- Traditional performance management systems are often ineffective and fail to improve employee performance for various reasons, such as goals not being clearly aligned, biases influencing evaluations, and lack of training. - An alternative is needed that focuses on regular, positive feedback and coaching from managers. Seeing managers as coaches who help employees improve or maintain high standards may be more effective than annual performance reviews. - Employees' views of performance management systems matter, as engaged employees will perform well regardless, while dissatisfied employees will likely view systems negatively. Keeping employees satisfied and engaged should be a priority.

1. Develop your
organisation’s talent
D R R C o n s u l t i n g
C h r i s t c h u r c h , N e w Z e a l a n d
+ 6 4 2 1 5 6 4 4 4 6
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1 / 9 / 2 0 1 5
Dani Rius, BEd, MA, MSc
Managing employee performance isindire needfor
transformation.The traditionalperformance systemis
deficientatitsbest.Findouthow youmeasure up
againstthe most resilientorganisations,whichare
learningorganisationsthatfocusontheirpeople and
developtheirtalents.

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Assessing your current PMS
How effective is your Performance Management System (PMS)? Does it deliver
the results your organisation expects?
Everyyear companiesdotheir organisational performance review,whichincludes theiroverall
humanresourcesperformance inadditiontotraditional financial reviews.The humanfactoris
assessedagainstnumericalcriteriathrough aso-called360ᵒ feedbacksystem,inwhichmanagers
and peersrate eachother; othertimesthroughamore or lessestablishedperformance
managementsystem.However, annual performance reviewsare notalways positively regarded.
Accordingto the recentresultsfroma publicsurveyundertakenbyDeloitte (HarvardBusiness
Review, April2015), 58% of executivemanagersdidnotfindtheirorganisations’PMStoimprove
employeeperformance. Theirfindingledtoasearch foran improvedsystem, whichtheynow claim
to have found.
It isa fact that employeesare oftencynical aboutperformance assessments(PA).PMresultsare
more likelytobe biasedwhenemployeesdonotwholeheartedlybelieve inthese assessments,or
are worriedabouthowthe resultsmightaffecttheirsalaries,promotionopportunities orwork
environment.More importantly, PMsystemsmore often thannotfail to helpimprove people’s
performance.There are manyreasonswhythese systemsare prone tofailure.
A system that is flawed
In fact,Murphy1
statesthat there isa weakrelationshipbetweenperformance and performance
ratingsgiven at work. He critiquescurrent performance managementsystems whichare still used
todayin spite of theirshortcomings.Theyare the same thathave been critiquedbyresearchersand

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practitionersalike, butthere haven’tbeenanysignificantchangesbecausenobettersolutionhas
beenfound.
The most currentlyusedPMsystemsfocusonidentifyingfaults ornegative aspectsof employee
performance,whereaswhatreally benefitsboththe employee andthe organisation iswhen
employees reflectabouttheirworkactivitiesandbehavioursinapositive way.Stimulatingpositive
thinkingandencouragingthe ‘can-do’attitude,providesasense of optimism2
inwhich new things
can be learned while havingthe confidence in the abilitytoperformtasks evenwhentheyare
challenging3
.
What is wrong with performance management systems?
Several thingsmaybe wrong.There are invisible forcesplayinginthe background. Firstly, different
areas of the organisation mayhave setthemselvesgoalsthat are notso clearlyaligned withthe
organisation’sstrategicgoals,maybe because interpretingandtranslatingthemproved tobe more
difficultthanexpected.Assessingperformance basedon differentgoalsislike usinganinaccurate
tool,so thatit isboundto be ineffective atreflectingwhatisreallygoingon.
Second,assessmentsare oftenflawedbecause of people’s biases.These are notonlyemployees,
whooftenwantto showonlytheirgood qualities,butalsosupervisorsand peers,whorespondto
surveysdependingontheir(goodorbad) relationshiptothe personbeingevaluated.
Third,it takesa lotof trainingtocomplete surveysinamore detachedwaysothat behavioursrather
than personalitytraits are observed.Sometimestrainingalone will notbe sufficient.Forexample, an
employeemaybe difficulttoworkwith sothat evena trainedpersonwill probably finditdifficultto
be objective whenevaluatinghisorherperformance.Althoughemployeesmaybe verygoodat their
jobs,theymaynot be team players.Inanotherscenario,anemployee’spersonalitymayclashwith
theirboss’s,butotherwise getalongquite wellwithmostof theirteammates. The supervisorwould
thenprobablyalsobe negativelybiasedtowardhisorher employee.

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The above,amongotherreasons,make itdifficulttodetectandeven hardertomeasure
performance.If you think there maybe otheradditional issues inyourPMS,we are happyto assess
your organisation’sspecificsituationby performinganeedsanalysisthatwillsuityourorganisation.
Is your organisation’s PMS positively influencing job performance?
If your employees answeredhonestly,chancesare theywouldsay ‘no’,or‘undecided’. Whether
otherwise satisfiedwithwork, very fewpeople seemtoanswerwithabsoluteconfidence thatthey
findperformance reviews usefulorsee anytangible benefitsforthemselves ortheircompanies.
Why isthat? It isbecause the message senttoemployees
isambiguous.
The fact is that the PMS in itself doesnot necessarily
benefitan individualemployee.Why isthis?It’sbecause
performance assessmentsare done tokeepthe business
on track. The focusis on the businessratherthanitsemployees.Itmakessense towantto keepthe
businessrunning.Everyonewouldagree tothis,foraslongas the organisationisalive, workers get
to keeptheirlivelihood. However, employees’performance isusuallyconnectedtoanadministrative
value,whichistranslatedtoa rise insalary,stagnation,orworstcase scenario,adismissal.Sohow
can employeesgenuinelybe motivatedtoparticipate inperformance reviews? Anhonestreviewof
the message yourHumanResourcesmanagementissendingoff toitsemployees isessential.
On one hand, employeesknow
they are expectedtoopenly
collaborate with their
performance reviews,on the
other, theyare often not
providedwith sufficienttime to
complete the surveys mindfully.

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Anotherissue of concernisthat howeverwell dataare gathered, the resultscanonlygetas goodas
the professional level inwhichtheyare processedandanalysed.Otherwise the review processmay
well justendupbeingawaste of time andresourcesas data are storedaway,therebylosing the
opportunitytoobtainvaluable learningfromthe results. BuckinghamandGoodall4
reported thatup
to 2 millionhoursayearwere consumed onPMS.Imagine justhow muchmoneythat costthem!
Theirawarenessof PMScosts lead Deloitte’s toreview theirPMS and make effective changes.
An alternative to traditional PMS
Supervisorsandmanagersshouldknowhow theiremployeesare doing,how theythinktheyare
performingandwhattheiraspirationsare.Whyget more personal?It’sbecause individual feedback
can be powerful.Itiswhatcan make itor break it.People are motivatedbyknowingtheycanmake
a difference.Orat leastbyknowingtheyare doingsome thingsright.The more theyare
acknowledgedfortheirgoodwork,the happiertheywill be atworkand therefore be more willingto
give ittheirbest.
Regularfeedback,aswell asimmediate feedbacktoperformance inapositive,respectful manner,is
an effectivewaytohelpemployeesimproveperformance5
,probablymore so thanthe once or twice
a year performance assessments,whichlargelyrelyonselective memory. Therefore,managerswho
are goodcoachesand mentorsto theiremployeesstandgreaterchancestohelptheiremployees
improve theirperformance,ormaintainthe highstandardsof highperformers.

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Why employees’ views matter
Giventhatmost of the organisationispopulatedby non-decisionmakingemployees,itmakessense
to wantto get themon boardwithyour PMS.Employeeswhoare engagedatworkwill performwell
regardlessthe PMsysteminplace. LeiterandBakker6
describeengagedemployeesasenthusiastic
and highlyinvolvedintheirtasks.Itistherefore notsurprisingthat several researchershave found
that engagedemployeesperform well andbeyondthose whoare disengaged7
.Infact,disengaged
employeescanbe dangeroustothe business8
.Havinganengagedworkforcemeansanorganisation
has “the right people inthe rightroles withthe rightmanagers”9
.Thishaspractical implicationsfor
business.Itmeansthatemployees’opinions shouldbe givencertainpriorityand,above all,they
shouldbe spared poorly executed performance assessments.Unfortunately,itishardto tell when
the performance review ishavinganegative orevenharmful impactonemployees,sothe more
importantitis to focuseffortsonkeepingthemhappy.
Figure 1 belowillustrates the relationshipbetweenemployees’PMSperceptionandtheir
satisfaction. The model illustrateshowthe currentlevel of satisfactionof employeesinfluencesthe
waytheyperceive the PMS. Whetheremployeesare otherwise satisfied(ornot) withtheirjobs,
there are much higherchancesthat theywill negativelyperceivethe PMS. Those whoare
dissatisfied atworkare most probablygoingtobe cynical (90%),and not participate inthe
performance appraisal wholeheartedly, maybe evenfearingnegative consequences.Of those who
are satisfiedwiththeirjobs,theymightstill thinkthe PMSdoesnot“talk”to them if there are no
tangible results(rewards),ortheywill justnotcare because theyknow theycando theirjobs
regardless of PA outcomes.Therefore satisfiedemployeesmay feel eitherwaytowardsthe PMS
(50% positive/50%negative perceptionof PMS).If there isno contingencypaymenttobe gained
fromperformance assessments,the equationcouldlookevengrimmer(30% positive/70% negative).

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Perceptionsoftraditional PMS
+
10% 50% (30%)*
Disengaged Engaged
Employees Employees
90% 50% (70%)*
_
Figure 1: Percentage of employeeswhoare likelyto be dis/satisfiedwiththe PMS dependingon
theirperceptionof it and their current level ofengagementat work.
*PMS system lackingthe provision of incremental pay (monetary rewards).
The intention of showingthisfigureistoillustrate how employeesatisfactioninfluencesthe
perceptionof aPMS, whetheritis goodor bad.So the task of HR isactuallyto workon employee
engagement.Whatif apartfromgivingemployeesajob,the organisationcouldofferthemaplace to
carry out meaningful activitiesinafriendlyenvironment? Inaddition,whatif the organisationcould
provide asafe havento learnnewabilitieswithoutfearof failure?Ourmodel proposeschanging
froma traditional PMStoa personal andprofessional developmentsystemwe liketocall the Talent
ManagementProgramme (TMP).
How to keep employees happy in spite of, or better, because of PMS
In orderto keepemployeessatisfiedatwork,itis bettertofocuson theirpotential ratherthantheir
shortcomings.Everybodyhasstrengthstheycanworkonto helpthemkeepuptheirgood workin
one area while buildingmore confidence inotherareasthatneedsome improvement orevenminor
adjustments. Bynurturingemployees’talentsandhelpingthemdevelopfurtherskillsrequiredfor
presentorfuture work,theywill feelmore valuedandenjoywork.Itis,afterall,funtodo whatyou

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knowhowto do best.Andlearningnewskillscanbe challengingattimes,yetithelpstokeepwork
interestingasthe monotonyof certaintasksis eliminated.
By aligningindividual’sgoalstothe organisation’sgoals, ortheirsmallerunit’sgoals,theyare bound
to be happieras theycarry out more meaningfuldaily activities. Ittakestime tofigure outwhat
individual’sinterestsordreamsare,butit isa muchbetterinvestmentthanlookingfortheir
weaknessestoemerge.
Figure 2 proposes a newapproachto enhancingemployees’engagementandperformanceat
work,inwhichthe focus onweaknessesisreplacedbyafocuson strengths,individualgoalsare
alignedtothose of the unit/departmentand organisationinawaythat ismeaningful toemployees,
and the promotionof talentissoughtinsteadof lookingforwhatiswrong.The model showsthat
employees’regardforperformance managementcouldchange dramatically.We canhelpyou
achieve that.
Perceptionsof/Satisfactionwith TMP*
+
10% 100%
Disengaged Engaged
Employees Employees
15% 0%
_
Figure 2: Percentage of employeeswhoare likelytobe dis/satisfiedwiththe TMP*(Talent
ManagementProgramme) withstrongfocusontalentdevelopment(TD) dependingontheirlevel of
engagementatwork.

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Those whoremaindissatisfiedwithtime have probablyalwaysbeena wrongfitfor the organisation,
i.e.theirindividualgoalsare incompatible withorganisational missionorstrategicgoals (10% isthe
average turnoverrate of businesses).The disengagedanddissatisfiedemployees(15%) are probably
individualswhoalwayscomplain nomatterwhat.Previouslyengagedemployees(30%-50%) who
alsoappreciate being givenlearningopportunitiestoenhance theircurrentskillsandgainnew ones
are boundto be evenhappierwiththe organisation,potentiallyreaching100% satisfactionwiththe
PMS/TDS (TalentDevelopmentSystem).
A final thought
CurrentPMS oftenhave the dual objective of helpingmanagementdecide onsalaryincreasesand
monetaryrewards while alsoidentifyingtheirstaff’sprofessionaldevelopmentalneeds.Thisis
where itgetsconfusing foremployees.
Theywill happilyshare theirweaknessesif theyknow theywill be mentored,coached,ortrainedto
improve theirlackingskills.However,whentheysense thatitisnotsafe to share theirflaws,they
will probablynotreveal themtoavoidbeingtakenoff the promotionsorrewardslist.Thatiswhyit
doesnotmake anysense toput these twotogether,i.e.the financial (e.g.,bonus,salary) andthe
developmental (e.g.,skillstraining) functions. Individualsmore oftenthannotappreciate
developmental opportunities,whichgivethemhope forthe nextbestjob upinthe organisation.In
fact, promotingpeople’stalentscantake the formof givingadditional rolesorresponsibilitiesto
helptransformyourtop performers intofuture leaders.
Instead, employeeswillnot welcome punitive measures, assimple assendingthemto training
programmesthatseemmeaninglesstothem.Therefore,conferringwithemployeesfirst tosee what
theirinterestsare withinawide arrayof possibilities isagood and ethical measure,andcertainlya
betterinvestment.

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Giventhatbetterperformance outcomescanbe predictedbyhaving
highlyengagedemployees,whybotherwithacumbersome andcostly
traditional PMS?Instead, we propose increasingemployeeawarenessof
theirstrengthsand offeringto develop themfurtherwhilealsoworking
on skillsthatneed improvementforpresentorfuture work.
In summary,itisbeneficial tohave aTalentDevelopment System(TDS)
or a TDP insteadof orin additiontoyourregularPMS. Yet make sure the
TDP is done separately.TDPisthe bestway to engage new staff and
improve employeeengagementoverall.Ask Dani atDRR Consultingif
youare interestedinfindingwaystodevelopaneffectiveTDP
programme. Please registeratwww.DRRConsulting.co.nzorcontact
Dani Rius directlyDani.Rius@DRRConsulting.co.nz.
1Murphy, K. R. (2008).Explainingthe weak relationship between job
performance and ratings of job performance. Industrial and Organizational
Psychology, 148-160.
2Seligman,M. E. P. (2006). Learned optimism: How to change your mind and
your life. New York: Vintage.
3Bandura,A. (2001).Social cognitivetheory: An agentic perspective. Annual
Review of Psychology, Vol. 52., pp. 1-26.
4Buckingham,M., & Goodall,A. (2015).Reinventing performance management.
Harvard Business Review, pp. 40-50;
5Aguinis,H. (2013). Performance Management. New Jersey: Pearson.
6Leiter, M. P., & Bakker, A. B. (2010). Work engagement: A handbook of
essential theory and research. NY: Psychology Press.
7-8Anitha,J. (2014). Determinants of employee engagement and their impacton
employee performance. International Journal of Productivity and Performance
Management, Vol. 63(3), pp. 308-323.
9Buckingham,M., & Coffman, C. (1999). First, break all the rules: What the
world’s greatest managers do differently. The Gallup Organization.NY: Simon
and Schuster, p. 248.
DaniRius@DRR
Consulting.co.nz
Dani Rius, BEd, MA
(Dunelm), MSc,isa
ThoughtLeaderintalent
developmentand
strategiclearning
solutions.She hasdone
researchinchange
management,learning,
and employeeand
organisational resilience
as resultingfrom post-
disasterexperiencesin
Christchurch(NZ)
followingthe 2010 and
2011 earthquakes.