So, the bureaucratic, cumbersome annual performance appraisal and ranking systems that see employees ranking their performance for the past year against certain criteria, then their managers ranking the employee and the two get together for some argy-bargy. Yes the system that ranks everyone on a 1-to-5 scale or, "not meeting, developing, met or exceeding"... Having done this myself and working with organisations that use these systems, everyone knows they don't work.
You can't call a once-a-year-discussion performance management, but we do. In some organisations everyone complains that "everyone is a 3" as managers are reluctant to raise the issue with perceived under-performers when they haven't talked about it during the year...others see it as a complete waste of time, and it is demoralising for employees.
Finally sense is prevailing. Australian businesses are thinking of abandoning the performance review process, following Accenture , others in the UK (reported by CIPD) as well as the USA (six per cent of Fortune 500 companies including Microsoft and Adobe; also see CEB).
For each employee there are three contracts in place. Firstly, there is an employment contract between the organisation and the team member, secondly what is referred to as the "psychological contract". The psychological contract is the reciprocal extension of trust and discretion that creates a social exchange of obligations extending beyond those of economic exchange in the employment contract. The psychological contract is how the team member feels about working for the organisation, are they proud to say where they work..?
However, most organisations ignore what I refer to as the 'triad of the emotional contract' (diagram above), the third and possibly the most important contract . Understanding this mental-model helps team leaders realise their responsibilities towards their team members and provides the mindset to develop effective, behavioral based relationships with their people. The reason most people leave a role is the declining quality of the relationship between the team member and their team leader, this relationship needs to be based on TRUST. Which is derived from (principally) three things - a clear agreement of the standards of performance; regular ongoing two-way communication and a commitment from the team leader to provide opportunities for skill and knowledge development.
The regular (fortnightly, or three weekly) ongoing two-way communication sessions are delivered through regular one-on-ones to collaboratively discuss performance against the agreed standards and criteria. The focus is not on managing for performance, but coaching for performance. Managing could be described as the processes we put in place to manage the work tasks and activities. Coaching however, is an attitude or approach to developing people.
As coaches, effective managers of people use the problems and challenges that come up on the job as opportunities to build skills, behaviours and motivation for each individual within their team. A manager with the attitude of a coach, doesn't just solve work problems, they use these opportunities to develop strengths and competencies in their people. If this coaching approach doesn't work with an individual, then the manager has the legitimate right to step into performance management, with no surprises from the individual. - So let's look forward to the time when the annual review and ranking process is gone and is replaced by regular coaching for performance feedback sessions where there is transparency and trust, with the manager focusing the team on improving their performance. A genuine win-win-win, don't you think..? .