Performance Management Systems and Cultural Norms

Organizations are changing dramatically. Everything is about flexibility and agility to adapt quickly and aggressively to changes and new developments. This means that policies, structures, processes, and people need to become more flexible as well. In other words, organizations are changing rapidly, because flexibility and agility are central and crucial to operations.

 

In this context, the ‘line-staff hierarchy’ becomes a ‘matrix- or network structure’, with or without forms of self-organization, functions become roles and employees with a permanent contract work side-by-side, together with colleagues who are temporarily employed. In addition, the traditional way of making agreements (goal setting at the beginning of the year) and appraisal (a year later) start to wring out. And what about the distinction between an interim review meeting, an appraisal meeting, an evaluation meeting, a career development meeting, and other types of conversations that are held between employees and executives?

 

It is no coincidence that ‘the call is made’ more and more to stop and abolish performance appraisals, and that in many organizations initiatives are being launched to promote 'good conversations' between executives and employees, which lead to continuous focus on goals, results, and continuous improvement.

 

Many executives have a hard time with this because how can a 'good conversation' be defined? And what is the role of an executive in a context in which people themselves want and need to take more and more control over their work and life? Moreover, people see each other less and less due to time- and location independent work and the fact that people increasingly work in changing, flexible and 'cross border' teams. Besides that, what can, and should agreements be made about, and what should and can be measured? And how do we encourage people to take control over their own development and performance at work?

 

In the context of these developments, organizations are increasingly confronted with the fact that the classical performance appraisal system of having three conversations during the year (planning meeting, interim review meeting and year-end appraisal meeting) is no longer of this time. In organizations where this system is still being used, it is mostly experienced as a ‘true puppet show’ (they do it only to do, not because they really believe in it). Such a system does not fit for organizations that are in the culture transformation process from directive to servant (coaching and facilitating) leadership. Saying goodbye to this directive style also means that executives will have to manage far less rigidly. From this serving role, executives need to look more closely at the needs of employees and how they can/should respond to these effectively. In such a role, executives do not engage in discussions with employees at a fixed moment in time anymore, but instead they see the performance cycle as a continuous process that needs to be adapted to the needs of the employees and the organization. The role of employees may change over time (is not static), so that there may be a temporary need for support and guidance and executives must respond effectively to this (situational management).

 

In such flexible setting, effective and continuous management of expectations and results by executives is of crucial importance: "What do executives expect from employees, what is the scope of tasks and responsibilities of employees and what support do they expect from the executives? In this context it is important that executives ensure that employees and the team can influence the goals and agreements that are made.

 

Building on what has been stated above, it is a fact that performance appraisal systems similarly influence norms and expectations in ways that go beyond the specific behaviors and/or outcomes they were designed to promote and reinforce in the first place. Research on culture consistently shows that performance appraisal practices that are perceived to be fair promote constructive norms. Appraisal viewed as unfair lead to defensive, particularly passive/defensive, norms.

 

My work with clients also suggests that when members view appraisals as subjective, they tend to report that they are implicitly required to stay on people’s good side and please those in positions of authority (approval and dependence norms). In contrast, appraisal systems that focus exclusively on individual performance can inadvertently promote competitive norms (aggressive/defensive). Important features to consider include team-based systems, which tend to promote humanistic- encouraging and affiliative norms (constructive norms). The aggressive impact can be even greater when appraisal systems require managers to evaluate employee performance along normal distribution, so that the number of employees ranked as poor is equal to the number ranked as excellent.

 

In conclusion, when developing and implementing a new performance management system or when adjusting the current system, it is imperative to use and apply the right set of criteria and guidelines that define and reinforce the desired culture norms for the organization.

 

Source: ‘Creating Constructive Cultures; Leading People and Organizations to Effectively Solve Problems and achieve Goals, by J. L. Szumal and R.A. Cooke.