HR needs to reinvent performance management

HR has failed to build performance management systems that benefit the organisation and its people.

If you were given a new laptop that didn’t do what you needed it to, would you keep using it without comment? No, you would repair and improve it until you had a device that met your needs. HR, however, has failed to take this approach with appraisals, and has consequently failed to build performance management systems that benefit the organisation and its people. Instead, it has retained an outdated model that does not add any value to the business.

Last year, the Corporate Executive Board found that, across the world, businesses need a 20% improvement in performance from employees to ensure that business objectives are met, yet the past 15 years have seen only around a 10% improvement. Organisations need drastic improvements in performance to help them meet their targets, yet the systems currently used to identify and develop high performers don’t work, restricting the ability of the organisation to meet its objectives. 

These systems consistently fail to engage staff. The 2014 CIPD Employee Outlook Survey found over 30% of employees in the UK believe the performance management process at their organisation is unfair. Research from Badendoch and Clark (2012) supports this, finding that 37% of staff believe appraisals are a waste of time and do not contribute towards their career development. HR has been aware of this now for decades, but has failed to fix what is historically a broken system. 

The problems with appraisals are, in my opinion, threefold. Firstly, the quality of discussions ranges drastically. Too many managers don’t know how to ask the right questions or how to gain the confidence of their staff.

Secondly, any agreed actions coming from these discussions are very rarely recorded by the manager or completed by the employee.  This means development goals are not monitored, and the desired benefits from the employee completing the action are not realised.

Thirdly, the timings of these meetings are too rigid. Having a set timeframe for performance management ignores the diversity of a heterogenous workforce.   

So why has HR failed to resolve this long-standing issue? I believe this oversight lies in HR’s preoccupation with writing and enforcing policies to gain compliance, rather than building workplace cultures that inspire performance and engagement. Annual appraisals ensure that poor performers can be identified and action plans can be put in place if necessary. It rarely, however, provides the development opportunities to transform middle performers to high performers, or high performers to future leaders.

New companies with no HR policies manage performance on a day-to-day basis and make decisions on reward, performance and development quickly – they do not wait for a year. By adopting flexible, recordable processes where managers have the resources they need to identify and provide the employee with the development opportunities they need, HR creates a more engaging, effective performance management system that will have the support of staff, managers and the business.       

HR has for too long been content to retain systems that, while ensuring compliance, do not inspire or engage. This is increasingly to the detriment of both the employee and the organisation. By adopting more effective processes, HR can better drive value from employees, improve performance, and, ultimately, align itself to business needs. Does your system do this? If not, maybe it’s time for an upgrade.

Jabbar Sardar is director of human resources and organisational development at Cafcass