The leader’s role in performance management 

Lady with grey hair, wearing glasses, smiling

With all the advancement in technology and our understanding of organisational psychology, the success of the PM process still rests on the quality of relationship between employees and their managers.

That makes leadership skills crucial in delivering on this key driver of organisational success, whether it involves highlighting individuals’ strengths and weaknesses at work, pinpointing opportunities for career development, or providing opportunity to align remuneration policy and practice appropriately to employees’ capability, effort and output.

The key to selling the value of the performance management?

The key to selling the value of the performance management process is the core belief by managers and executives that it is as useful for the employee as it is for the organisation - that better alignment of individual capability, effort and output to organisational success provides shared benefits for all stakeholders.

So, returning to first principles, what should HR and managers consider to overcome the tough challenge of rethinking and repackaging the process? 

  1. Ownership

    The bottom line is that personal and career development is the responsibility of each individual employee: they need to feel ownership both process and of their performance goals, and not feel as though they are being judged or penalised, i.e., “performance managed.” 

    However, it is the manager’s job to get that message across loud and clear, and then - crucially – to keep it alive by taking an active interest in each team member’s progress towards their goals. 

    There really is no such thing as two-way “over”-communication when it comes to empowering employees to own their work experience: if managers don’t follow up regularly and ask meaningful questions, individuals will switch off from the whole performance issue and focus on their “real work,” i.e., the work they most like doing at which they are most proficient. 

    At the same time, embedding performance development into regular catch-up conversations can better enable managers to quantify employees’ progress towards specific targets, and additionally their broader development 

    For HR, the challenge is to dispel that bleak image of performance management as a dreaded chore imposed by them on everyone else. That means understanding and managing the system and facilitating the process to employees and managers alike. It means broader support for managers, especially those newly appointed to people management roles, to help them understand exactly what they are doing and why. And ideally there should be plenty of scope for supporting employees too – with advice on goal identification or training, for example. 

  2. Reward and career development 

    Performance management for its own sake, as a box-ticking exercise to keep HR happy, is understandably seen as an excessive waste of time. Conversely, when it is linked to monetary reward, career progress and other benefits, employees have an obvious incentive to engage with the system.

    However, there is no one-size-fits-all answer to the question of “What’s in it for me?,” because every employee is different, and each organisational will have its own reward culture. The challenge for managers, therefore, is not just to understand and maintain a genuine interest in each person’s individual goals, but also to highlight new opportunities – for example in terms of greater expertise or higher visibility within the organisation – that achieving those goals could bring. 

    There is a growing expectation among businesses that managers and their staff will agree goals and rewards in partnership. Our 2022 Global Talent Trends research shows that people no longer want to work for a company, they want to work with a company. It is a matter of employee empowerment and the mutual benefits increasingly associated with it. If these “contracts” are absent good employees will seek organisations where the performance/reward balance is more attractive to them.

    Of course, the organisation has its strategic targets, which trickle down to shape those of members of staff; but academic studies have shown that employees thrive within their workplace when they participate in setting their own goals. Similarly, rewards, whether financial or less tangible (e.g., promotion or career development), can be adapted according to what each individual hope to achieve. However, they are set, goals and definitions need to be clear, quantifiable, and achievable. 

  3. User-friendly technology

    Given the importance of employees viewing the performance management process as a valuable exercise, rather than as a distraction from other jobs, the technology platform needs to be quick and simple for everyone to use. 

    If performance management is to be embedded as an integral part of daily working life, it also needs to be easy to access. The 2022 Betterworks report into performance enablement found that while a third of employees surveyed said they use performance targets as a daily guide for setting their workplace priorities, more than a fifth have their goals set annually and then never look at them again. A further 16% reported that they have not been set any goals. 

    The report also highlighted the importance to employees of a user-friendly system. Indeed, the data consistently show that in terms of employee engagement and positivity, software that staff do not like or find difficult to use is worse than no software at all. 

    At the other end of the spectrum, HSBC Singapore has taken the notion of easy access a step further, introducing a multi-function app that employees can use 24/7 to track activities, record progress and stay connected with their managers.  

    Performance management enables staff to know how they are doing and managers to know how to reward them; it should be integral to any successful business, yet it still suffers from a terrible image problem. A focus on ownership, purpose and user-friendliness are key elements of a successful makeover.

About the author(s)
Tamara Dzgoeva

Workforce Transformation Director, Mercer

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