In the previous post, I endorsed a recent article in the Sunday Times, which pointed to a number of flaws in the widespread practice of linking individuals’ pay to their perceived performance.
In addition to the problems identified in the article, I called into question the fundamental premise on which performance-related pay is based. That is, that direct relationships can readily be established between organizational outcomes and the decisions and actions of specific individuals. The complex social dynamics of organization make such links impossible to establish. In other words, it is simply not possible to isolate the effects that the intentions and contributions of a particular individual have on organizational performance.
So the challenge to target setting and performance-based rewards for individuals can be made on two fronts:
- First in relation to the supposed effect that these have on an individual's tendency to work more effectively than he or she might otherwise do (that is, the proposition that targets increase motivation, focus effort, and enhance accountability).
- Secondly, as regards the complex social dynamics of organization that inseparably intertwine the intentions, interactions and contributions of those we are seeking to appraise with the intentions, interactions and contributions of all other participants – both ‘within’ the formal boundaries of the organization and ‘beyond’. These dynamics render the notion of cause and effect meaningless in relation to the effect that individuals' contributions have on organizational outcomes.
Responding to these two challenges has significant implications for leadership practice.
As regards the underlying dynamics of organization, the inability to predict, choose and control outcomes calls into question many of the taken-for-granted assumptions that underpin management orthodoxy. These issues are dealt with extensively in Informal Coalitions (the book) and explored further throughout this blog.
Here, though, I want to focus on the supposedly ‘performance enhancing’ assumptions that are woven into the fabric of conventional, target-based ‘performance-management’ processes and practices. In particular, I want to contrast these assumptions with those implicit in leadership practices which take people's willingness to contribute and desire to perform well as a 'given'. This shifts attention away from the imposition and monitoring of targets and controls. It focuses instead on seeking to enable people to perform at their best in relation to the challenges that they face, as the gritty reality of day-to-day demands takes over from the idealized planning assumptions.
A number of these contrasting assumptions are set out below.
( 1) Conventional performance management (C) … starts by looking at what can easily be measured and included in “scorecards”.
In contrast, Enabling leadership (E) … starts by understanding the business and the underlying dynamics of performance.
( 2) C … believes that managers need to ‘push’ staff to perform, using the 'carrots and sticks' of supposedly objective targets and performance appraisals, in the belief that what gets measured gets done.
E … maintains high expectations of people’s willingness and ability to contribute (and sees ‘carrots’ as cleverly disguised ‘sticks’): what is meaningful gets done.
( 3) C … believes that performance outcomes can be planned, predicted and controlled – by ‘doing things better and getting them right’, using rational management approaches.
E … recognizes the complex social dynamics of organizations – messiness, informality, spontaneity and emergence mean that managers are both in control (“in charge”) and yet not in control at the same time.
( 4) C … requires individuals to meet specific, pre-determined outcome targets (based on already out-of-date planning assumptions).
E … works to enable people to perform at their best in the light of the day-to-day challenges that actually emerge.
( 5) C … demands compliance with rigid ‘performance management’ processes and procedures, which are meant to align people’s roles and responsibilities to the pre-defined needs of the organization.
E … encourages, assists and enable personal response-ability - i.e. people’s ability to anticipate and respond to events without seeking permission, and to continually grow their contributions in line with their developing capabilities and emerging challenges.
( 6) C … equates accountability with notions such as answerability, blameworthiness and liability; often as a ‘stick’ with which to beat people if things go wrong.
E … sees account-ability as the ability to account for what’s going on, in an informed and insightful way, as a basis for joint sense-making, collaborative problem solving and ongoing improvement.
( 7) C … pursues a one-size-fits-all approach (e.g. common processes, timescales and ‘scripts’; competency frameworks; etc) even in a world that advocates the benefits of diversity.
E … encourages and values diversity, in the broadest (not simply ‘demographic’) sense - working to make full use of the talents that are available, by discriminating between people according to their differing needs and prevailing circumstances.
( 8) C … sees performance management as a once- or twice-a-year, set-piece, ‘boss-subordinate’, and externally monitored event.
E … sees ‘performance management’ as an ongoing conversation between managers, staff and their colleagues, punctuated by periodic framing, stock-taking and joint problem-solving events (i.e. open play’ as well as ‘set-pieces’).
( 9) C … focuses on evaluating ‘people performance’ as the route to improved organizational performance; rewarding or punishing individuals for their good or poor performance, as judged by others.
E …focuses on improving the overall ‘performance package’ – primarily enabling people to self-manage and improve their own contributions, both individually and collectively.
(10) C … uses measurement judgementally – providing information ‘upwards’ to rate, reward and/or punish individuals and teams.
E … uses measurement to provide enabling information to individuals and teams themselves - as an aid to problem-solving, improvement and capability development locally.
(11) C … can encourage gaming and ‘spin’, to meet the targets and secure the related rewards – irrespective of business impact.
E … encourages openness and candour, to expose process weaknesses, poor practices etc as potential sources of learning and improvement.
(12) C … sees applying judgement (Yes/No, Good/Bad, Succeed/Fail) as the purpose of the process.
E … sees facilitating movement (shifting thinking and practice) as the purpose of the process.
Most managers would say that they and others in their organizations invest large amounts of time, energy and money in recruiting people. They believe these people to be the best available for the job. That is, people who are sufficiently talented, motivated and ‘tuned in’ to meet the challenges that they are likely to face – whatever their job happens to be. Further time, effort and money then continue to be invested in the ongoing development of those people.
Given this, why is it that they believe that people will only perform to their full potential if targets are set for them. And if they and their managers are compelled to comply with the other formal trappings of conventional performance management practice?
Previous posts on related topics: