goals make no sense when unexpected events are possible.  The COVID crisis makes that all too clear.

The most important development is the understanding that coaching and ongoing feedback help employees improve. That’s recognized as essential in any situation where people want to improve, from learning to ride a bike to playing in the Super Bowl.  However, it changes the manager’s role significantly, making training and new skills essential for managers.  For years HR offices have suggested having performance discussion meetings a couple of times throughout the year.  But now we know frequent, even 5 minute chats are useful.  Its analogous to the coaching in football games when players come off the field.  That’s a very different supervisory role and requires new thinking.

Another important development is the growing use of a version of crowdsourcing to assess how employees perform. Every employee serves one or more “customers”, internal or external.  The new practice is to solicit feedback from multiple sources on the employee’s performance.  In the same way employees are asked to assess their manager’s performance.

An approach to minimize bias and discrimination relies on asking managers to meet with a committee of peer level managers to justify their ratings. It introduces increased honesty and consistency.  It also satisfies the legal need to closely scrutinize the ratings of poor performers.

An added step in light of the emerging emphasis on equity is to analyze and compare ratings by gender and minority status.  There is research showing raters use different words and phrases to assess men and women.  Managers need to be aware of the issue.  The new approach needs to be seen as fair.

A final step to improve performance is to recognize and reward the best performers – but only when there is a reasonable confidence ratings are fair. A possible policy at least initially is to continue general or step increase policies for all but the few poor performers.  The few stars then are granted an additional lump sum award. The amounts do not have to be large or costly.  If, for example, 20% of the workforce are rated as stars or role models, budgeting 0.5% of payroll for awards translates into $750 for an employee with a base salary of $60,000.  The point is that high performers need to be recognized.  The better managers in the new normal should also be recognized and rewarded

To emphasize a central point, appraisals based on generic performance dimensions (e.g., quality of work, reliability) are suspect and of little value – which explains why so many organizations are looking for something better.  However, it should also be clear that the many issues that need to be considered in planning a process that has to be used and accepted by large, occupationally diverse groups is a complex problem – but it’s important and can be accomplished. Tennessee proved it can be done.

No One Said It Would Be Simple

The National Academy of Public Administration has used the phrase “compliance culture” to refer to the common work environment in government. That is to say, employees are expected to do what they are told. Now with the lessons from the pandemic, and the continued importance of remote working, the need is to shift to practices that encourage workers to independently perform at higher levels. The phrase “performance culture” refers to a work environment where the shared goal is improved results.

It may be obvious but this is not an HR problem. The office needs to take the lead in hiring, training, recordkeeping, and when managers fail to accept their responsibility, but the function has no direct involvement in the day-to-day management of performance. The implementation of improved practices is a change that requires commitment at the highest level, as Governor Haslam did in Tennessee. It requires a multi-year commitment so it should start early in a new administration.

Ineffective practices adversely affect agency performance as well as employee engagement. As an early step, discussion groups delimited by agency, job family, and management level, can be asked to discuss if current practices are working. They are likely to agree they are not working and that gets everyone ready for change. There will be a need for additional meetings; it’s almost certain to generate a lot of interest and ideas for change. Everyone wants to see something better.

Focus group discussions would be a logical next step to evaluate and flesh out new ideas. Teams, possibly based on the ‘professions model’, can be tasked with planning and testing new practices. In the end managers and employees make or break new practices, and it makes sense to involve them in the planning. Training in new practices, like goal management, is essential. 

A recent column from McKinsey, “For Smarter Decisions, Empower Your Employees”, argues managers and employees will need coaching to shift the culture and make everyone comfortable with delegating decision making.  Making employees responsible for job-related decisions increases their job satisfaction and frees managers to focus on more important issues.

Culture change is never easy or quick. The problems are not simple. However, as the Tennessee story confirms, it’s a win-win for managers, employees, and the public. Government serves an important purpose that can attract new graduates as well as experienced applicants when they can expect the work to be positive and rewarding.

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