About an American company. As told by Jason Corsello.

It’s an entertaining tale, you should read it even if just for a laugh. But it make you take note of the fact that Performance management ain’t a cure for stupidity, – that’s for sure.

It often occurs to me that some of the highly educated people that comprise the management ranks at our nation’s most highly regarded companies are so capable of strategizing that they never actually DO anything. They just think.

Not that there’s anything wrong with that by itself.

But, in that world, the people that are actually doing the work are just that – doers. Well what if the doers thought and the thinkers did? What a wonderful, productive world it would be. In some ways, I think that’s part of the promise of goal alignment in particular and performance management in general.

Just a thought.

I was directed to this very good article from WPS magazine called Succession Planning: The Nuts and Bolts of the Process which is sort of a primer on succession planning. A couple of its most enlightening observations are that 1. people often make the mistake of biting off more than they can chew with Succession – meaning that they try to collect too much data on too many people and 2. the best place to start a succession planning process is during the performance management process.

The author also points out an important decision: the one on which group will own the succession process. To me, the obvious place is HR, because succession fits so snugly with other responsibilities, but alternatives are a corporate strategy group or even a wholly separate succession group. A quote:

Once an organization has established all of the skills and competencies for every key leadership role and formulated a plan that works to take them from the current state of succession planning to the desired future state, the company must decide which department should own the process. “There’s not one cookie cutter answer in the sense that some organizations may have a corporate strategy group,” Kondo explained.

The 2006 talent management survey, conducted by IHRIM and Knowledge Infusion, found that 77% of the HR professionals think that talent management will only increase in importance over the next three years.

Some of the factors, according to Jason Averbrook of Knowledge Infusion, are “the looming talent shortage, the increased focus on redeploying internal employees rather than recruiting and the realization that organizations must link training, knowledge and performance.”

The most interesting piece, I thought, was this quote from Averbrook: “Many organizations roll out a performance management system or workforce analytics system and simply just put it out there. They don’t do a good job of making sure that people know why these systems are implemented, show people the value of the systems, etc. So if organizations don’t market these systems to their employees, the employees will just think of them as another online tool and won’t actually use them to their full advantage.”

Employees can themselves get real benefits from performance management initiatives. And there’s far more to it than just making reviews easier. ( I refer you to a previous post on the topic.) But making those benefits clear to employees and explaining why usage of the system will help THEM is an important part of a successful deployment and not to be overlooked.

Jason Corsello of The Yankee Group (who writes a blog in his spare time and has a nice looking dog called Larry) in his growth forecast for the talent management market says: “”As the workforce becomes increasingly mobile and global, companies that invest in talent management solutions and examine it from a worldwide perspective will reap tremendous benefits for their business organization and operations.”

As such, Jason’s firm is forecasting that the market for talent management applications will be growing by 25% year over year (from $2.3 Billion in 2006)for the next 4 years, reaching $4 Billion by 2009.

That’s some wave.

Interestingly, the release also mentions that while Yankee’s definition of of talent management includes “Recruitment management, performance management, compensation management, succession management, learning management and other (knowledge management, self-service, analytics and reporting),” the market is largely being driven by the “the performance and succession management segments.”

You may have noticed a poll in the left-hand column over the past couple of weeks. Though clearly not scientific in any way, the poll has provided some insight into what’s on the minds of our readers.

We asked, “What is your most pressing HR issue?” 

We had 50 people respond to the poll, and the results are interesting. Despite all the talk about succession and compensation, the core issue (28%) for our respondents was Performance Reviews followed followed closely by Goal Alignment (24%).

To me, it indicates that Performance Management and Goal Alignment are still the biggest pain points for HR practitioners. They represent the heart of talent management initiatives, and Succession and Comp. are just further down in the hierarchy of HR needs.

I’d be curious to hear what you guys have to say about the results. Do you think they’re generally representative, or are they skewed for some reason?

Such is the conclusion of an extensive McKinsey study done at LSE and reported in this article at the McKinsey Quarterly.

The findings are really interesting. To sum them up: it is now proven that for companies to succeed, they must have good managers at all levels of the company. According to the survey, managers are more important than just about anything else; industry sector, geography and regulatory environment included.

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According to this IDC brief, workforce performance management is the fastest growing segment of the talent management market – growing at over 16% yearly for the next 5 years. 

The report seems to be targeted at both buyers and vendors of performance management systems and offers these headlines:

IDC offers the following key points for potential buyers of WPM software and services:

– Take advantage of others’ best practices, rather than automating a broken or ineffective process
– Build a collective WPM plan with a specific end goal in mind
– Resist the temptation to build a WPM system in-house

The last bullet and the first one are particularly interesting to me – I also think they’re related. So often companies feel they can simply build a performance management system using internal resources. They most certainly can. But how flexible will it be? How scalable? How will it be supported? And to the first point, will you just be automating a (broken) process? And what about usability? Accessibility? Languages?

Or so says this HBS article (via Be Excellent).

Instead, they argue it’s the job of every operating manager and senior management up to and including the board should play a part:

In this worldview, it is part of the line manager’s job to recognize his subordinates’ developmental needs, to help them cultivate new skills, and to provide them opportunities for professional development and personal growth. Managers must do this even if it means nudging their rising stars into new functional areas or business units. They must mentor emerging leaders, from their own and other departments, passing on important knowledge and providing helpful evaluations and feedback. The operating managers’ own evaluations, development plans, and promotions, in turn, depend on how successfully they nurture their subordinates.

Further, boards can play a vital role in shepherding up-and-comers. Because they are detached from  day to day operations, they can more clearly see the company’s leadership needs and bench strength.

This feels about right to me, but if it’s the case, what then is the role of HR? To me, it’s twofold: guidance and enablement.

Guidance in that HR experts will always be needed to help assess an individual’s ability and potential inside the organization. If the board adds value because they are outside the company, HR can add value by being the insider.  As far as enablement, by providing and owning strategic platforms like performance management, HR can ensure they are the fundamental enabler of leadership development and succession planning.

Thoughts?

With all this talk of the downsides of performance management going on in the blogosphere, I thought I might take a look at this from the employee perspective. Hey wait, I AM an employee! Thusly: Some reasons why I, Max Goldman, like performance management and wouldn’t want to work for a company that didn’t do it - a brief list:

1. What the heck is my job again?
Being just one piece of a bigger entity like a company is not an easy thing. It’s sometimes hard to know what part I need to play to add the most value. I want to add as much value as possible because I want to advance my own career, make more money and do something important with my life. Our performance management system lets me understand what I can be doing to support the company’s larger goals, know what’s expected of me and find opportunities to do bigger and better things.

2. Why is THAT guy driving a free Touareg?
At our company meeting this past January, four VW Touaregs were given out to top performers -people who add a lot of value to the company and our customers. Two went to salespeople. They bring in the bucks, so fine. But two went to regular employees. Why are they driving brand new, free cars (or getting watches, vacations, bonuses – you get my drift)? If I know why, I can work at those qualities and results and get myself a brand new ride next year. But what are those qualities, what is the measure of success? Without performance management, it’s anecdotal, arbitrary and simply unfair.

3. What is this company doing, anyway?
I now know what it is I’m meant to be doing (see #1), but what is everyone else doing? Why does any of this matter? What is this company striving at? What are the strategies and tactics that will make us all (and me, particularly) successful? Our performance management system lets me understand that. How what I’m doing aligns to what my boss and his boss are working on. Why what I’m doing matters. And I want it to matter.

4.  What’s wrong with me?
I admit it – I’m not perfect. I’m close, dammit, but I’m just not there – yet! What can I do to get better? What areas do I need to work on to perform at the next level? Without performance management maybe I’ll figure it out and maybe I won’t. With performance management, my development needs are outlined and I can know where I need… (ahem) work. Even better, I can get my boss to agree so when I nail those things, he has no choice but to admit it.

5.  What’s great about me?
Like I said, I’m pretty close to perfect – now tell me about it! It makes me feel good and lets me know I’m on the right track. Performance management forces my peers and my boss to tell me what I’m good at so I can lord it over everyone and do my special victory dance. Ok, no dancing, but you get the idea. People, myself included, like to know what we’ve done well so we can keep doing it.

6. Pay me more money. And a bonus, too.
What’s that, I achieved every goal we set out? Nice. Pay me. When I know what I’m being measured on, I can work against those goals. When I achieve them, there is no choice but to recognize my performance. If the company doesn’t, I can take my clear track record of success elsewhere.

What do you all think? What are the reasons you like (or dislike) the results of your performance management system or process?

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.

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