Mistake #10: Ignoring the impact of your performance management systems on your employees’ engagement and productivity

Ensuring good performance management is like a maestro conducting a symphony.  In order to make everything sound harmonious and beautiful, you must manage all of the individual parts. But each part will need something different from you in order to achieve the right sound. And taken as a whole, everything must work together in order to sound beautiful. 

So it is with performance management. It is important to have the right systems in place but the devil is in the individual implementation. Each employee will need something different from you and you must structure your systems so that each employee is incented and encouraged to work as part of a team to achieve greatness together. Sounds easy, right? 

Well, if it were easy then every company would be wildly successful and, we know that’s not true. But wildly successful companies have indeed cracked the code on how to best manage their employees’ performance, with an eye towards both the short term and the long term.

First of all, let’s define performance management. Many CEOs tend to have a more limited and narrow view of performance management. These CEOs think of performance management as simply a program that HR rolls out once a year in order for people to get their 3% salary increases. Or these CEO’s may think of it more punitively and view it as being just a disciplinary process when an employee is performing poorly. Neither of these views is correct.

In fact, good performance management is so much more. Simply put, it is the structures, tools, and processes by which you encourage and teach certain behaviors and discourage and attempt to change other behaviors. Done well, you can harness exponential amounts of productivity from your existing teams and organization that you hadn’t otherwise foreseen. Done poorly, you can discourage an employee from putting in any effort beyond the absolute minimum to stay employed.

One of the goals in all of this is to get an employee to provide to their employer what HR professionals label discretionary effort. I define discretionary effort as being that effort which we voluntarily choose to provide to an activity. In everyone’s life, each of us have a certain baseline amount of effort that we are required to provide to perform the basic tasks of that activity, whether at work, home, church, community, etc. This is what I call required effort. Above and beyond this baseline of activity is the extra time that we can choose to provide to any number of competing interests for any number of reasons. This extra time is not proscribed in anyway and each of us decides for ourselves how we want to spend that time.

Smart companies know how valuable this discretionary time is and will actively compete to sufficiently engage employees such that when the time comes for the employee to choose how to spend her time, she will choose to spend part of it working. This is the extra effort that someone will put in late at night to make a presentation just right or work they do over a weekend to ensure that a project deadline is met. These are your most valuable employees because they are both engaged and committed to their work and, by extension, to your company. This is the reason why paying attention to your performance management systems mean paying attention to your business.


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