Blog: Alternatives to Performance Management that truly motivates people

In the previous post, I wrote about the consequences of the traditional Performance Management process and what it does to our employees' desire to perform better and be motivated at work. How should we work with goal fulfilment and performance if we are not allowed to put the employees in a box, and put a label on them? We do want our employees to work efficiently and deliver value! Here comes the paradoxical truth. If we pressure people to deliver, we get a backlash, this is completely normal. If we instead let people contribute according to their ability, following their intrinsic motivation, skills, and will, in roles that are tailored to each person, we can expect increased conditions for achievement. Instead of controlling, measuring, evaluating, and assessing, we as managers, and HR, should dedicate ourselves to creating the best conditions for everyone to be able to perform optimally and feel intrinsic motivation, drive, job satisfaction, and commitment. We do this by communicating, getting to know people deeply, and really understanding what would make each person able to perform and feel good in the organisation.

The performance process has many purposes. I have listed the most common answers (and what to do instead) in the table below, that has come up when I ask participants in my training to explain why they work with Performance Management.

If the purpose is to give feedback and coach employees to higher performance, I recommend regular reviews and that the manager shows that he/she cares about the employee, and tries to create the optimal conditions. For example, you can have a shorter review every two weeks and a longer every three months. The form and how often you meet is not the most important thing, focus instead on involving the employee, and let them influence the agenda and what should be discussed. The focus should be on removing obstacles so that the employee can perform optimally.

If the purpose is to increase performance by setting challenging goals, then you can for example work with the method Objectives and Key Results – you find some more information about OKRs here: https://felipecastro.com/en/okr/what-is-okr /

It entails setting personal, relative goals that are transparent and linked to the company's overall goals. Thus, it is not about reaching a fixed goal, but about doing the best you can, given your personal conditions, to come as far as possible during the period. OKRs should never be linked to salary or rewards. They are there to increase performance, learning, and collaboration in the organization, and should not affect salary. 

If the purpose is to learn new things and develop employees, work with continuous learning every day, and make sure that a large proportion of what you do are experiments where you learn when you succeed, but also when you fail. Work across functional boundaries to further broaden learning and create good effects in the system through, for example, Buddy Systems (see the learning section of this blog series to learn more).

If the purpose is to make decisions about compensation and benefits, use methods to set salaries that are not directly linked to goal fulfilment or determined by one or a few people with formal power. Let employees give input on how to do it and who has performed the best given established, transparent criteria for how salaries are set in your organisation. Perceived fairness must always guide the salary strategy.

In the picture above you see some changes that we need to implement to work effectively with Performance Management, and what needs to replace the old ways of working. Think about where you are on the scale between From - To and how to move in the direction you want to go.

Annual performance reviews are replaced by continuous meetings where employees are coached and receive feedback and help to remove obstacles for performance.

Mandatory rankings are replaced by no rankings, because there are better tools to increase performance and goal fulfilment.

The annual process is replaced by a continuous flow of check-ins for monthly or quarterly goals.

The annual assessment performed by the manager is replaced by regular feedback from all employees.

Rewards and feedback determined by managers are replaced by everyone determining the reward systems in the organisation.

Career plans for just talents and high performers are replaced by career plans for everyone.

Focus on moving up or out of the organisation, is replaced by being able to move in the organisation in a way that suits each employee's unique situation.

Evaluation of the performance by the manager is replaced by everyone continuously evaluating themselves with the help of, for example, OKRs, and the purpose is to constantly improve, not to set a salary.

Unclear, or lack of goals, no common direction is replaced by total transparency as to who has which goals and how the goal-setting process works.

Evaluations directly linked to performance and results (if these are retained) are instead linked to behaviours, learning, and continuous development.

These are just some of the changes taking place in the field of what traditionally has been called Performance Management. In the future it will become an integral part of good leadership in a culture where everyone works to improve themselves. To shape an organisation that creates value for the customer, in a more competitive way that brings out the best in people. In the next blog we will deep dive into the continuous learning organisation. 

About the Author

Pia-Maria Thorén

Pia-Maria is an international authority and speaker on Agile leadership and Agile HR. She is an Inspirational Director and founder of Agile People also an author of Agile People - A Radical Approach for HR and Managers (That Leads to Motivated Employees). Agile People is a global network of people who work to improve workplaces by helping HR and leaders to attain an agile mindset for the future of work by using agile tools, methods, values, and principles. Pia-Maria specialises in helping companies move towards a culture of increased agility through Agile HR, Agile leadership and Motivation.

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