• How to Create an Effective Performance Management System Chapter 1
• How to Integrate Performance Management Chapter 2
• Performance Management in the Information Age Chapter 3

What is an Effective Perofmance Management System?

• An effective performance management system is usually based on ongoing employee coaching: developing action plans to support improvement, setting clear expectations, providing feedback, and having regular check-ins with employees to ensure they are on track and have the resources they need to succeed. It should also be tailored to each individual’s goals and objectives, and to the company’s mission and vision. In this guide we outlined a clear process on how to implement an effective performance management system and coach employees.
  

Chapter 1

How to Create an Effective Performance Management System

An effective performance management system usually consists of the following elements:

– Performance and Development Planning:

You have to give your employees and team members a goal to aim for and a way to clearly measure their progress. To give them more autonomy, sit down with your employee or team member regularly and help them set their development goals. It is common to use SMART goals during this process (here you can learn more about how to create SMART goals and objectives correctly).

It also helps at this stage to discuss how their performance and development goals will help the team or the company as a whole to achieve their mission.

– Ongoing Performance Feedback:

Helping your employees to achieve their performance goals is a little like manually piloting a plane. You may know that you have to get from Atlanta to London, but without a computer to guide you, you have to manually calculate the distance and direction and then keep adjusting as you go. Being even one degree off course over a long period of time will take you somewhere completely different.

But even if you unknowingly start off in the wrong direction, as long as you catch yourself partway through and adjust, you’ll still get there in the end. That’s why ongoing performance feedback and coaching is so vital to helping your employees learn, reach their goals, and measure their progress on the way toward mastery.
Usually this process involves regular 1-on-1 sessions with supervisors.

– Recognition and Celebration:

Once your employee reaches their goal, take a moment to recognize and celebrate their achievement. Ensure your team member has some time to rest and recalibrate. Then sit down with them, agree on some new performance and development goals, and start the performance management process again. Learn more: How to Give Performance Feedback? Techniques and Examples (Star Feedback)

These are not the only components in a successful performance management system; the other factor is you. Indeed research by performance management company Gallup has shown that while performance management processes are important, leaders and mentors remain the most crucial element in developing high performers. In their study of 22 different companies, they found those great managers:

• Focused on employee strengths rather than weaknesses
• Clearly communicated performance standards and what good performance in a role looks like
• Helped employees understand that the purpose of the performance management system was to aid in their development; it was not just an activity required for pay or promotions
• Communicated regularly with their team members on performance expectations, rather than once a year

 

Actionable Steps: Employing Performance Management As A Leader

In Michael Bungay Stanier’s bestseller The Coaching Habit, he sets out a compelling argument for performance management coaching: it creates more time for you to do important work. He notes that if you don’t coach and stick to simply directing your team members, you’ll eventually create over-dependent employees who feel they have to run every little decision past you.

Not only is this disempowering for your team, it will eventually become frustrating for you. There’s no productivity hack in the world that can save you from being simply overwhelmed with work. And if you’re caught up in minutiae and disconnected from the strategic work you need to do, you may find the quality of your own work suffers.

Building a Coaching Habit

Coaching may become your new favorite leadership tool. You’ll not only help to mentor and grow your team, you’ll also save time and free yourself up to do the work you love. And while leaping headfirst into a new leadership style sounds intimidating, it doesn’t have to be. Stanier actually recommends implementing coaching simply as a regular habit integrated into your day-to-day work.

If we draw on Charles Duhigg’s influential book The Power of Habit, this means identifying a clear ‘trigger’ that reminds us when to dedicate a few moments to coaching.

This could be as simple as setting up automated weekly status reports with your team; not only will the status updates keep you up-to-date on what’s happening, you can also see how they’re going, and provide coaching in context.Alternatively, if you run a project-based team, you could use each milestone as a reminder to take each employee aside for a few moments and give them some feedback.

In his book Coaching for Performance, John Whitmore sets out a simple formula:

• if an issue arises and time is the most limiting factor, then the fastest solution will be either handling the issue yourself or giving an employee precise directions on what to do.However,
• if the most important factor is consistently delivering a quality result, then coaching is the best approach, because over the long-term it will help to develop your employees’ performance, engagement, responsibility, and awareness.

So now you know the why and the when of implementing performance management coaching. Now let’s get to the how:

• 1) Develop your Coaching Mindset

  If Hollywood movies are to be believed, then coaches can get away with playing motivational music and muttering cryptic sayings. Unfortunately, life rarely resembles Hollywood movies. We can, however, draw inspiration from the father of modern coaching techniques, Harvard educationalist and sports expert Timothy Gallway.

  Between 1974 to 2009, Gallway wrote a number of classic bestsellers, including The Inner Game of Tennis. What continues to captivate millions of readers is the way he describes the real challenge of performance as ‘inner game’ within player’s heads. Gallway’s view is ‘the opponent within one’s own head is more formidable than the one on the other side of the net.’

  We can see evidence of this when players lose their temper and subsequently lose a match, or when people panic and ‘choke’.

   

  We all know that their well-trained bodies are perfectly capable of making the jump or delivering the speech they’ve practiced hundreds of times. It’s mental barriers holding them back.

  It’s not that different in business. In Coaching for Performance, Whitmore observes that for knowledge and learning workers,
  “One of the largest blocks is fear of failure, lack of confidence, self-doubt, and lack of self-belief.”
  These are the inner opponents within our heads and our employees, and their influence cannot be underestimated. Closer to home, you might recognize your inner opponent when you find yourself hesitating to speak up in important meetings, or feeling like you don’t have the experience to put your hand up for exciting overseas projects.

  Once we understand that coaching is about helping our employees face these mental challenges, we can develop the right mindset and environment to help our team members grow throughout the performance management cycle.

   

  After all, as Whitmore notes,

  “Coaching is not merely a technique to be wheeled out and rigidly applied in certain prescribed circumstances. It is a way of managing, a way of treating people, a way of thinking a way of being.”

• 2) Agree on a Personal Development Plan

  The right mindset is seeing your employees’ hidden potential and committing to unleashing it. The right environment is one with honest and open communication and clear expectations throughout the performance management cycle. You can create both with clear performance and development planning: this is where you sit down with each team member and have an open and honest discussion about how they want to develop. If you don’t know where to start, you can get the ball rolling by discussing skills they want to master, or weaknesses they want to turn into strengths.
  Once they have a list, go through it together and discuss which ones fit best with their current role and team, and which ones they’d like to focus on over the next few months. Try to limit it to a maximum of two or three goals for each period, so they can concentrate on them fully.Then you can discuss how to reach each goal through targeted SMART performance goals,
  .

  –Specific
  –Measurable
  –Agreed upon
  –Realistic
  –Time-Based
  

  If it’s appropriate, you can also discuss development-related rewards for reaching these goals. Remember, while monetary or carrot-and-stick rewards and punishments don’t work for knowledge or learning workers, you can still use rewards linked to the three drives: autonomy, purpose, and mastery (more on this in Chapters 2 and 3).

  
  Here’s an example of how you might discuss and set development and performance goals with a team member who is a social media specialist:

“We will have monthly one-on-one meetings to check in on your progress and current numbers, and decide if we need to tweak the content or strategy.”

Steps	Example
1. Discuss role models	Role models: Seth Godin (for his short but insightful blog posts), Ann Hadley (for her sense of voice and great tweets)
2. Write down a list of development goals and choose 2 or 3	List of development goals/skills: Master writing short blog posts, learn how to make video content, learn Instagram, become a Twitter specialist, found a blog, write an eBook, grow personal brand   Development goals: Master writing short blog posts under 800 words. Become the team’s main Twitter specialist
3. Agree on a performance goal that aligns with the employee’s role and matches their development goals	Increase social media and online engagement by 20% by 23 December through short blog posts and tweeting
4. Help your employee understand how the goal fits into the company’s broader mission	Increased social media engagement and sharing our mission will increase brand awareness and customer loyalty
5. Agree on the best way to measure progress	Progress is measured as -the number of reads on company blog posts -an increase in the number of Twitter followers, and -an increase in the number of shares of social media posts
6. Discuss and agree on possible actions they can take to reach the goal	To achieve the desired result, the employee shall: -Develop 3-5 tweets per day -Write 2-3 short but engaging posts for the company blog every week -Submit 1-2 short articles every month as a guest blogger or to industry news sites or journals
7. Discuss and agree on what success looks like	By the end of the year: -Your blog posts will have averaged over 200 views each -The company’s Twitter account will grow by over 2,500 followers -Your tweets will have achieved over an average of 50 shares
8. Discuss and agree how much support they need and when to provide it	We will have monthly one-on-one meetings to check in on your progress and current numbers, and decide if we need to tweak the content or strategy
9. Reward or Recognition based on the three drives (autonomy, purpose, mastery)	If you achieve these targets, then you can direct the company’s next main Twitter campaign

 

That’s a solid result for a short performance and development planning session. But you might think the above section is missing something: What happens if your employees don’t reach their goals? Shouldn’t there be a punishment?
We’re trying to create a safe environment to help employees learn and grow into exceptional team members who will use their experience and creative problem-solving skills to do great work. If your employees are not doing their jobs or are incompetent, that’s another matter. But punishing employees for trying and failing will undo all your hard work in committing to a performance management process aimed at getting them to experiment and learn.
.
Focus instead on helping them to plan crystal-clear and measurable development and performance goals, and then providing ongoing performance feedback and support to help them get there.

• 3) Coaching for Performance Management

  Tim Grover, the specialist trainer used by top athletes such as Michael Jordan and Kobe Bryant, provides an excellent example of how ongoing feedback can build incredible results in his book Relentless: From Good to Great to Unstoppable.
  .

  Years ago, I went with Michael to an FBI training facility where there’s a practice range for the most elite sharpshooters in the world. There’s one guy out there alone, practicing his craft, over and over. The target is four hundred yards away – four football fields. He has to get in his truck, drive to the target, set it up, and drive back to where we’re standing. He gets his gun with the scope, takes aim, one shot – foom – we didn’t even hear it go. Then we get in the truck with him and drive back to the target… We would have been impressed if he’d hit the target anywhere. Four hundred yards. Dead center.

  Four hundred yards is around 365 meters. By any means, that’s an impressive shot. But what struck us more is the process that this sharpshooter uses to keep improving. Every time he makes that shot, he gets in a truck, drives to the target, and pinpoints exactly where he hit. Only then does he go back and try again. He doesn’t just stay in his position and keep taking shots.
  .

  That’s because he needs the ongoing feedback to improve.
  .

  He needs to know exactly what happens when he takes the shot a certain way, and he has to know it as soon as possible after he’s made the shot so he can learn from it and adjust. If he shoots this way, does it still hit the center? What happens when he has to compensate for different conditions? How can he do this faster? To keep improving, he absolutely has to have the ongoing feedback of knowing exactly where his shots landed.
  .

  That’s your job as a performance management coach
  .

  To help your team members understand the results of their actions, and how they need to improve and adjust to hit the target. But in your case, what you’re struggling with isn’t something measurable like distance or wind direction, it’s the inner fears and doubts of someone’s mind.
  .

  So you have to start with two key steps: asking the right questions to understand what’s going on, and then providing tailored and ongoing feedback.
  .

  ---

  .

  Asking the Right Questions

  .
  In The Coaching Habit, Stanier sets out the way he’s trained over 10,000 busy managers to coach their team members in under ten minutes during day-to-day work. You’re off to a good start since you’ve both already agreed on a clear plan to achieve those performance and development goals. The focus now is on helping them to overcome the challenges along the way or to reorient when they’re feeling lost. That means you have to take the time to regularly touch base and see how they’re going.
  .

  It’s not enough just to ask them how they are, however. Instead, ask open but targeted questions to help them identify anything they’re struggling with and what support or feedback they need. Use questions that spark critical thinking and create learning opportunities, such as: “What’s the real challenge here for you? What tools or assistance do you want to overcome this challenge?” And then, after a goal has been reached or a deadline has passed, “What was most useful to you? What did you learn?”
  Stanier sets out his 10 favorite key questions in The Coaching Habit, but he collects others on his website here. Go through them and choose the questions that feel right to you. You can also use a communication and performance management tool like Status to narrow down on some of these questions and remind yourself to regularly keep checking in.

  ---

  .

  Giving Ongoing Performance Management Feedback
  .

  As your team member hits certain milestones or continues to struggle, ongoing performance management feedback becomes increasingly important to help them know specifically what they are doing right, and how to adjust if they need to reorient themselves.
  .
  For a deep dive into how to give performance feedback, have a look at our guide on performance feedback examples here. Then take the time to set up a ‘trigger’ to remind you to provide feedback, such as commenting on your team’s daily or weekly reports when they land in your inbox.

   

  Of course, one of the most crucial times to provide performance feedback is when a goal has been achieved or missed. If it’s been achieved, you can head right to step 4. But if your team members miss their goals the first time around, review with them what happened. Let them reflect on what they think went well, what went wrong, and what they could have done better. Then if you both agree, they might try again and implement a new plan using what they’ve learned. That’s growth.

• 4) Recognition and Celebration

  Once your team members have reached their goals, take a moment to recognize their achievement and celebrate their hard work and development. You may or may not have an appropriate development-related reward in your plan – that’s fine. As Daniel Pink notes in Drive, external rewards (if they’re not linked meaningfully to the goal itself), particularly monetary rewards, can actually work to decrease people’s inner drives because they send the message that the work isn’t actually related to autonomy, purpose or mastery.

  But never underestimate the power of recognition, positive feedback, and social celebration. That’s all part of the glue that binds teams together, builds trust in each other’s competence, and helps with the strong relationships needed to pull through difficult challenges.

• 5) Repeat: The Performance Management Cycle

  The performance management process is ultimately a cycle of excellence. Each time you go around the cycle, you help your employees to build and grow. While each employee’s individual performance management cycle should look different and be personalized to them, you will find that as you repeat the process, you’ll become a better leader each time, leading a stronger team.

  So that’s how to use performance management as a team leader. But as we (and the experts) have noted time and time again, there is only so much you can do as an individual. That’s why in the next and final chapter, we’ll explore how to create a company culture and environment integrating and supporting your new performance management cycle and system.

 

Chapter 2

Build for Success: How to Integrate Performance Management into Your Company’s DNA

Like any process in your company, for success, performance management must be supported from the top down and grassroots level. In particular, it needs three main components:

1. Deep involvement and participation from management
2. A clearly defined mission, vision, and values
3. Creating a culture of open and transparent communication

Let’s look at each of these in more detail.

 

1. Deep Involvement and Participation from Management

   
   As anyone who has ever touched change management knows, change is an incredibly slow and difficult process. It’s human to resist change or to question why it’s needed, especially if it is a change that ultimately encourages high performance. That’s why it’s essential to have deep involvement, participation and support from top management to establish a performance management culture in the company. This is particularly the case because it’s so easy to be skeptical of performance management and coaching. After all, the clunky HR processes that everyone hates have always promised to deliver better performance as well.

   So what makes this different?

   However you decide to deliver the change, everyone has to be consistent with the answer to that question, from the executive and senior leadership team down to each individual team leader. We know how each team leader can implement performance management, but they also in turn need to be supported by the senior leadership team.

   As champions of the performance management system, top-level managers should be the first ones to understand how the system will work, spread the message, and lead by example. Here are a few action points to get started:

   
   A) Learn More:

   Pick up some of the great books and articles we’ve referred to throughout this guide. Explore other evidence-backed materials and courses out there on performance management and coaching for knowledge workers. This is the future and performance of your company we’re talking about, so if you choose wisely, you’re looking at a great return on investment. You can also implement performance management tools and systems so that people share their learning and help to convert any members of your senior or executive team who are still skeptical.

   B) Communicate a Clear and Consistent Message on Performance Management:

   You no longer want to work alone – you want to work with high-performing teams to build a high-performing company. Share that message and passion with your employees. Make sure that other members of your leadership team are also emphasizing the need for continuous improvement and the importance of investing time in performance management. Because it is an investment – a worthy one – and one your company will likely see the returns on in the years to come.

   C) Lead by Example:

   Start implementing the performance management system with your own senior team. Build learning how to coach into their development goals and check in on their progress. And don’t neglect yourself! Find your own mentor, coach or Mastermind group and keep track of your own development goals. If you feel comfortable, share your progress with the company as proof that you’re truly leading by example, and share your knowledge and learning.

2. A Clearly Defined Mission, Vision, and Values

   
   We know that one of the great internal drives for knowledge and learning workers is purpose. That means that you need to consistently and clearly define and communicate your company’s mission, vision, and values. You can do this through a number of ways, including:

   A)

   Ensuring your team leaders relate employees’ individual development and performance goals to the company’s broader mission, vision, and values.

   B)

   Being consistent with messaging on your company’s mission, vision and values, both inwardly and outwardly across social media, blogs, the company intranet, and other communication tools such as ProsperForms.

   C)

   Consciously relating your actions and decisions to your company’s mission, vision, and values. This helps to tell a story about your company and what you stand for, and how it relates to everything you do. Not only is this powerful (and necessary) externally from a branding perspective, it will provide a model for your employees to gradually develop their own way to align their work with the company’s mission, vision, and values.
   (Learn more: How to Create Company Mission, Values and Vision Statements?)

3. Creating a Culture of Open and Transparent Communication

   
   Without a question, the entire performance management system depends on open and transparent communication. This is because you need trust and a safe environment before people feel comfortable enough to receive development and performance feedback and use it to break past their internal barriers.

   On top of this, as James Kouzes and Barry Poster point out in The Leadership Challenge, open and transparent communication provides many other performance benefits. Firstly, employees can’t act with autonomy for the company’s benefit or feel ownership and drive toward working towards the company’s goals without having a fundamental understanding of how the company works. Secondly, as they point out:

   Competence is a vital component of trust and confidence in a leader. One way to demonstrate this is to share what you know and encourage others to do the same. So sharing knowledge and information is incredibly important. Trust among team members goes up when knowledge and information shared, and performance increases as a result. It also means that if you show a willingness to trust others with information they will also share and grow.

    

   So here are some ways you can create this environment:

    

   A)

   Let your employees know what’s happening in the company. Breakdown data silos and encourage interdepartmental communication. Share operational figures and data and explain how they measure the company’s progress towards its goals. Share both good news and bad news in a way that empowers them and treats them as equals who are similarly invested in your company’s mission, vision, and values.

   B)

   Employ grassroots performance management by encouraging your employees to provide feedback and suggestions on how the company’s going and how it can improve.

   C)

   When you’re making a decision that will directly affect your team, if time is on your side, then take the opportunity to consult with them first. Give them ownership of the situation by letting them participate in the decision-making process and offering their insights, opinions, and suggestions. If the decision is urgent, explain to them as soon as you can what is happening and the reasons behind your decision. And then invite your team members to contribute to a post-decision or project review.

The Three Drives Behind Digital Age Performance Management Systems

In his book Drive, Daniel Pink sets out a science-backed solution. Firstly, it’s important to compensate people more than enough to make them feel safe and treated fairly. This creates an environment where they can start devoting their energy and mind to thinking about their work rather than worrying about money. Once you’ve achieved this step, you can focus on the three main factors proven to drive both performance and employee engagement: autonomy, purpose, and mastery.
Here’s a quick look at each of them in the context of a company:

• Autonomy

  Is the level of freedom employees have to direct themselves at work. This could range from employees having more control over the projects they choose, or simply having a voice in how they go about solving problems or doing the tasks assigned to them.

• Purpose

  Can be split into two categories: narrow and broad purpose. A narrow purpose might be to achieve a specific goal, such as contacting five new customer groups by the end of the week. In contrast, a broad purpose is a bigger picture goal, such as your company’s mission statement or vision.

• Mastery

  Is probably the most recognizable drive out of the three factors. We see it in professional sports players who wake up every day at 5 am to start training. We see it in well-respected specialist surgeons who have worked their way up from studying medical textbooks to performing intricate surgeries. The drive to learn and master something is intrinsic, human, and incredibly powerful.

If these three drives look familiar, it’s because you’ve probably seen them before in a different context. We’ve explored before (in our Ultimate Guide to Boosting Culture and Performance through Daily and Weekly Reports) how one of the most powerful ways to engage and motivate your employees is to help them understand how their daily ‘narrow purpose’ goals and tasks are linked with the company’s ‘broad purpose’ mission and goals. (Click here to read more about setting goals correctly and here to learn how to create company’s mission and vision statements.) And the popular concept of servant leadership is all about empowering and developing your team to be the best they can be. As James Kouzes and Barry Poster state in their classic book The Leadership Challenge:

No leader has ever gotten anything extraordinary done by working solo. A grand dream doesn’t become a significant reality through the actions of a single person. It requires a team effort, it requires solid trust and strong relationships, it requires group collaboration and individual accountability.

So how do you harness these drives to grow your company or team?

It’s actually both simpler and harder than you might think. Simpler, because it doesn’t require huge investment in a complex HR system that everyone needs training to understand. Harder, because it relies so heavily upon your leadership and continued engagement with the performance management process. As Pink states in his interview with the Harvard Business Review:

“What managers can do is not develop elaborate incentive schemes, but help people recognize their progress, shine a light on that progress, recognize it in front of other people, celebrate that progress, help people stay on a path toward making progress.”

Chapter 3

 

Performance Management in the Information Age

The term ‘knowledge worker’ was coined in 1959 by the father of modern management, Peter Drucker, who looked at the mostly manual workers of his age and predicted a new class of employees who worked with knowledge and information. In his 1966 book The Effective Executive, Drucker states:

Every knowledge worker in a modern organization is an ‘executive’ if, by virtue of his position or knowledge, he is responsible for a contribution that materially affects the capacity of the organization to perform and to obtain results.

Think for a moment about how many members of your company or your team fall into that category. In today’s world, the chances are that your numbers are very high. In most developed countries, the Information Age and the Fourth Industrial Revolution has led to a number of knowledge workers outstripping nearly every other category of worker.

And while some now argue that knowledge workers themselves are being threatened by artificial intelligence and automation and will soon be replaced by the ‘learning worker’, both the knowledge worker and learning worker share one thing in common: they mostly do conceptual work requiring creativity and problem-solving skills.

And this is a problem for traditional performance management systems.

Why?

Because of traditional performance management systems, whether they’re focused on accountability or development, both use a carrot-or-stick approach toward motivation and performance. Good performers get bonuses and pay raises. Poor performers miss out on bonuses and are fired or put on notice.

This used to work very well for the majority of workers engaged in easily measurable and repetitive tasks. Unfortunately, it’s not so great for knowledge and learning workers. In fact, it’s downright detrimental. In his book Drive, Daniel Pink identifies our three main drives.

• The first, biological drive ensures that we eat, drink and sleep.
• The second drive makes us respond to rewards and punishments.
• The third drive motivates us to work because of broader factors such as interest, fun, and the feeling of contributing.

Pink explains in Drive that using rewards and punishments to engage the second drive works fantastically well for easily measurable tasks, such as turning a screw or adding up columns of figures. However, for more conceptual work that requires creativity, problem-solving and big picture thinking, using rewards and punishments actually makes people underperform. This staggering, troubling result is demonstrated in the following study.

Dan Ariely, a behavioral economist and author of Predictably Irrational, set up an experiment where he split 87 participants in rural India into three groups. Each group was told they would receive a bonus if they performed exceptionally well on a number of cognitive and problem-solving tasks.

• The first group was told they could receive a small bonus, roughly one day’s wage in rural India.
• The second group was told they could receive a medium-sized bonus of around two weeks’ pay.
• And the third group was told they could receive a large bonus of approximately five months’ pay.

Common wisdom tells us that we’d expect the first group to perform well, the second group to perform even better, and the third group to hit it out of the park. After all, earning five months’ pay in one day’s work would be incredibly motivating for anyone!

But that’s not what happened.

Instead, Ariely found that the second group performed no better than the first. And the third group who were offered the most tantalizing bonus actually did the worst out of all three groups.

Shocked, Ariely replicated the study at the Massachusetts Institute of Technology, where he also included tasks involving more mechanical, routine skills. Again, he found that offering higher bonuses led to a poorer performance on cognitive tasks. It was only when subjects faced mechanical and easily measurable tasks, such as tapping a key as fast as possible, that their performance increased in line with the size of the offered bonus.

If you imagine performance management as a spectrum, then at one end of that spectrum is a laser-like focus on accountability.

Performance management systems focused on accountability seek to identify and reward good performers and punish or fire bad performers. As such, they tend to involve ranking employees or assigning performance ratings, as well as monetary rewards and disciplinary measures.

At the other end of the spectrum is an emphasis on developing and using performance management to grow employees and make them better workers and leaders.

Performance management systems focused on development tend to concentrate more on setting meaningful goals and coaching employees on their progress and may also include monetary rewards for excellent performers.

Historically, the pendulum has often swung between these two extremes depending on economic and social context. Taking a quick look at the evolution of this debate shines a light on where we’ve come from and where we’re going.

The modern performance management system was born out of World War I and World War II, when the US military developed rating systems to identify poor performers to dismiss and good performers who could potentially become officers. This system was swiftly adopted by companies to measure employee performance and allocate rewards. However, when circumstances changed, using performance management to develop people to lead and grow became more important.

For example, whenever there is a shortage of talent, companies are forced to adapt and focus on development. But when there is an abundance of human capital or other pressures such as inflation rates, the focus in performance management shifts back to accountability.

You can the ebb and flow of this debate in the number of companies who have or are beginning to move away from the once hallowed tradition of annual performance reviews and rankings to ongoing performance feedback aimed at developing their employees.

Interestingly, many companies who tried abandoning performance ratings recently, such as Deloitte and PwC, have actually reinstated them. They now walk a delicate balance between both ranking for accountability and emphasizing performance feedback and development.

You can read more about the fascinating history of performance management in the Harvard Business Review article The Performance Management Revolution.

 

In John Whitmore’s book Coaching for Performance, he tells the story of Joe Gough, a British Royal Navy trainer for the Fleet Air Arm competition team. In 1990, Gough attended Whitmore’s performance coaching course before his team entered the Royal Tournament and the Field Gun Race. Just one glance at the Field Gun Race’s notorious record explains why Gough might have been looking for help.
The Field Gun Race has been described as ‘the toughest team competition in the world,’ requiring ‘immense strength, fitness, precision and teamwork’ to coordinate 16 men dragging heavy military equipment through a brutal obstacle course.

Whitmore reports that Gough was skeptical of performance coaching. It seemed very… soft compared to the military command-and-control leadership style he was used to. Nevertheless, he saw potential in it for his team during 9 weeks of getting ready for the competition. So he tried it. The results speak for themselves: for the first time in the 100-year history of the competition, Gough’s team won all five of the event’s trophies. Even more impressively, they did so while sustaining record low numbers of injuries during both training and competition. When he was asked to how they’d managed this incredible achievement, this is what he said:

“The way we did it before, we had one brain, and sixteen bodies. Now we used seventeen brains.”

In his study of over 3,000 executives, psychologist Daniel Goleman found that coaching was the most underutilized style of leadership. Goleman’s study also found that coaching had a ‘markedly positive’ impact on the company’s performance, culture and bottom line.

Many years have passed since Goleman published his findings in the classic Harvard Business Review article: Leadership that Gets Results. But not much has changed. We still face a high-pressure economy, and not enough time for everything. What has changed is our increasing understanding of the importance of performance management, and of how nebulous factors such as company culture and employee engagement can impact our bottom line. And with this understanding, if you don’t take time during your day to manage and empower your employees, then you are choosing to rely on your one brain, rather than the five or thirty or two hundred brains that you might be able to draw on.

Like many things, integrating performance management into your company is deceptively simple and hard to execute. After all, it takes a lot to build a high-performance company in any circumstances. Today, we’re blessed with numerous opportunities, knowledge and performance management tools, but also face an incredibly competitive market and global challenges ranging from automation to climate change.

In the face of these challenges, it’s important to keep coming back to that big question that could make or break you: when you wake up and go to work, are you working alone today, or are you working with your team?

We hope that this guide has helped you with the answer to that question. At Status.net, we are truly passionate about helping great companies do great things through fostering communication and collaboration. That’s why we put together this guide. We hope it helps you in your journey.

Read more:

How to Give Performance Feedback? Techniques and Examples (Positive, Negative, STAR Feedback)

How to Identify and Handle Employee Underperformance? 5 Proven Steps

One on One Check-ins: Actionable Techniques and Best Practices

What Is Active Listening? (Examples, How-to’s, Best Practices)

How to Set Goals and Objectives Correctly?

How to Create Company Mission, Values and Vision Statements? (Difference Explained)


Click here to check the most extensive collection of performance feedback examples – 2000+ Performance Review Phrases: The Complete List

 

• How to Write an Effective Performance Review (Essential Steps)
• Job Knowledge Performance Review Phrases (Examples)
• 28 Essential Areas of Improvement for Employees [Examples]
• 100 Performance Review Phrases for Job Knowledge, Judgment, Listening Skills
• Management Styles Interview Questions [Example Answers]
• Quantity Of Work Examples For Performance Reviews (Full Guide)
  The Roadmap to Effective External Communication and Stakeholder Relations