Fear, Greed and Performance Management - Why Staff Hate Performance Management - And a Solution

If the universal goal is a high performance, why is performance management so difficult. In this article I will explore the influence of two drivers, FEAR and GREED, and the way they have corrupted the idea of performance management.

When Gordon Gecko said "Greed, for lack of a better word, is good." in the hit movie, Wall Street, it was the mantra for the Wall Street fat cats who led us into the global credit crisis through their pursuit of obscene, often illegal, profits and bonuses. Their behaviour since being rescued by the taxpayer shows that they have not learned to modify their pursuit of wealth at any cost.

Everyone who has been subjected to micromanagement, as a means of making their life at work so intolerable that they are induced to resign, knows how the process demeans and then destroys their spirit. Corporate bullying masquerades as performance management, and the bullies continue to be promoted to positions of greater power despite the annual dreaded "performance review" that never seems to touch them. The HR profession seems to have legitimized this practice as a way of achieving staff reductions, and practitioners regularly find themselves forced to defend personal grievances from victimized employees.

Is it any wonder that performance management has acquired a bad name, or that so many senior managers avoid the term because it has acquired such nasty connotations among the managed.

Why is it so?
I could well ask "why do so many managers mismanage the process", deliberately, or through misunderstanding.

I suggest it is due to a misinterpretation of the phrase "knowledge is power". If you believe that information should be hidden from your people in case they get to know too much, you risk becoming a black hole, where everything gets sucked in and nothing is given out in return.

Are these managers corrupted by a lust for power. Do they hide information from superiors in case their errors are exposed; do they hide performance information from subordinates so they can use it as a weapon when they feel threatened? Are they simply responding to the cultural norm?

Whatever your answer, as a CEO or business owner, you have a deep-seated problem.

The organizational quandary is that performance must be measured and managed for an organization to prosper. After all, the finest strategy is nothing until it is implemented and managed.

Why have KPIs become the problem, not the solution?
I believe this occurred by a misinterpretation of the term Key Performance Indicator. KPIs have become confused with the bad old performance management process, simply because they share the word performance.

Performance management uses achievement of personal objectives as the focus of the process. The hapless employee is measured against the demanded, or sometimes agreed, target. Little wonder that they feel like the goat tethered to the stake, waiting for the inevitable fate, as they are told that they have not achieved their KPIs.

Achieved or Not Achieved? Bonus or No Bonus? Pay rise or No Pay Rise? Promotion or Demotion?

The problem is that an individual cannot have a KPI. A person can have an objective, but never a KPI.

A KPI belongs to a function; not to a person. A KPI evaluates functional performance, contribution to the organizations performance and it belongs to the manager and the team. The manager is accountable and the team is responsible.

As soon as you accept that a person can never have a functional KPI you transform your understanding of the purpose of a KPI Model.

The real key to resolving the problem of fear and greed.
Experience with high performing organizations around the world has enabled a robust process to be developed for gaining acceptance of KPI models and, implicitly, adoption of sound performance management by the whole organization.

The secret is to tap into the deep knowledge of the people doing the work. One simple question serves this purpose.

"How do you know if you have had a good day?"

Ask this question in a workshop with all managers and supervisors present, and they will give you the KPIs for their function. List them and use them as a point of reference.

Now you have a base for constructing your KPI model, and it is simply a process of teasing apart, as a group, the sequence of functions that the organization must perform to satisfy its customers.

Yes; there are many iterations of the modeling process before you get it right, and it may help to have an experienced facilitator, but there is no high tech gear needed. This is a high touch process of working together with pencils and lots of large sheets of paper.

Along the way, managers learn what staff know about their work, and staff learn how a decision at some point in their process affects the overall business performance. Suddenly the financial numbers and KPIs serve them and guide their operating decisions. Managers and staff share a common point of reference. They ask a single question. "Will this decision increase or reduce business performance as its effects flow through the organization.

Above all they trust the information the KPI model provides because it integrates everyones knowledge of the business.

Managers now have a reliable set of levers to push or pull, and can provide feedback to work teams on their performance that team members understand.

This is not a magic bullet solution. It requires commitment and hard work. What is important is that it always pays off when it is followed through.

What is most surprising is that management by fear becomes unnecessary, and overall performance improves without the shortsighted boost of greed-based incentives, or fear inducing processes.