Having spent a couple of hours describing to us an impressive array of reward and development initiatives planned for this year, the senior HR team from a major multinational had no problem in defining their biggest challenge: performance management.
They are not alone. E-reward will soon release its latest research on the subject. Its previous study found that most organisations, like this large one, had changed their process in the past three years. But most had further reforms planned, a hamster-wheel pattern of change that seems to leave most employers berating the process but still regarding it as a necessary evil.
The latest research by Ed Lawler, distinguished professor of business at the University of Southern California’s Marshall School of Business, found a worrying disengagement from the process by senior management, as well as a slightly negative correlation between effectiveness and the computer systems that most large employers now use.
These employers are correct in terms of its necessity. Research on the links between HR management, corporate performance and employee engagement generally show performance management to be the most powerful single HR component in these relationships, in settings ranging from major corporations to NHS acute hospitals.
But they are also right that most organisations are experiencing major issues in delivering these benefits in practice, with Microsoft’s well-publicised abandonment of its infamous ‘rank-and-yank’ system being just one of many examples. Any consideration of the difficulties of relating pay to performance invariably returns to the lack of decent foundation in performance management
As a regular observer of engagement focus groups in many different employers, the consistency of employees’ responses to the subject in the current climate is overwhelming: ”I can’t work any harder”; ”I feel under more pressure to perform, with less support”, ”I had no say in the objectives set”, and, most depressingly, ”my manager spent my appraisal meeting looking at his computer screen”.
Discussing the way forward at our recent Aon Hewitt seminar on the topic, similar consistency was evident. The early E-reward findings suggest change is already occurring in this direction, with: simplification of what have often become over-complex and over-engineered processes; rebuilding the more forward-looking and development aspects, rather than the review and reward dimensions; reinvesting in line manager training and focusing on what Lynda Grattan, professor of management practice at London Business School, calls two-way ‘conversations that count’.
The large multinational we were with recently talked about ‘rehumanising’ the performance management process. That would be an appropriate, ‘SMART’ annual objective for many HR and reward professionals.