Leadership Development: Performance Management
Does Performance Management Perform?
Most large organisations utilise comprehensive performance management systems, and invest resources in teaching managers how to manage the performance of their teams. But there are very many flavours of performance management. Is it possible to tell what works, and what doesn’t? HFL’s Alistair Gordon searches for an answer.
In February this year, a prospective client – a Human Resources Director at a large FMCG organisation – asked us pertinent question: “How can I prove to the senior leadership team that investments in properly targeted leadership development projects deliver positive business outcomes?” It’s a great question, and remarkably, one we rarely get asked.
There is a great deal of research out in the ether about how such initiatives produce outcomes, and to varying degrees consultancies like ours quote them. Some sound very promising. One study found “Executive coaching delivered an ROI – return on investment – of 503% over 12 months”, but unfortunately this study turned out to be of 50 coachees at one organisation. Another talks about behavioural change following a workshop, and so on.
Delivering positive business outcomes is difficult and expensive to measure if we are to apply shareholder value and the like into the equation; but there is a simpler way— take a look at the performance management system and see if key measures are improving.
An authentic study
Our search for a definitive answer to our prospective client’s question led us to a study which we think has high relevance and authenticity. It was a study conducted almost eight years ago (in 2002) by the Corporate Leadership Council (a US based Council with broad international membership). The study, titled ‘Building the High Performance Workforce’, aimed to identify strategies that contribute most to the development of a high performance workforce.
It is their methodology, and the breadth of the study that appeals. In simple terms, the research team first compiled a list of 106 strategies that have been deployed by organisations to improve workforce performance. They then enlisted the participation of a large group of companies from all industry sectors, and conducted two surveys. First, they surveyed over 19,000 individual employees, asking them whether or not they had had any of the 106 strategies applied to them, and if so, how regularly. They then took the company-supplied performance data and graded every one of those surveyed by performance – breaking them into performance percentiles. The researchers then investigated which performance strategies were most prevalent in the higher performing percentiles, and considered whether there were clear trend results.
After a great deal of complicated analysis, the researchers categorised each of the 106 strategies according to their effectiveness. They then grouped these strategies into four groups according to the level of positive impact they have. A-level performance drivers have a 25% or greater positive impact on performance. D-level performance drivers have 0% or less positive impact (i.e. they often have a negative impact).
The study found 9 performance management strategies that were A-level. These included:
- Ensuring managers provided fair and accurate feedback to employees
- Risk taking
- Emphasis in formal reviews on performance strengths
- Employee understanding of performance standards
- Internal communication
- Ensuring managers remain knowledgeable about their employees’ performance
- Providing opportunities for employees to work on things that they do best
- Ensuring feedback from the manager is given to assist the employee in doing their job better
- Providing opportunities to work for a strong executive team.
It all seems like leadership 101, of course. If an organisation can get their leaders to execute these performance strategies consistently, they’ll achieve a significant improvement in the performance of their workforce. However, like many other leadership consultancies, HFL is in business precisely because most managers can’t execute successfully in these areas (or don’t realise they ought to).
The conclusions we draw out of this data are simple
Firstly, it’s less about the performance system, and much more about the performance conversations held day by day with employees.
Secondly, if our leadership development initiatives focus on these types of strategies, and how individual leaders can become highly proficient at executing them, then it stands to reason that leadership development activities can have a significant impact on business outcomes. More work gets done by fewer staff who are highly motivated, understand what performance is required, and are good at their jobs. All good news.
Having provided this research to our prospective client, HFL won the assignment. The even better news, from the client’s perspective, is that the HRD and the executive team now know what success looks like. So HFL had better deliver!
For more information about the products and services HFL offers, please contact:
Simon Brown – Director of Client Relationships, Sydney 02 9927 3014
Katelijne Pee – Director of Client Relationships, Melbourne 03 8648 6490