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Expert suggests new rules for effective performance management

In these times of shrinking budgets and increasing demands, maximizing the potential of an organization’s human capital is a top priority in both the public and private sector. The promise of “performance management” (PM) is to drive high performance, but the truth is, PM is broken, says Dr. Elaine Pulakos, president of PDRI and an industrial-organizational psychology author & expert. Despite spending enormous amounts of time and money on PM activities, most organizations see little value from the PM process. With such an investment, why has PM yielded so few results?

Dr. Pulakos asserts that it’s time to throw out the old rules and follow these 3 new rules of PM to improve retention, optimize performance and ultimately, boost your bottom line.

  1. Reset your mindset. The prevailing view of PM is that it is an HR system consisting of steps, tools, forms, rules, procedures, and software programs. However, research has clearly shown that it is the positive, day-to-day leadership behaviors that comprise the core of PM –and not formal PM systems –that yield bottom line results and employee engagement. The promise of PM can only be realized if organizations fundamentally change their mindset about what PM is. Managers and employees spend the lion’s share of their day engaging in PM without even knowing it –what needs to get done, by when, and what defines success. Shifting the collective mindset in the organization requires everyone understanding that PM is not just a once or twice a year event. It is a day-to-day activity for which everyone is responsible.
  2. Ditch the formal system –build the informal one. Over 50 years of research has attempted to improve PM systems in every way imaginable –by changing what’s rated, who makes ratings, how often feedback is given, what rating scale is used, etc. Sadly, none of these strategies have been shown to improve attitudes towards PM. Despite this, the quest for the perfect PM solution goes on, yielding increasingly elaborate, burdensome, and expensive PM systems that managers and employees alike bemoan as having no value. This focus on a formal system has caused us to lose sight of what effective PM really is and derailed us from getting there. Instead, we need to focus on the informal, day-to-day PM behaviors that have proven to lead to high performance and engagement: Convey how employees’ work and roles fit into the big picture; Communicate real-time expectations and goals on a regular basis; Increase the frequency of real-time positive/negative feedback to work; and Develop employees on-the-job with exposure to varying roles and situations.
  3. Change your company’s DNA. More important than initiating change, is actually sustaining change. Give your new approach to PM some staying power by making it a part of the organization’s DNA. Establish operational triggers to continually reinforce effective and ongoing PM behavior when it’s needed and does the most good. To be successful, organizations need to weave this “Everyday PM” philosophy into the fabric of the culture for company-wide adoption.

Dr. Pulakos says Performance Management is profoundly broken but should not be abandoned –it’s actually essential for organizational success. “But, at a time when conserving fiscal resources is also essential, money shouldn’t be wasted on systems and processes that haven’t been proven to work. Performance management needs to be turned right-side up by putting the people in front of PM, not behind it. Following these New Rules will not just put you back on track, but will put your organization on an entirely new track –benefiting your human capital as much as they benefit your organization.”