Performance Leadership beats Appraisals 

Performance management systems in Australian organisations are undergoing a series of quiet yet revolutionary change. Over the past few years there has been a significant shift in best practice, in both the public and private sectors
 

Performance appraisal has typically been the starting point for most organisations in working with individual performance. Appraisal alone however seems to primarily be a compliance exercise. It often becomes something to be endured once a year and has little to do with business or individual productivity. "It's something we have because it is a good thing - or so I am told" one General Manager stated recently.
 

Performance appraisal in isolation, becomes a drain on any organisation and perhaps is best done away with. Yes, just get rid of it. The only time appraisal seems to work is when it is so embedded in the organisation that individual performance becomes immersed in organisational practice. Then it becomes a business driver.
 

The evolution to this stage is through the establishment of an effective performance management system that:

• has clear goals linked to business outcomes, i.e. the performance management system itself has clear goals. This leads to identifiable outputs that in turn support organisational outcomes, ultimately sustaining an organisation in the marketplace.
   
• provides a clear line of sight between individual contribution and organisational outcomes. Employees want to know the contribution they make to the success and sustainability of a business. Without this understanding, employee performance will not come from commitment and productivity will reflect this.
   
• is simple to understand and administer. All research into successful performance appraisal/management confirms the importance of simple systems. These systems support performance discussions not replace them.
   
• is consistent in its application and is also seen to be consistent.
   
• focuses equally on not only what will be achieved, but how. Without the 'how' the performance discussion becomes a directive and is unlikely to result in the performance desired by either the individual or the organisation.
   
• includes specific links to organisational values and the strategic direction. Organisational values if 'lived', drive sustained performance in organisations. If addressed proactively a focus on organisational values builds and supports a performance culture. Few businesses however fully leverage this effect.

The evidence is that such an approach does enhance the productivity of an organisation but not to the extent of what I have termed 'Performance Leadership'
 

Performance Leadership is about a more strategic approach to individual performance that is achieved through:

• clear and effective articulation with other fundamental business systems, including learning and development, capability development, business planning and workforce planning. Performance management is a 'bolt on', i.e. something added as an afterthought attempting to reactively resolve a problem, but rarely doing so, as it is not integrated with the business system overall.
   
• including the 'health' of the individual performance management system as a fundamental business measure - along with ROI and overall profitability. Many businesses invest a significant amount in performance management activities, yet do not assess the return on this investment. Why should performance managemnt differ from any other business cost? Surely it is wise to occasionally audit the effectivenes of performance management, in line with good continuous improvement practice.
   
• the executives of organisations driving the individual performance system, to the extent that their own performance pay is dependant on achievement of the objectives of the system. Nothing focuses as much as self interest! Those organisations that link performance pay/bonuses to the effectiveness of performance management, invariably have systems that are effective and responsive to changing environmental circumstances.
   

Indications are that such an approach is likely to significantly increase return on human resource investment for little actual cost. Much of what has been described above is within control of leaders and managers and does not involve any significant infrastructure or resource investment.

How does an organisation make the shift? Simply ask the question - how much is your human resource base worth and what return does it currently deliver? If the response is that the return is greater than the investment you are fortunate and unusual as an organisation. Anything less than this however means that you are only partially utilising your most costly resource.
 

To remedy this situation:

A practical starting point is to establish what a performance management system is to achieve. Use yourself as an example. Take a sheet of paper. On the left side describe the performance outputs expected of you, i.e. what you will be judged against quantitatively. On the right hand side of the sheet list your organisational values and under each one briefly describe the behaviours you will engage in to support the value concerned.

What you now have is a framework for performance discussions in the future. Now take this and apply it through the parts of the organisation you are responsible for. Doing this will cause you to consider all the points mentioned above.

Certainly this is a deal more complex than a mere 'flick and tick' appraisal once a year - it will produce results however.

John Robinson is recognised for his business focus approach when partnering with organisations who need to  navigate their people through change with effective leadership

John can be contacted through The Training Link on 1300 88 44 33