Performance management has over the years become known as a rating and scoring system that is done by managers in order to determine the increases and bonusses of subordinates. These traditional performance based monetary reward schemes are relics from the industrial revolution, where employees were rewarded based on their ability to perform basic mechanical tasks, has become obsolete in the knowledge economy that we live in today. Organizations have been forced to reevaluate their approach and many have moved to performance optimization systems that don’t just reward employees, but also motivates and engages them.
It goes without saying that employees will not be able to perform to the best of their abilities if they are unmotivated. But how does an organization motivate its employee’s through performance optimization? Motivational theories have evolved from three main theories namely, the Howthorne effect in the 1920’s, Maslow’s hierarchy of needs in 1954 and Hertzberg’s hygiene factor theory. Many modern motivational theories have recently started to acknowledge the important role that autonomy, mastery and purpose plays in performance optimization. This has led organizations to realize that the secret to performance optimization is not rewards and punishments, but rather the intrinsic motivating power of autonomy, mastery and purpose.
In recent years the sustainability and effectiveness of performance management systems have been challenged by employees who are no longer motivated by money, but rather want to make a meaningful contribution to the world through the work that they do. The search for finding purpose in one’s occupation has become most relevant in the millennial generation. An ever-increasing number of employees, especially millennials, are starting to question the impact that their work has, not only on their own lives, but the lives of others.
Autonomy in the workplace refers to the amount of freedom given to employees to determine their own destiny. Traditionally organizational structures have called for strict oversight, especially at lower levels of the organization. Depending on the industry, autonomy might also include the amount of input employees are allowed to give in the selection of projects, schedules, roles or clients. Studies show that work environments that are autonomous in nature lead to higher levels of productivity. This has prompted many organizations to be more flexible by allowing employees more flexibility in terms of how and when they work.
We all have the desire to improve our ability to perform any task that we put our minds to. This holds true for the world of work as well where employees have a deep seeded desire to master their chosen profession. Organizations that give their employees the opportunity to develop and grow will unlock intrinsic motivators that have a much greater impact that reward and punishment.
Performance appraisals provide leaders with an ideal opportunity to formally engage with employees in order to find ways of improving performance through motivation created by autonomy, mastery and purpose.
Performance appraisals have become a process that is almost universally loathed and avoided by leaders as well as employees. The time-consuming scoring based systems that have been developed over the years do very little to actually improve the performance of employee. The state of performance management has gotten so bad that some organizations have gone so far as to get rid of performance management all together.
We at Apex People Solutions still believe that performance appraisals play a vital role in the success of any organizations. The system that is implemented however must adapt to the challenges that the business world currently faces. We believe that in order to find a system that best caters to the current needs of the business world we first have to look at the history of performance management.
Performance management – The Story so far…..
Performance management has gone through many phases over the last 70 years or so. Below we attempt to summarize the major paradigm shift along with the factors that caused these shifts.
1950’s and 1960’s – Accountability to Development
The original performance management system was a “merit rating” system that identified top performers and rewarded them with promotion opportunities. Conversely the system also aims to identify and get rid of under-performers. This military style system almost exclusively focused on the rating and scoring of employees.
During the 1960’s the world encountered a shortage of managerial talent. This forced organizations to pay more attention to the development of employees into managers and supervisors. Subordinates were given the opportunity to give greater input on ways to accelerate their own development. In some instances, attempts were made to find a system that combines accountability and development.
1970’s to 1990’s – Back to Accountability
With the rise of capitalism in many countries employees were increasingly focused on maximizing their earning potential. Organizations were therefor forced to differentiate between top, average and under-performing employees and reward them accordingly. This also formed an important part of retention strategies.
2000’s Accountability goes into overdrive
Jack Welch famously implemented the 20/70/10 forced ranking system at GE, with many other companies also implementing similar systems. These systems were however becoming increasingly complex and time consuming. With company structures becoming flatter supervisors found it almost impossible to find enough time to effectively manage the performance of all their subordinates.
The simple answer is the world is changing and organizations must change with it. These changes have meant that performance optimization systems have to adapt to the following challenges:
- Leaders have less time available because they have more people reporting to due flatter organizational structures
- Organizations must be able to adapt to changes faster than ever before
- Individual rating systems undermines cooperation in the modern team based working environment
- Rating systems are inaccurate and often reflect the bias of the supervisor
- New generation want to have more input in their own career development
- Monetary reward schemes no longer effectively motivate employees
The Apex People Solutions way
Taking all this into account we believe that an effective performance optimization system should incorporate the following principles:
- Based on outcomes that are aligned to the current goals and targets of the organization
- Focus is on two-way communication between the employees and supervisor rather than scoring
- Can easily be adapted to changes in the organization
- Leaders help employees understand their role and impact in the organization
- Focus is on development, rather than reward, through a comprehensive development plan
- Reviews are regular and not time consuming
- Focusses on the future, not just past performance
- Leaders and employees jointly find the most effective way to structure work
- Success is recognized and celebrated
What we do
Apex People Solutions are experts in the field of performance management that assists organizations to transform their performance management process.
We assist organizations to improve the way in which they manage performance in the following ways.
1. The System
Many performance management processes are unsuccessful because of over complicated and ineffective systems. More often than not the system distracts rather than enables the leader to properly manage performance.
Apex people solutions assists organizations to review and overhaul their current systems or implement a new system if nothing is currently in place.
2. The Supervisors
The competency of leaders is the most crucial element to any effective performance optimization process. Leaders need to have all the necessary skills and knowledge in order to effectively manage performance.
Apex People Solutions are strong believers in the crucial role that emotional intelligence plays in determining how effective a manager manages performance. We will facilitate the development of the emotional intelligence of the leaders as well as other critical skills.
Apex People Solutions will measure the effectiveness of the performance optimization process by getting feedback from leaders as well as employees. We will then assist with the formulation and implementation of corrective measures if required.
How we do it
Apex People Solutions does not believe in generic solutions to unique challenges. We would like to get the opportunity to get to know and understand your organization better in order to propose a solution that caters to your individual needs.
We are very flexible in terms of our service offering as well pricing structure. Our aim is not short term gain, but rather the formation of long term business partnerships that are mutually beneficial.
In a performance-driven organization in which dopamine is the primary means of reward – hit the goal, get the money – like gambling, we can become addicted to “making the numbers”. – Simon Sinek