How to review employee performance

When the marketing executive, a seasoned professional with 20 years’ experience, came back from her lunch break 15 minutes late, she was stunned to find herself being rebuked by her manager in front of her colleagues. When she countered that she had worked an extra two hours earlier in the week, she was ordered into her boss’s office where she was told there was nothing special about her working late – all her colleagues did it – and that her “outburst” was typical of someone who had never been a team player.

The relationship between the executive and her boss, never close, soured until finally she was informed, in the presence of the company’s human resources director, that she was to be “performance-managed” and was issued with a set of performance indicators by which she would be appraised. As well as having to endure the overbearing scrutiny of her manager, the marketing executive was humiliated when her colleagues were asked to contribute to a “360 degree” assessment of their co-worker.

The besieged executive was horrified to learn that her colleagues believed her to be arrogant, aloof and not a team player. She now surmises that her fair-weather colleagues could see who the winner and loser of this bitter ordeal was going to be, and they nailed their colours to the mast accordingly.

This was the last straw for the executive, who resigned before the performance-management process had run its course. “This was a tight-knit group and I was new to the team, and I wasn’t one for long nights at the pub after work because I had a family to get home to, but it never occurred to me that I was on the outer to that extent,” she says. “Suddenly my behaviour, my loyalty and even the quality of my work was being questioned.”

Culture shift on its way

Performance management is a one-on-one process between manager and staff member to overcome poor performance, non-compliance with workplace policies or unacceptable behaviour in the workplace. Employees are monitored as they work towards agreed goals and indicators, including regular “performance discussions”, but critics argue that the process amounts to “glorified bullying”.

Funny they should say that. From January 1, amendments to the Fair Work Act will include provisions against workplace bullying,but not before employers successfully lobbied the previous government to ensure that “reasonable management action carried out in a reasonable manner”, including performance management, was excluded from the definition.

What constitutes “reasonable” remains to be tested, but workplace lawyers and consultants agree that poorly conducted performance-management relationships can resemble workplace bullying, the definition of which hinges on “unreasonable behaviour directed towards a worker, or a group of workers, that creates a risk to their health and safety”. The Fair Work Ombudsman has even thought it prudent to issue a “best practice guide [for] managing underperformance” to ensure that lines aren’t blurred.

Question your motives

Most companies have at least one performance-management horror story. Peter Holland, associate professor of human resources management at Monash University in Melbourne, has heard many of them – and happy endings are rare. “If you want to damage an organisation, performance management will do it almost every time,” he says. “Managers seem to think it’s a disciplinary process; they see it as an opportunity to attack or undermine an employee. It’s a vindictive, targeting measure which managers use as a way to beat an employee over the head and they don’t quite appreciate the damage that it does to the rest of the organisation.”
In the example above, the manager and his team members used the process to gang up on an unpopular colleague, but Holland says poorly handled performance management usually alienates employees who feel threatened when a colleague is singled out. Performance management is ostensibly a process aimed at rehabilitating a team member whose performance or behaviour has slipped, but a skittish workplace, feeling the pressure of cutbacks and demands for greater productivity, may fail to see such interventions as positive.

According to a report by the Australian Psychological Society, Stress and Wellbeing in Australia Survey 2013, 47 per cent of working Australians cited workplace issues as a source of stress.
“Performance appraisals and performance management are often handled badly and the casualty is trust,” Holland says. “Employees feel that managers don’t trust them, don’t value them, and that’s when morale and motivation go through the floor.”

Holland says managers who resort to performance management need to ask themselves how the situation was allowed to deteriorate to such an extent. In many cases, he says, managers confine themselves to annual performance reviews rather than regular informal chats with employees in which emerging performance issues and employee concerns can be picked up and acted upon well before performance management is considered necessary. “It only takes a five-minute chat over a cup of coffee to get a sense of the climate in the workplace and the issues you’re dealing with at an individual level,” he says.

Annual cycle is not a feedback loop

Adelaide-based organisational psychologist and management consultant Graham Winter, director of team-building consultant Think One Team International, laments that performance systems, including performance management, will remain in vogue despite providing so few obvious benefits. “The annual performance review is one of the most talked about, least changed human resources practices in business. It’s an absolute sacred cow,” says Winter, three-time chief psychologist for the Australian Olympic team. “The annual cycle doesn’t make sense: something done annually doesn’t constitute feedback, but the performance review remains unchallenged.”

Winter argues that managers, many of whom are promoted on the basis of their technical proficiency, lack the communication skills to have the conversations with staff that would identify problem areas, set expectations and reduce the need for performance management.

He urges corporate clients to institute monthly, or at least quarterly, formal conversations between managers and staff. He says it’s “cowardly” for managers to “hide behind” annual reviews to raise issues of underperformance, “but it’s an easy technical solution to have a mandated process that you can follow”. Performance management is typically the final step in a flawed system. “By the time you get to the performance management stage, it’s too late. At this stage, it’s largely about compliance; it’s a process to go through,” Winter says.

“If you’ve reached the point where someone is being performance-managed, eight times out of 10 what will be in the manager’s mind is that if at some point they have to front the industrial tribunal [for unfair dismissal] they will have a documented process to fall back on.” Winter hopes that as the imperative to increase productivity continues, corporate leaders will come to understand that the relationship between managers and their reports is critical to achieving greater productivity. “The imperative for organisations at the moment is to be adaptive, to be able to change their business. That’s an opportunity to put the performance conversation at the absolute centre of that.”

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