Our good friend Dubs thinks performance management is wrong. Not just broken. Not just in need of improvement. Flat out a flawed paradigm for improving company performance.  Perhaps predictably, I find it difficult to agree. I’m not saying that the current concept of Performance Management is perfect, but I’m not ready to call it worthless and scrap it either. Read on for the reasons why.

 If I may take a moment to deconstruct his argument, I’d break it down into a few key points:

1. He’s never seen it work.  “How many performance plans have you seen where the performance process actually impacts increases in engagement and productivity?” he asks.

2. Performance Management is backwards facing. By the time you are evaluating performance, the work has already been done.

3. Performance Management does not improve future results. The work laid out in a goal plan would be completed whether or not it was stated as such.

Okay. Fair enough. Those are reasonable points.

I’d like to begin my thoughts with the following. It’s a quote from Watson Wyatt that I came across in a presentation they did. It goes like this: “The financial performance of organizations with strong performance management systems is more than twice that of organizations with weak systems.” This quote was based on a survey they did – you can watch the presentation for more detail. But suffice it to say it is based on real data and not anecdotal evidence.

For me, this means that at the very least, performance management CAN work. So with that as a baseline, let’s keep going.

Point 2 says that PM is backwards facing. If you’re talking about annual reviews, exclusively, then I think he’s right. But if you open up the definition to include 360 reviews and quarterly assessments – I think there is the potential to impact ongoing work – and ultimately the results of that work.

Point 3 says that goals plans don’t do anything except list out work that would happen anyway. A first thought here is that even if that were true, the concept of goal alignment would still be relevant. I can write down a bunch of goals, but if those goals don’t align to my bosses goals, and to his bosses goals, those goals, and the work that results from them is irrelevant. Organizations need to align around shared goals and that’s one of the key benefits of performance management.

But if we’re just talking about individual goal plans, I would agree that much of what makes it into goal plans is low-hanging fruit for which people want credit. Nevertheless, goal plans can also be used for the more aspirational, more strategic and more developmental goals. A good performance management system supports collaboration between managers and employees to encourage this type of goal. And I think that’s an important point here. Maybe the most important point. People, individual managers, are the most critical piece of any performance management initiative.

Anyone who thinks performance management processes or systems remove the need for good management (as in managers) is flat out wrong.  Regina makes this point (in a backwards sort of way) in her post. No system, process or software removes the need for good people to drive it. And in that way, there exists the opportunity for a virtuous cycle. Good people support a good system which creates a good plan, which develops good people, and so on. If we look at performance management  in that light – as a foundational enabler – it’s not as easy to “scrap it.”

It’s certainly one approach to go around digging up foundations because you don’t like the houses on top of them. But perhaps there is a more direct option:  knock down the house. I submit that if there is a problem with performance management, it’s not the foundational components (goal plans, pay for performance) that are the problem – it’s the unusable processes (houses) that have been created to achieve them.