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SHRM Foundations
Effective Practice Guidelines Series

Building a High-Performance
Culture: A Fresh Look at
Performance Management
By Elaine D. Pulakos, Rose A. Mueller-Hanson, Ryan S. OLeary,
and Michael M. Meyrowitz

Sponsored by

Halogen
Building a High-Performance Culture: A Fresh Look
at Performance Management

This publication is designed to provide accurate and authoritative information regarding the subject matter covered. Neither the publisher
nor the author is engaged in rendering legal or other professional service. If legal advice or other expert assistance is required, the services
of a competent, licensed professional should be sought. Any federal and state laws discussed in this book are subject to frequent revision
and interpretation by amendments or judicial revisions that may significantly affect employer or employee rights and obligations. Readers are
encouraged to seek legal counsel regarding specific policies and practices in their organizations.

This book is published by the SHRM Foundation, an affiliate of the Society for Human Resource Management (SHRM). The interpretations,
conclusions and recommendations in this book are those of the author and do not necessarily represent those of the SHRM Foundation.

2012 SHRM Foundation. All rights reserved. Printed in the United States of America.

This publication may not be reproduced, stored in a retrieval system or transmitted in whole or in part, in any form or by any means, electronic,
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15-0187
Table of Contents

iii Foreword

v Acknowledgments

vii About the Authors


1 Building a High-Performance Culture: A Fresh Look at

Performance Management

2 Common Strategiesand Why They Fail

3 Challenging Assumptions

4 Wheres the Disconnect?

5 Building a High-Performance Culture

6 Step 1: Motivate Change

10 Step 2: Lay Foundation

13 Step 3: Sustain Behavior

14 Step 4: Monitor and Improve

14 Old Thinking Versus New Thinking

15 Legal Considerations

17 Summary and Conclusion

19 Sources and Suggested Readings

27 References
Building a High-Performance Culture: A Fresh Look at Performance Management

FOREWORD

Dear Colleague:
Decades of research and practice have been devoted to understanding and improving
performance management in organizations. Yet the traditional performance review process
continues to be painful and ineffective for both managers and employees. In many cases, the
focus on improving formal systems has not achieved the desired results. In fact, research shows
that what truly increases employee performance and engagement is not annual reviews, but the
day-to-day process of managers communicating expectations, providing feedback and leveraging
employee talents.
This new SHRM Foundation report, Building a High-Performance Culture: A Fresh Look at
Performance Management, goes beyond the formal review process to explore how leaders can
create a performance-based culture using strategies such as improved communication and better
relationship skills. Summarizing the latest research and thinking on high-performing workplace
cultures, the report identifies specific tools to develop more effective performance management
behavior in organizations.
The SHRM Foundation created the Effective Practice Guidelines series in 2004 for busy HR
professionals. It can be a challenge for practitioners with limited time to keep up with the latest
research results. By integrating research findings on what works with expert opinion on how to
conduct effective HR practice, this series provides the tools to successfully practice evidence-
based management.
Other recent reports include HRMs Role in Corporate Social and Environmental Sustainability,
Promoting Employee Well-Being and Onboarding New Employees. This report is the 16th in the
series. To ensure the material is research-based, comprehensive and practical, the reports are
written by subject-matter experts and then reviewed by both academics and practitioners. Each
report also includes a Suggested Readings section as a convenient reference tool. All reports
are available online for complimentary download at www.shrmfoundation.org.
The Effective Practice Guidelines series is just one way the SHRM Foundation supports lifelong
learning for HR professionals. In addition to creating educational resources used in hundreds of
classrooms worldwide, the SHRM Foundation is a major funder of original, rigorous HR research.
We award more than $150,000 annually in education and certification scholarships to SHRM
members. And all this good work is made possible by the generous support of donors like you.
I encourage you to learn more. Please visit www.shrmfoundation.org to find out how you can
support the SHRM Foundation.

Mary A. Gowan, Ph.D.


Chair, SHRM Foundation Research Evidence Committee
Professor of Management
Martha and Spencer Love School of Business
Elon University iii
Building a High-Performance Culture: A Fresh Look at Performance Management

ACKNOWLEDGMENTS

The SHRM Foundation is grateful for the assistance of the following individuals in producing
this report:

CONTENT EDITOR PROJECT MANAGER


Lynn McFarland, Ph.D. Beth M. McFarland, CAE
President Manager, Special Projects
Human Capital Solutions, Inc. SHRM Foundation

REVIEWERS
Robert Cardy, Ph.D.
Chair, Department of Management
College of Business
University of Texas at San Antonio

Carol J. Cooley, SPHR


Vice President of Human Resources
Total Community Options

Tracye Mayolo, SPHR


AVP of Human Resources
Church Street Health Management

Major funding for the Effective Practice Guidelines series is provided by the
HR Certification Institute and the Society for Human Resource Management.

v
Building a High-Performance Culture: A Fresh Look at Performance Management

ABOUT THE AUTHORS

As vice president of PDRIs Systems and Information Technology Services division, Mike Meyrowitz
provides business, technical and strategic leadership to PDRI. Under his leadership, the IT Services
division provides integrated information technology solutions, systems and services in all areas of
human capital management, including performance management. Mr. Meyrowitz has over 15 years
of experience in the management, design and development of information systems supporting
the missions of commercial, nonprofit and government organizations. He has worked with federal
government clients such as civilian and Department of Defense agencies, as well as the intelligence
community. Prior to joining PDRI, Mr. Meyrowitz directed Lockheed Martins Internet Applications
division. Mr. Meyrowitz holds a Master of Science in information technology and a Bachelor of Science
in business from Virginia Tech. Mr. Meyrowitz also serves on PDRIs Board of Directors.

Dr. Rose Mueller-Hanson is director of Leadership and Organizational Development Consulting


at PDRI, an SLH Company, where she leads a team of consultants to conduct applied research in
performance management, leadership development and organizational design. She has presented
her work at numerous national conferences and publications and is a co-recipient (with colleagues
from PDRI) of the M. Scott Myers Award for Applied Research in the Workplace, granted by the
Society for Industrial and Organizational Psychology. Prior to joining PDRI in 2002, Dr. Mueller-
Hanson worked as a human resource manager for a nonprofit organization and served in the
U.S. Air Force. She received her doctorate in industrial/organizational psychology from Colorado
State University. She currently is the president of the Personnel Testing Council of Metropolitan
Washington, DC.

Dr. Ryan OLeary is manager of hiring assessment services at PDRI, an SHL Company, where he
leads a team of consultants developing performance management and selection and assessment
programs. He has developed performance management systems for numerous federal government
agencies covering a range of scientific, technical and administrative occupations. Dr. OLeary
has presented his work at numerous national conferences and has published on performance
management and assessment best practices. He was named a 2011 Game Changer by Workforce
Management magazine. Dr. OLeary holds a doctorate in industrial/organizational psychology from
Auburn University and a Bachelor of Science in psychology from Emory University.

Elaine D. Pulakos is president of PDRI, an SHL Company, and past president of the Society for
Industrial and Organizational Psychology. A Fellow of the American Psychological Association and
the Society for Industrial and Organizational Psychology (SIOP), she is a recognized author and
speaker, having published numerous articles, books and best practice guidelines on various talent
management topics, most notably performance management and hiring. Dr. Pulakos earned
SIOPs 2009 Distinguished Professional Contributions Award for career achievement. She
has spent her career consulting with public and private sector organizations to improve their
talent management practices by designing, developing and successfully implementing large-
scale hiring, career development, performance management and leadership development
systems in organizations. She received her doctorate in industrial/organizational psychology
from Michigan State University.
vii
Performance management is the Achilles heel of human capital management
often viewed as ineffective by employees and managers alike. Despite the time,
effort and resources devoted to it, performance management rarely achieves its
intended purposeimproving performance.
Building a High-Performance Culture: A Fresh Look at Performance Management

BUILDING A HIGH-PERFORMANCE
CULTURE: A FRESH LOOK AT
PERFORMANCE MANAGEMENT

Managing employee performance is a key part of effective


leadership. Research has shown that managers who engage in
effective performance management produce extraordinary business
results compared with those who do not. One study demonstrated
50 percent less staff turnover, 10 to 30 percent higher customer
satisfaction ratings, 40 percent higher employee commitment ratings
and double the net profits.1

But many organizations struggle to realize these benefits. When


asked what purpose performance management should serve in
organizations, employees, managers and HR professionals alike cite
important outcomes such as improving performance effectiveness
and results, developing employees, and facilitating communication
and information exchange between employees and managers.

However, when a slightly different question is askedwhat purpose


does performance management servethe responses are quite
different. Most people say that in reality, performance management
serves primarily administrative purposes. These include helping
managers make pay decisions, providing documentation for the
organization to defend itself in court and enabling the organization to
deal with poor performers.

When asked, How well does performance management work to


achieve its purpose? managers and employees agree: It does not
work very well. Overall, attitudes toward performance management
are consistently poor. No more than 30 percent of those surveyed
reported that their performance management system effectively
establishes goals, provides feedback and actually improves
The Business Case performance. These perceptions have earned performance
management the distinction of being the Achilles heel of human
Effective performance management
capital management. 2
behavior leads to better:
After decades of research and practice devoted to improving
Bottom line results
performance management systems in organizations, the reality
Employee engagement is that most of them neither drive effective performance and
Retention of key staff development nor serve administrative purposes. It is time to take a
fresh look.

1
Building a High-Performance Culture: A Fresh Look at Performance Management

Given the current negative to achieve the desired results. It In the end though, these attempts to
perceptions, should organizations will first examine what has been improve performance management
continue to invest in performance tried unsuccessfully in the past have ended up reducing it to an
management? The answer to this and will then present different administrative drill that lacks real value.3
question is yes! strategies that hold real promise for Unfortunately, negative attitudes among
increasing performance management managers and employees toward their
When done right, performance
effectiveness. Finally, it will present performance management systems have
management yields higher levels
a model to help organizations build spawned the vicious cycle of attempting
of engagement, retention and
a high-performance culture through improvements, followed by disappointing
organizational performance. A strong
effective performance management. results, leading to continuous reinvention
business case exists for improving
of these systems. The great amount
the effectiveness of performance
of research that has been devoted to
management, but how is this task Common Strategies performance management without
accomplished? The key is to change and Why They Fail yielding success speaks volumes about
the focus. Concentrate on establishing
how inherently difficult it is.
effective performance management Most performance management
behaviors first, and then make sure strategies focus on developing Figure 2 graphically demonstrates a
that the performance management improved rating tools and processes common pitfall: Although performance
system reinforces and supports those including various rating formats, management processes are designed to
behaviors. Performance management different rating criteria, more drive effective behavior, they more often
must be more than a formal appraisal elaborate process steps and using end up motivating intermittent spurts of
system: It should be an everyday part raters with disparate points of view. activity, spiking a few times a year.
of a high-performance culture. An implicit assumption is that specific
tools and carefully prescribed steps in This pattern is actually at odds with
This report will offer new ideas for a formal system will lead to effective effective performance management
using performance management performance management. (see Figure 3), which requires regular
tools and concepts more productively and ongoing activity:

Figure 1. Examples of Past Attempts to Improve Performance Management

Objectives, results, individual competencies,


Change what is rated
behaviors, contributions

Differentiated 3, 5, 7, or 9-point scales, pass-fail


Change the rating scale
scales, developmental scales or narratives

Supervisors, peers, customers or the employees


Change who rates
themselves

Change the goals SMART, HARD, cascaded, team, individual or none

2
Building a High-Performance Culture: A Fresh Look at Performance Management

Figure 2. Poor Performance Management Behavior

High Set Goals Mid-term Review Final Appraisal


Activity Level

Low

Begin Cycle End Cycle

Communicating expectations on a management for administrative is no clear connection between


regular basis. purposes has become synonymous consistently high ratings given to most
with burdensome requirements that employees and the more variable pay
Providing feedback in real time
detract from important goals. increases awarded to them.
whenever exceptional or poor
performance is observed. Many managers report that they
CHALLENGING ASSUMPTIONS do not arrive at pay decisions
Helping employees develop expertise
by following the detailed rating
that maximizes their potential.
Assumption #1. Performance processes their performance
If our systems are working, they management helps managers management systems prescribe,
will create a pattern, showing but instead retrofit their ratings to
make pay decisions.
performance management as a fit the pay increases they want to
Reality: Performance ratings usually
regular part of daily work. The give. Pay increases are affected by
do not sufficiently differentiate among
fact that this is rarely the case many factors beyond the employees
employees to support gradations
suggests there is plenty of room for performance, including the
in pay, unless managers use
improvement. 4 competitiveness of the market, where
forced distributions. This failure to
employees sit within their pay bands
Even beyond failing to drive effective, differentiate can leave organizations
and even whose turn it is to get a
ongoing behaviors, performance in a vulnerable situation if there

Figure 3. Effective Performance Management Behavior

High Set Goals Mid-term Review Final Appraisal


Activity Level

Low

Begin Cycle End Cycle

3
Building a High-Performance Culture: A Fresh Look at Performance Management

little information that can be used identified eight habits of highly


How to Drive Results to address performance issues. effective managers and three pitfalls
Most organizations have an entirely that hamper success. Google found
Set clear expectations for separate system for dealing with that what its employees valued most
employeesso they can deliver. unsatisfactory performers. Employees were even-keeled bosses who made
are often given formal notice when time for one-on-one meetings, helped
Help employees find solutions they do not meet expectations, and them solve problems by asking
to problems. specific expectations are outlined questions rather than by dictating
in performance improvement answers, and took an interest in their
Play to employees strengths
plans or opportunity periods. lives and careers. One surprising
rather than their weaknesses in
Once employees are placed on a result was that the managers ability
work assignments.
performance improvement plan, to perform technical work ranked last
Acknowledge employees managers maintain extensive among the top eight behaviors. 6
strengths while also addressing documentation to justify any
Google discovered that bosses
development needs. subsequent actions, such as
have a great impact on employees
separation or reduced compensation.
Provide regular, informal performance and job attitudes.
These separate systems are used to
feedback. Simply put, better bosses translate
deal with unsatisfactory performers
into bottom-line results. This thinking
because the main performance
reflects the old HR adage that people
larger increase this yeara factor that management system usually does
dont quit their jobs, they quit their
often comes into play when base pay not contain enough accurate rating
managers.7 Googles best managers
increases are small overall. information.
those who embraced the habits and
avoided the pitfallshad teams that
Assumption #2. Performance WHERES THE DISCONNECT? performed better, stayed longer and
management provides Most employees and managers view maintained positive attitudes.
documentation that organizations their performance management
need to defend themselves. systems as largely ineffective and
Reality: A common belief is that incapable of delivering results. Eight Habits of Highly
documentation is needed to defend But research performed by the Effective Google Managers
administrative decisions, such as Corporate Leadership Council (CLC)
promotions, separations and pay has shown that over half of the Be a good coach.
raises in the face of legal challenges. most important drivers of employee Empower your team, and do not
However, in most cases, formal engagement and performance are
micromanage.
performance management systems precisely the behaviors that define
do a poor job justifying ratings and effective performance management: Express interest in team
aligning ratings and outcomes. setting clear expectations, helping members personal success and
What is documented in performance employees accomplish work, providing well-being.
management systems often ends regular feedback, and finding
new opportunities for employees
Dont be shy; be productive and
up being more helpful to employees
to succeed and develop. 5 These results-oriented.
challenging the organization than it is
to the organization defending itself. behaviors are clearly valuable, yet our Communicate and listen to your
performance management systems team.
are not seen as producing these. Why?
Assumption #3. Performance What can firms do to improve results? Help your employees with
management provides a career development.
mechanism to deal with At Google the answer came in
the form of Project Oxygen, an Express a clear vision and
poor performers.
attempt to build better bosses. By strategy for the team.
Because employees are hardly
ever rated less than meeting analyzing performance reviews, Demonstrate technical skills so
expectations, most systems have feedback surveys and nominations
you can help advise the team.
for managerial awards, Google

4
Building a High-Performance Culture: A Fresh Look at Performance Management

Googles Three effective performance management. Building a High-


Although managers often do not
Pitfalls of Managers
recognize it, performance management
Performance Culture
Have trouble transitioning to is what good leaders do naturally, each Several factors influence the
the team. and every day. These behaviors are likelihood that managers and
essential tools that enable managers to employees will practice effective
Lack a consistent approach to accomplish work through others. performance management behavior:
performance management and
career development. For employees, performance The extent that they believe
management is the primary way performance management is
Spend too little time managing of understanding what they are essential to getting work done.
and communicating. supposed to do and developing
and advancing their careers. Both
The quality and trust of the
managers and employees should view manager-employee relationship.
The factor over which companies
have the most control in terms of performance management not as a How well the company reinforces
retaining employees is the quality of formal administrative system but as successful performance
managers. Google began teaching a broader tool that helps employees management behavior as a key
managers the eight habits in a variety accomplish work and organizations business strategy.
of settings. This practice paid off retain key talent.
quickly. Seventy-five percent of the Figure 4 shows a four-step process
Communicating what employees are to help organizations trying to build
firms least competent managers
expected to do, providing feedback and and sustain a high-performance
showed significant performance
helping employees contribute the most culture. The steps focus on changing
improvement as a result. 8
they can to organizational success are perceptions and training, reinforcing,
Taken together, the implication of the essential behaviors managers must and ensuring that effective behavior is
the CLC and Google studies is that engage in to achieve the outcomes that integrated into the corporate culture.
effective leadership is synonymous with drive a companys success.

Figure 4. Four Steps to Developing a High-Performance Culture

Assess current culture.


Motivate change Shift performance management mindset.

Scale back burdensome demands.


Introduce new concepts.
Lay foundation Put the right people in managerial jobs.

Provide tools and resources to drive behavior.


Sustain behavior

Hold leaders accountable for continuous improvement.


Monitor and improve

5
Building a High-Performance Culture: A Fresh Look at Performance Management

readily understand these concepts,


making changes in behavior easier
Rather than trying to improve performance management tools to achieve. Organizations that do
and processes, focus instead on creating a high-performance not have a performance mindset
culture by improving the frequency and effectiveness of will require more time and effort
before they are able to demonstrate
performance management behavior.
significant improvements in
behavior. Assessing a firms culture
provides a roadmap to the extent
and type of change needed.
Changing perceptions and integrating a high-performance culture is to Culture assessments also provide
new behaviors into the culture are the assess where the organization a benchmark for tracking progress
most importantand uniqueaspects currently stands. Does the during and after implementation,
of the approach described here. company already have a culture serving as a helpful tool for
Unfortunately, most organizations that values excellence, strives for organizational feedback.
do very little to make a compelling success, seeks feedback, and
business case for the value of embraces continuous learning and
performance management or to development? The second step is Shift Performance
solidify effectual behavior on the job. to evaluate the extent to which both Management Mindset
managers and employees currently Research and practice show
engage in effective performance that successful organizational
STEP 1: MOTIVATE CHANGE management behavior. change depends on management
commitmentthe stronger the
Assess the In organizations that already commitment, the greater the
embrace a high-performance potential for success. 9 Executives
Current Culture
culture, employees will more who believe in the value of
An important first step in building

Figure 5. Examples of Strategies to Improve Performance Management

Benefits for
Benefits for Managers
Employees

Employees contribute more Employees feel more


Communicate the when they understand the big connected and make
big picture picture, meaning less work for wiser decisions, increasing
managers. engagement and results.

Managers gain higher-quality Employees perform better


Provide ongoing work from staff more quickly work and feel more confident
expectations and feedback with less rework. about their contributions

Managers accomplish more,


Develop others Employees grow, develop and
succeed faster and focus on
through experience advance more quickly.
what they want to do.

6
Building a High-Performance Culture: A Fresh Look at Performance Management

more independently and effectively,


New Mindset freeing managers to grow the group, Recommendations
implement strategy or take on higher-
Both managers and employees level responsibilities. Once managers Clearly articulate the
must engage in performance and employees understand these organizations mission and
management behavior to benefits, they will be motivated to priorities.
accomplish anything at work, so pursue them, rather than seeing
performance management as a
Discuss how the work fits into
this mindset benefits everyone.
burdensome administrative drill. the overall mission.

performance management and Employees who have a clear


Provide regular updates so
communicate this to lower-level understanding of the big picture employees understand context
managers and employees can help make more informed decisions and and outside factors affecting
drive change. However, because can more readily connect with what is their work.
success relies on both managers happening in the larger environment,
and employees engaging in effective rather than needing continual
performance management behavior, Recommendations
step-by-step guidance from their
they must be convinced of its value managers.
for them personally. In other words, Tailor the type of expectations
managers and employees must One strategy to communicate the to the particular jobbehaviors,
internalize a new mindset about big picture is to cascade goals results or SMART goals.
performance management. from the top of the organization
through each level until they reach Set ongoing expectations in
One way to begin to shift mindsets is individual employees. Theoretically, real time throughout the rating
to remind people that they engage in this approach enables employees period.
performance management behavior to see how their work fits into the
every daywith their children, organizations mission and priorities.10
spouses, co-workers, friends and However, the process of cascading unit contributes to the whole and what
vendors. Once people make this goals has proven challenging in organizational issues are influencing
connection, they can better grasp practice. Organizational goals are the work.
the meaning of performance frequently complex and can be
management in the workplace. difficult to propagate to all levels and #2: Provide Ongoing
Three actions should be targeted in jobs. In addition, cascading requires Expectations and Feedback
the workplace: 1) ensuring employees meetings at each level that depend
Most formal performance
understand the big picture and their on higher levels completing their
management processes begin with
role and contribution to the mission, cascades. As a practical matter,
planning that entails communicating
2) setting clear expectations and cascaded goals rarely make it down to
expectations to employees for the
providing feedback so employees can individuals, and even partial cascades
upcoming rating period. A popular
succeed, and 3) developing individual can take months to complete.
practice is to set SMART (specific,
employees so they achieve their Because this process is time-
measurable, attainable, relevant, time-
maximum potential. All three actions, consuming and difficult to execute
bound) goals or to identify KPIs (key
reviewed in greater detail below, are well, especially in large organizations
performance indicators) that provide
clear positives for both managers and with many levels, it is unsustainable in
customized, meaningful expectations
employees. many firms.11
and criteria based on what each
An alternative to cascading goals employee is expected to achieve.
#1: Communicate the Big Picture is for managers to provide a plain-
Establishing goals at the beginning
language description of how the
Leaders need to be able to describe of the rating period can work well
team and each employee contribute
how the work of each employee for jobs with static performance
to the overall mission. Engagement,
relates to the companys overall requirements and defined metrics,
productivity and autonomous work are
mission. Employees who understand such as sales jobs.12 However, goal
all facilitated by understanding how
the big picture and deliver work that setting for knowledge and service-
ones work fits into the unit, how the
meets expectations can operate based jobs, which are fluid and
7
Building a High-Performance Culture: A Fresh Look at Performance Management

Behavioral Standards Objective Results Task or Project Goals


Can be used in most jobs. Best for jobs with clear, readily Best for jobs that are dynamic, but
measured outcomes. in which nearer-term activities and
Most relevant for knowledge work.
milestones can be defined.
Measure what matters, not just
E xample: Treat others with
what can be measured. Closest thing to SMART.
professionalism and respect;
communicate clearly. E xamples: sales quotas, E xample: Complete XYZ report by
production rates, error rates. Tuesday.

unpredictable, is frequently more circumstances under which each have argued that formal review
challenging.13 Further, some jobs tends to work best. The idea is that a sessions should simply be eliminated.18
in fields such as R&D do not lend combination and balance of different Sitting down only once or twice a year
themselves to goal setting at all, types of expectations will likely be for a perfunctory feedback review
because predicting when and what needed at different times during the is not enough, especially for todays
discoveries will occur is impossible.14 rating period, based on the specific younger career-minded workers. Both
So goal setting processes overall are demands of each employees job. technology and the growing number of
fairly disappointing. Goals often read Millennials entering the workforce are
Regarding feedback, most formal
more like generic task statements driving demand for more meaningful
performance management systems
rather than SMART goals, and their feedback and development strategies.
mandate midyear and year-end
difficulty varies so greatly even within But it is not just young Millennials; high
reviews to provide feedback on what
a given job or level that employees performers also tend to seek regular
has occurred during the rating period.
raise concerns about fairness.15 feedback, regardless of their age.19
During these meetings, managers
Most work situations evolve and discuss their evaluations and the To be effective, feedback needs to
change over time, some significantly. rationales for them with employees.16 be provided regularly when it makes
Therefore, effective performance sense to do so, not only once or
A great deal of worry accompanies
management behavior requires twice a year during formal reviews.
formal performance reviews for
setting ongoing expectations Unfortunately, many managers are
both managers and employees. In
and near-term goals as situations not skilled at providing feedback.
a recent survey, over 50 percent
change. This point raises questions They frequently avoid giving feedback
of respondents reported that they
about the utility of formal goal because they do not know how to
believe performance reviews do not
setting processes conducted at the deliver it productively and in ways
provide accurate appraisals of their
beginning of the rating period, which that will minimize defensive reactions.
work, and nearly 25 percent said
are incorporated into most of todays Even when managers do provide
they dread performance reviews
performance management systems. feedback, it is often superficial and of
more than anything else.17 These
Managers also have an important little value.
results are not surprising in light of
ongoing role in goal setting that is not
a 2008 Mercer survey of 350 major Research has consistently
captured well in most formal systems;
U.S. companies, in which almost 25 shown the importance of regular
they help employees translate
percent of respondents revealed that feedback for effective performance
higher-level objectives into more
their managers are only marginally management, 20 future performance 21
specific plans, activities, milestones
skilled at doing performance and job attitudes. 22 Informal,
and interim deliverables that they will
evaluations, and only 12 percent continuous feedback is the most
accomplish day-to-day.
indicated that their managers were valuable type. 23 If feedback is
The table above shows different highly skilled. provided immediately following
types of expectations a manager can good or poor performance, it helps
Poor attitudes toward performance
establish with employeesbehavioral employees make real-time alterations
reviews have led to calls for
standards, objective results and in their behavior and enables them to
improvements that will better motivate
task or project goalsand the perform their work more efficiently. 24
and develop employees, and some

8
Building a High-Performance Culture: A Fresh Look at Performance Management

Figure 6. Comparison of Formal and Informal Feedback

Formal Informal
Feedback Feedback

Occurs in formal sit-down


meetings (infrequent). Occurs spontaneously whenever
discussion is needed.

Covers work conducted over time: Covers a specific incidentwhat


multiple performance events and went right or wrong and what to
competencies. do differently.

Relies on two-way accountability


Initiated, led and controlled by and interaction.
the manager.

The effectiveness of the feedback


Figure 7. Leader Behaviors to Build Trust/Employee processinformal or formalis
Responses to Trust contingent on the manager-employee
relationship. 25 In fact, the strength of
the relationship between managers
Leader Behaviors Employee and employees influences employee
to Build Trust Responses Trust job satisfaction, organizational
citizenship, engagement and
1. Make realistic 1. W illingness to follow
performance. 26 Trust is a key element
commitments manager lead
of the quality of this relationship and
2. F
 ollow through on 2. W
 illingness to take an essential prerequisite for effective
promises feedback feedback and coaching. 27 While some
3. Keep others informed 3. P
 erception of fair managers naturally create trusting
4. S
 how support and treatment relationships with employees, attitude
avoid blame 4. Increased innovation surveys reveal that many employees
and creativity have very poor relationships with their
5. Share information managers and do not trust them. 28
6. Protect those not 5. Higher satisfaction
Without a basic level of trust, it is
present 6. Increased effectiveness
unlikely that communication and
engagement between a manager
and employee will be sufficiently
productive to lead to positive
outcomes. Trust can be developed
between managers and employees by
Many managers and employees opportunities for it helps managers training managers to engage in trust-
naturally engage in informal and employees take advantage building behaviors, like those shown in
feedback, such as discussing how of teachable moments. These Figure 7. As trust increases between
a presentation went, but these moments are learning opportunities managers and employees, they
discussions tend to be more intuitive that occur as part of day-to-day become more comfortable with each
than intentional, and they are work. Unfortunately, training for other and are more willing and able to
often not recognized as feedback informal feedback is rare, but it is participate in valuable communication
events. Understanding the value of critical to successful performance and feedback.
informal feedback and recognizing management.
9
Building a High-Performance Culture: A Fresh Look at Performance Management

#3: Develop Others to employees who are already highly


Through Experience skilled. Assigning tasks to those who Recommendations
In most formal performance can clearly accomplish them presents
management systems, the year-end less risk and potential for redoing Use job experience as the
review is used as an opportunity to work, but this strategy is shortsighted. primary means of developing
plan the employees development Forgoing opportunities to develop employees.
for the upcoming year. Development employees skills leaves managers
Continually seek job experience
should be ongoing and in real time with fewer staff members who can
that builds performance.
as learning opportunities arise, not perform the full array of job tasks with
restricted to one or two formal sit- a high degree of effectiveness. Stretch outside comfort zone.
down discussions yearly. In fact, if The most beneficial approach to Provide opportunities to make
ongoing performance conversations, development is for managers and mistakes.
candid feedback and development employees to continually look for
occur day-to-day, formal review Entail deliberate practice and
opportunities that will help enhance
sessions will not really be needed, skills, so employees can contribute feedback.
because there will be no new more fully. Development as a Make relevant to role.
information to exchange. continuous process helps employees
Because identifying development acquire the experience they need
Most formal performance
areas is easier than knowing how and also encourages a development-
management systems contain a
to address them, Development oriented mindset, so that acquiring
number of steps and processes
Guides are often provided to help experience and enhancing skills
that have been shown to be difficult
managers and employees select become an integral part of day-to-
and time-consuming to implement
appropriate learning activities. 29 day work. This strategy focuses both
well. These include things like
These guides typically suggest on- managers and employees on taking
cascading goals, SMART goals
the-job experiences, formal training advantage of naturally occurring
set at the beginning of the rating
and other resources, such as books development opportunities, which
period, numerical ratings on a large
or websites, targeted to different accelerates learning.
number of competencies, and
competencies. They provide roadmaps mandatory review meetings, among
for addressing development needs. STEP 2: LAY FOUNDATION others. Although these activities
At the year-end review, managers can add value in certain situations,
and employees usually select one they generally tend to contribute to
Scale Back Burdensome
or two competencies toward which intermittent and cyclical behavior
the employee will direct development Demands
rather than to the ongoing, day-to-
effort, typically taking some type of Regarding what system or process to
day behavior that is necessary for a
formal training. implement, the key is to ensure that
high-performance culture. To combat
the associated tools and steps support
this problem, evaluate each step of
What many managers and employees the ultimate goals of the organization.
an organizations formal process for
do not realize is that employees By focusing on completing forms and
the results it is producing, with an eye
usually gain the most learning and steps within prescribed time frames,
toward eliminating steps, activities
development by engaging in readily current performance management
and requirements that fail to reinforce
available job experiences day-to- processes tend to detract from
key leadership behaviors.
day. 30 In fact, 80 to 90 percent of effective behavior. In fact, achieving
learning occurs on the job. If, for a high-performance culture that For example, many organizations
example, an employee needs to reinforces day-to-day behavior means base performance ratings on
improve her briefing skills or customer de-emphasizing, streamlining and competencies, which are often defined
service skills, she should have many minimizing administrative requirements. by standards that reflect different
opportunities to practice and acquire We offer several examples below of levels of responsibility, complexity
these skills on the job. When making how current formal systems could be and difficulty at various job levels.
assignments, however, managers scaled back to better support effective Competencies are advantageous
often neglect to think about performance management behavior. because they provide a job-relevant,
which employees need particular fair and consistent basis for evaluating
experiences and instead assign work
10
Building a High-Performance Culture: A Fresh Look at Performance Management

employees. Some performance Another strategy for streamlining is to


management systems contain a large eliminate weighting of competencies. Recommendations
number of competencies, which can An overall rating based on weighted
take a long time to rate, especially for competencies tends to result in the Eliminate formal system
managers with many employees. But same rank order of employees as steps that do not add value or
given that little differentiation in ratings using unweighted competencies. So undermine effective performance
exists among employees, there is no the added burden of weighting has no management behavior.
compelling practical reason to rate a practical impact on results.
Use the smallest number of
large number of competencies.
A final streamlining strategy is to rating factors possible to cover
In the spirit of streamlining formal reduce or eliminate requirements job requirements.
system requirements to make way for narratives. If effective, ongoing
feedback is occurring in real time,
Simplify rating scale and
for increased daily performance
narratives typically add little value requirements.
management behavior, we
recommend collecting ratings on as and in fact often undermine candid Identify tools that will be well
few competencies as are necessary to information exchange, due to received and that effectively drive
capture the jobs critical requirements. reticence on the part of managers desired behavior.
This method can amount to as few as to put negative information in
three or fourfor example, technical writing. Also, because narratives
However, whether formal numerical
performance, teamwork and initiative. are often misaligned with ratings or
ratings are actually needed in a
Although five- and seven-point scales rewards, they do not provide credible
given situation is useful to evaluate.
are commonly used in rating systems, justification for either. The value
As discussed earlier, ratings do not
simpler scales with three points of performance narratives in many
necessarily support the administrative
are often sufficient because most situations is unclear.
purposes they are designed for.
employees are rated at the top end of
The necessity of rating or grading
whatever scale is used. See Figure 8 The more performance management
employees is an unquestioned
for an example. can be disentangled from these
assumption in most organizations.
administrative purposes, the easier it

Figure 8. Example of a Simplified Rating Scale

Failed to meet technical quality standards; work was incomplete,


Unacceptable poorly conceived, error-ridden or not well targeted; work performed
unsatisfactorily or in an unresponsive manner.


Products and services met expectations, were complete, well

Successful targeted and understandable; work performed was responsive and


competent.

Surpassed quality standards and expectations; products were

Outstanding thorough, error-free, ideally targeted and maximally responsive to


needs.

11
Building a High-Performance Culture: A Fresh Look at Performance Management

Figure 9. Traditional Training/Behavior Change

Traditional Training Behavior Change


Typically manager only Training provided for both managers and
employees
Primarily on navigating the formal
process Deeper dive, focusing on the knowing/
doing gap
F
 ocuses on knowledge acquisition,
not skill building More individualized, using assessment
results as baseline
O
 ften disconnected from on-the-job
realities Uncovers underlying fears and attitudes
that prevent change
No accountability for learning or
application Accountability for learning and
application
No reinforcement on the job
Tools to facilitate change

will be to motivate effective behavior. One difference between the training


Administrative purposes actually model proposed here and typical training
undermine effective performance is that the latter focuses primarily on To build a high-performance
management by inhibiting honest formal system steps, while lip serviceat culture, training needs to
feedback and development mostis paid to engaging in effective be effectively delivered and
discussions.31 If organizational decision behavior. Even when more extensive
transferred to the job through
makers can abandon their numerical behavioral training is offered, supports
ratings altogether or possibly use are rarely in place to reinforce training on
the use of environmental
summary strengths and development the job. Below we discuss the beginning cues, tools and reinforcers
areas in lieu of them, a high-performance of the training process, designed to that drive behavioral change.
culture is likely to evolve more quickly. introduce concepts.
If policy dictates that a rating of record
For initial training, in-person sessions
is needed, there are clear advantages
are recommended to better convey
to implementing the least burdensome
the advantages of this new approach. clear expectations) can be offered
requirements that will meet the
Although more expensive, the to support behavioral change. An
organizations needs, as this will minimize
training can then include hands-on advantage of web-based training is that
the effort associated with making formal
exercises and interactive discussions participants can complete programs
ratings that add little practical value.
to facilitate understanding. If feasible, at their own pace. Advanced forms of
it is best to train intact manager online training can also provide high-
Introduce New Concepts and employee teams to carry out fidelity simulated practice exercises.
Employees and managers need to ongoing performance management The biggest disadvantage of web-
be able and motivated to engage in activities to allow them to understand, based training is that managers and
effective performance management. practice and become comfortable employees can ignore it easily.
Training can be helpful, but traditional with their roles in the feedback and
training is more of an introduction to development process.
Put the Right People in
concepts and must then be followed
by a solid strategy to ensure behavior Following initial training, web-based Managerial Jobs
modules on selected topics (e.g., setting A final important component of
change.
12
Building a High-Performance Culture: A Fresh Look at Performance Management

creating the foundation for a high- reinforce productive behaviors.


performance culture is ensuring that Recommended Topics
On-the-job performance management
managers with the potential or skills
aids are useful to strengthen skills
to perform effectively are in place.
learned in training. For example, an For both managers and
Many are promoted into managerial
aid might be developed that lists a employees:
positions because of their technical
managers primary responsibilities in Building trust.
competence, even though the job of
the performance management process.
a manager is not to perform technical Learning strategies for
Such aids tend to be succinct at a
work. One of the more interesting communication.
glance tools, and as such, they are
findings from the Google study is
usually most beneficial following formal Ongoing expectations and
that in an organization that relies on
training. The advantage of such aids is feedback.
technical innovation and competence,
that they can be used at an employees
the ability to provide advice on Developing through experience.
discretion.
technical issues was the least critical
For managers:
of the eight good boss habits. Other tools that help keep
performance management at the Communicating the big picture.
These results further support what
forefront of employees and managers Diagnosing and addressing
we already knownamely, that the
minds on a daily basis include performance issues.
essence of a managers job is to direct
things like cartoons-of-the-day and
and develop others successfully. Deep-diving on feedback and
messages from leadership, which
Managers need particular aptitudes, coaching skills.
can be sent to employees desktops,
skills and dispositions to be able
laptops and mobile devices. For employees:
to learn their leadership roles and
effectively accomplish work through Over the past several years, many Ensuring clear expectations.
others. So selecting managers who organizations have implemented Seeking feedback.
are well suited for the job is the first automated systems to ease administrative
step in driving effective performance demands. The typical automated
Reacting well to feedback.
management behavior. performance management system is
a stand-alone system that is separate
Obviously, if attention has not been
from other automated systems that are events. Another organization
paid to selecting managers with strong
used daily. As such, they require separate provided an easily accessible tool
leadership skills, more effort will need
logins, and most get used only at peak to provide feedback to others
to be devoted to training and training
required activity times: the beginning with a click. Tools that incorporate
transfer. Because many organizations
of the cycle, when most performance social networking concepts to drive
will not displace managers once they
management processes require goals feedback are especially helpful for
are selected, there may be limits on how
to be recorded in the system, toward engaging younger employees in the
well some managers will be able to learn
the end of the cycle, when employees performance management process.
effective performance management
are often required to record their
behavior. Selecting managers with the Some organizations provide a
accomplishments or self-ratings, and
potential to perform satisfactorily makes performance management hotline
at the very end, when managers are
a long-term contribution to building a to facilitate learning and to provide
required to record ratings.
high-performance culture. coaching support for managers and
If performance management tools that employees. Callers can ask questions
STEP 3: SUSTAIN BEHAVIOR facilitate feedback and development about performance management issues
were incorporated seamlessly into the they are experiencing. While such
standard IT systems and workflows hotlines can add value in building a
Provide Tools and Resources that employees use every day, performance culture, organizations must
to Drive Behavior they would help drive more regular be willing to staff them with capable
After introducing the concepts behavior. Simply put, making tools people who can competently offer
underlying effective performance easily accessible makes it more advice. This type of hotline requires
management through formal training, likely people will use them. One a different skill set than do hotlines
the next crucial step is to incorporate organization tagged e-mails to flag focused on procedural, administrative
tools and features that build and them as development or feedback and automated system support.
13
Building a High-Performance Culture: A Fresh Look at Performance Management

Menu of Google, not only evaluate manager as perceptions about the value of
Environmental Reinforcers effectiveness but also provide coaches performance management.
for those who need additional support.
At a glance aids. In turn, managers should periodically
check in with employees, assessing Old Thinking Versus
Automated tools that drive and discussing how well they are New Thinking
feedback and development engaging in the process.
embedded in enterprise While some have suggested that
systems. Building a performance management performance management is so
culture is not something that will broken that formal processes should
Attention-grabbing messaging
be eliminated entirely, this is not
happen overnight. Rather, it can take
pushed out via automated considerable time, even years, for necessary. Rather, substantial changes
systems. should be made to redirect current
enculturation of sustainable change.
Performance management performance management systems
What will help drive a high- and approaches so they focus on
hotlines and coaches. performance culture are ongoing reinforcing the critical behaviorsfor
Social networking tools and evaluation, feedback and improvement both managers and employeesthat
supports to share experiences of the system as a whole. Pulse ensure performance management
and lessons learned. surveys directed to individual success. Having formal processes
managers can be aggregated so in place also provides a valuable
that metrics can be tracked at an safety net to ensure that at least
A final strategy to reinforce effective enterprise level. Reporting these some performance information is
behavior is to create communities of results should further motivate the communicated to those employees
interest or practice, in which members frequency and effectiveness of with poor managers who may
can exchange information, experiences the leadership behaviors we have
otherwise neglect their performance
and lessons learned to help each been discussing. In addition, we management responsibilities.
other. Performance management recommend evaluating the extent
portals, blogs, forums or collaboration to which the new performance The table on the next page
tools can easily be made available to management practices are affecting summarizes key differences between
facilitate this. bottom-line business results as well the traditional old approach and
the new approach discussed in
STEP 4: MONITOR AND IMPROVE
Figure 12. Sample Evaluation Metrics
Hold Leaders Accountable for
Continuous Improvement
To drive enculturation of performance
management behavior, short pulse
surveys are useful for collecting Business results
feedback about the extent to (decreased turnover,
which employees believe that their improved outcomes)
managers are providing them with
growth opportunities on the job,
setting expectations that make Behavior change from
performance requirements clear and existing state (pulse
providing effective feedback that surveys/360s)
helps them develop. Providing the
results of these surveys to managers
drives accountability and helps guide
behavior adjustments. Employee and leader views
(surveys, focus groups)
Organizations serious about building
high-performance cultures, like

14
Building a High-Performance Culture: A Fresh Look at Performance Management

Performance Management Performance Management


Old Thinking New Thinking

Organizational Alignment Cascading goals Mission articulation and discussions of


fit

Goals SMART goals at the beginning of the cycle Ongoing expectations as work evolves

Development Reluctance to discuss; primarily formal Part of daily routine; acquiring


training experience, mentoring

Feedback Once or twice a year; perfunctory and Regular discussions embedded in work
dreaded

Performance Ratings Detailed to support decisions, often Simplified; small number of factors
cumbersome and low value defined by standards

Training For managers on formal system For managers and employees on day-to-
requirements day behavior

Policies and Procedures Extensive, with documentation Considerably streamlined


requirements
Evaluation, Monitoring Whether steps are completed or not Pulse surveys to gauge behavior,
satisfaction, results and perceived value

this report, namely focusing on Zappos 10 core values, such as Performance Management
encouraging significant, ongoing delivering Wow service or showing at Zappos
performance management behavior. humility.
Driving this behavior is not simple. Managers provide regular
To drive feedback, Zappos directs
But it can be accomplished by feedback on and examples
managers to provide employees with
implementing infrastructure, training, of behaviors exhibited by
status reports on their performance
tools and environmental supports employees who embody core
for informational purposes only, such
aimed at changing attitudes and values.
as the percentage of time spent on
developing effective behaviors,
the telephone with customers. The Purpose of tool is to help
like those identified in the Google
frequency of the reports is decided employees understand how
research.
by the manager. Managers no they are perceived.
An example of a company that longer make ratings on a five-point
has implemented a performance unsatisfactory to outstanding scale,
Not used for reward or
management process aligned but instead indicate how many times disciplinary purposes.
with the New Thinking model is they notice employees exhibiting ree classes offered to
F
Zappos. By replacing its traditional specific behaviors that represent the employees on improving
performance management 10 core values, with documented behavior that reflects core
process in favor of one based examples of what the employee values.
on continual feedback and self- actually did. These assessments
improvement, Zappos is reinforcing are not used for promotion, pay or
the development of more effective disciplinary purposes. Rather, their Beyond Zappos, several other
behavior. Rather than being rated and purpose is simply to provide feedback companiesincluding Google and
given feedback once yearly as part of on how employees are perceived by Appleare experimenting with
a formal review process, employees others. If an employee scores low performance management practices
are given regular feedback on the in an area, free on-site courses are that drive effective leadership
extent to which they demonstrate offered to help the employee improve. behavior as their key strategy. 32

15
Building a High-Performance Culture: A Fresh Look at Performance Management

Legal Considerations the organizations performance well against the guidelines from case
management process. In fact, many law cited here. As we have discussed,
Organizations must be knowledgeable of the ideas presented here should documentation often does not match
about professional33 and legal enhance defensibility, especially in ratings or rewards, managers often
guidelines, 34 including relevant case the areas of setting expectations and avoid providing feedback, and the
law in any given country, pertinent providing feedback. Furthermore, expectation-setting process is often
to the design and implementation of as we discussed previously, when formalized at the beginning of the rating
performance management systems. managers and employees have period but then inconsistently managed
Following these guidelines will enhance effective relationships characterized and largely forgotten during the year.
the defensibility of a system in the by trust, employees perceive higher For these reasons, organizations have
face of a legal challenge. 35 Although levels of procedural justice and feel implemented and will need to retain
an in-depth discussion of legal issues that they are more fairly treated. their formal performance opportunity
and requirements is beyond the scope Employees who believe they have programs, in which employees are put
of what is covered here, guidelines been treated equitably are the best on notice about their performance when
relevant to performance management defense against legal actions because significant issues arisebecause it is
systems based on U.S. case law are they do not tend to initiate or become primarily through these systems that
presented in the sidebar below. involved in legal challenges. 36 appropriate feedback is provided and
It is noteworthy that none of the documentation is created that complies
Many of todays formal performance
recommendations made in this report with the guidelines outlined above.
management systems would not fare
will undermine the defensibility of

Performance Management Guidelines Based on Case Law

Evaluate employees on job-relevant factors.


Inform employees of expectations and evaluation standards in
advance.
Have a documented process with specified roles for managers and
employees.
Train managers and employees on the performance management
process and relevant skills.
Document justifications for rewards/decisions by managers.
Provide timely feedback on performance issues.
Allow employees to formally comment on and appeal evaluations.
Make sure evaluations used for decision-making are consistent with
decisions.

16
Building a High-Performance Culture: A Fresh Look at Performance Management

SUMMARY AND CONCLUSIONS

There is strong consensus that high performance. Research has


performance management is shown that effective performance
the most difficult human capital management behaviors positively
system to implement successfully, affect employee engagement
with both employees and and bottom-line results. To the
managers unconvinced about extent that changes are made to
its value. Its inherent difficulties formal systems, the goal should
have commanded an enormous be to reduce complexity and
amount of attention from both administrative demands. While the
researchers and practitioners, but strategies outlined here may be
the vast majority of interventions to more challenging to implement
improve performance management than a traditional formal system,
outcomes have focused on making they are also more likely to
changes to the formal system. produce sustainable performance
management improvements leading
This report suggests that
to a more successful and productive
organizations should cease
organization.
their almost exclusive focus on
reinventing formal systems and
instead focus on building trust
between managers and employees
creating a culture that fosters

17
One way to begin to shift mindsets is to remind people that they engage in
performance management behavior every daywith their children, spouses, co-
workers, friends and vendors. Once people make this connection, they can better
grasp the meaning of performance management in the workplace.
Building a High-Performance Culture: A Fresh Look at Performance Management

SOURCES AND
SUGGESTED READINGS

Beer, M. (1981). Performance appraisal: Dilemmas and


possibilities. Organizational Dynamics, 9(3), 24-36.
This article attempts to summarize what is known about the underlying
causes of problems experienced with performance appraisal and to
suggest some means for overcoming them. The central thrust has
been to find means for dealing with the main barriers to effective
appraisalsavoidance by the supervisor and defensiveness from
the subordinate. The authors suggest a number of ways in which
supervisors and employees might negotiate the difficult dilemma of
discussing an evaluation of performance in a nonevaluative manner.

Bryant, A. (2011, March 13). Googles quest to build a better boss.


The New York Times, p. BU 1.
In early 2009, statisticians inside the Googleplex embarked on a
plan code-named Project Oxygen. Their mission was to build better
bosses. Google began analyzing performance reviews, feedback
surveys and nominations for top-manager awards. The statisticians
correlated phrases, words, praise and complaints and found eight
habits good managers have that all reflect performance management
behavior. For much of its 13-year history, particularly in the early years,
Google has taken a pretty simple approach to management: Leave
people alone. Let the engineers do their stuff. If they get stuck, theyll
ask their bosses, whose deep technical expertise propelled them into
management in the first place. But what the study found was that
technical expertise ranked dead last among Googles big eight habits.
What employees valued most were even-keeled bosses who made
time for one-on-one meetings, who helped people puzzle through
problems by asking questions, not dictating answers, and who took an
interest in employees lives and careers.

Cardy, R. L. (2003). Performance management: Concepts, skills,


and exercises. Armonk, NY: M. E. Sharpe, Inc.
This book examines the entire process of performance management,
providing both theoretical concepts and practical, how-to skills. It is
organized around a straightforward model of performance management
that includes performance definition and improvement, diagnosis,

19
Building a High-Performance Culture: A Fresh Look at Performance Management

evaluation, and feedback. The author are shown to be consistently useful in the way that matters for high
also addresses important issues in for producing effective interviews: performance and retention? What
performance management that are a supervisors knowledge of the is the business case for (or against)
often overlooked, such as incorporating subordinates job performance, a allocating scarce resources to drive
strategy and values into performance supervisors support of the subordinate employee engagement? Of the many
criteria and dealing with emotions and a supervisors welcoming of things that impact engagement,
that can accompany performance the subordinates participation. The what are the handful of strategies I
feedback. Each chapter begins with impacts of the functioning, frequency should prioritize to maximize returns
a discussion of a specific concept, and format of the interview, as well on engagement investments? A
followed by a variety of skill-building as the presence of goal setting and study was conducted with 50,000
exercises that provide a rich resource subordinate participation, are shown to employees in 59 organizations
for HR professionals, students, faculty, depend on the characteristics of the and 27 countries. Using advanced
workshop instructors and trainers. employee and job. modeling analyses, several strategies
were identified as most effective for
Cawley, B. D., Keeping, L. M., & Center for Creative Leadership, increasing employee engagement
Levy, P. E. (1998). Participation Kirkland, K., & Manoogian, S. and, ultimately, performance and
in the performance appraisal (2007). Ongoing feedback: How to retention. Particular attention is paid
process and employee reactions: get it, how to use it. San Francisco: to strategies that scale to reach
A meta-analytic review of field Pfeiffer. hundreds or even thousands of
investigations. Journal of Applied employees at the same time, driving
Formal feedback experiences and performance and retention through
Psychology, 83(4), 615-633.
career transitions involve both acquiring employee engagement.
The relationship between participation new skills and honing current ones.
in the performance appraisal process Critical to this is measuring progress. Culbert, S. A., & Rout, L. (2010).
and various employee reactions is This guidebook provides a proven Get rid of the performance
explored by examining 27 research technique on how to elicit feedback review!: How companies can stop
studies. There is a strong relationship and use it to effect change. Tips on intimidating, start managingand
between participation in performance how to evaluate feedback and what to
focus on what really matters. New
appraisal and employee reactions. do if the decision is made not to use it
York: Business Plus.
Various ways of conceptualizing are also provided.
participation and employee reactions This book points out profound
Corporate Leadership Council. problems with typical performance
are discussed and analyzed. Overall,
appraisal participation is found to be
(2004). Driving employee reviews in organizations and the
most strongly related to satisfaction. performance and retention through performance management process in
Value-expressive participation engagement: A quantitative analysis general. Strategies are suggested that
(i.e., participation for the sake of of the effectiveness of employee will enable managers and employees
having ones voice heard) has a engagement strategies. (Catalog to gain more value from performance
stronger relationship with most of the No. CLC12PV0PD). Washington, management processes.
reaction measures than instrumental DC: Corporate Executive Board.
participation (i.e., participation for the
Daniels, A. C. (2000). Bringing out
purpose of influencing the end result).This study examines two imperatives the best in people: How to apply
The results are discussed as they that place significant pressure on the astonishing power of positive
senior HR executives: achieving
relate to organizational justice issues. reinforcement. New York: McGraw-
increasingly higher levels of employee Hill.
Cederblom, D. (1982). The performance while retaining the
performance appraisal interview: A organizations top-tier and core This book argues that the key to
review, implications, and suggestions. performers. It was hypothesized managing effectively has always
that these outcomes are driven by remained the samecreate positive
Academy of Management Review,
employee engagement, and the consequences for workers when they
7(2), 219-227.
study sought to address several exhibit behaviors you wish to increase,
Research on the performance appraisal questions: How engaged is my and undesirable consequences for
interview is reviewed. Three factors workforce today, and is it engaged behaviors you wish to decrease.

20
Building a High-Performance Culture: A Fresh Look at Performance Management

Focusing on the concept of positive This book serves as a useful tool Gebelein, S. H., Nelson-Neuhaus,
reinforcement, the book describes for any manager who wishes to K. J., Skube, C. J., Lee, D. G.,
how to define reinforcers that improve performance throughout Stevens, L. A., Hellervik, L. W., &
work and to tailor them to meet an organization. It presents a Davis, B. L. (2010). Successful
individual employees needs; how to systems approach to performance managers handbook. Atlanta, GA:
set fair performance expectations enhancement and includes tools for
PreVisor, Inc.
and implement and maintain them determining current performance
with minimal cost and effort; and levels and establishing desired The Successful Managers Handbook
how to provide constant feedback performance levels. Specific is a trusted resource for organizations
and reinforcementso employees guidance is provided on 1) analyzing around the world, with more than
always know exactly how to improve the performance of individual 1,000,000 leaders having relied on
performance when they have employees, 2) pinpointing gaps in the book since it was first published
achieved it. Simply by discovering performance and determining what in 1984. It provides practical, easy-
what reinforces each person, the is causing those gaps, 3) developing to-use tips, on-the-job activities,
author argues, any organization practical strategies for maximizing and suggestions for improving skills
can attain the kind of individual performance, 4) getting the most and effectiveness, no matter what
performance that adds up to from training dollars and ensuring the economic environment. This
effective organizational performance. that training is successful, 5) giving 700-page ready reference guide
Performance management case recognition for an employees helps managers understand key
studies from 3M, Xerox, ConAgra and achievements, and 6) evaluating performance expectations and
other major firms are presented. whether or not employees are using coach others, find effective ideas for
what they have learned. management challenges, develop
DeNisi, A. S., & Kluger, A. N. skills to become more effective as
(2000). Feedback effectiveness: Fitzwater, T. L. (1998). The managers leaders, and create realistic action
Can 360-degree appraisals be pocket guide to documenting steps for personal development plans.
improved? Academy of Management employee performance. Amherst, MA:
Executive, 14(1), 129-139. HRD Press. Gilliland, S. W., & Langdon, J. C.
(1998). Creating performance
This article discusses performance This step-by-step guide provides management systems that promote
feedback, an important part of help on documenting and changing
perceptions of fairness. In J. W.
many organizational interventions. unwanted work behaviors before they
Smither (Ed.) Performance appraisal:
The authors note that managers become issues leading to termination.
It presents information on the legal State of the art in practice. San
typically assume that providing
employees with feedback about their framework surrounding discipline and Francisco: Jossey-Bass.
on specific measures for accurate
performance makes it more likely that The authors of this chapter describe
job performance will be improved. performance documentation that three aspects of fairness: procedural
Despite the prevalence of feedback will help protect against discharge fairness (the fairness of procedures
mechanisms in management litigation. The book includes a four- used to arrive at outcomes),
interventions, however, feedback is step progressive discipline process interpersonal fairness (the fairness
not always as effective as assumed. and how to apply it, including how to of interpersonal treatment and
In this article, specific conditions1) clarify gaps in execution versus communication), and outcome fairness
under which feedback might be gaps in knowledge, 2) promote (the fairness of the decision and of
less successful, or even harmful, self-discipline through PEPs outcomes such as pay associated with
are presented. The implications of (Performance Enhancement Plans), the decision). They review research
the results and model for designing 3) clarify position expectations showing that employees perceptions
of interventions aimed at improving to meet expected deliverables, of appraisal fairness are related to
performance are discussed. 4) employ behavior modification acceptance of evaluations, satisfaction
through corrective rather than with the process, (modest) changes in
Fisher, S. G. (1997). The managers punitive action, 5) develop a coaching
performance, trust in the supervisor,
pocket guide to performance leadership style, 6) isolate factors organizational commitment and
management. Amherst, MA: HRD for improvement, and 7) document intention to stay with the organization.
Press. performance issues. The authors provide specific

21
Building a High-Performance Culture: A Fresh Look at Performance Management

recommendations and organizational Ilgen, D. R., Fisher, C. D., & Taylor, This book is modeled after Eighty-
examples that illustrate how to increase S. M. (1979). Consequences of Eight Assignments for Development
fairness in each of the three aspects individual feedback on behavior in in Place, one of CCLs most popular
of the performance appraisal process: organizations. Journal of Applied publications. In the years since that
system development (creating appraisal Psychology, 64(4), 349-371. report was published, more has
instruments, communicating objectives), been learned about development in
appraisal (observing and evaluating The literature on feedback to individuals placefrom research, from working
performance, making reward decisions), has previously been reviewed with with managers and organizations
and providing feedback (communication respect to its effect on the behavior that make use of developmental
of ratings and rewards). of individuals in performance- assignments, and from colleagues
oriented organizations. Although in the field. This book consolidates
Government Accountability Office. contemporary views of individual this knowledge into one tool to
(2008). Human Capital: DOD behavior in organizations stress that help leaders add developmental
needs to improve implementation feedback is necessary for effective role assignments to their own jobs and to
of and address employee concerns performance, little attention is given to help others do the same by including
about its National Security the psychological processes affected tables in the book that are full of
Personnel System (GAO-08-733). by it. This review focuses on the development assignments.
Washington, DC: Author. multidimensional nature of feedback as
a stimulus and addresses the process Lee, J., Havighurst, L. C., & Rassel,
The report summarizes the results of a by which feedback influences behavior. G. (2004). Factors related to
GAO evaluation of the implementation Emphasis is placed on those aspects court references to performance
of the Department of Defenses of feedback that influence 1) the way appraisal fairness and validity.
(DODs) National Security Personnel it is perceived, 2) its acceptance by the Public Personnel Management, 33
System (NSPS), a human capital recipient and 3) the willingness of the (1), 61-78.
system for managing civilian personnel recipient to respond to the feedback.
performance. Congress asked the In this study, the authors test whether
GAO to determine 1) the extent to Kahn, S. C., Brown, B. B., & appellate court judges concern for
which the DOD had implemented Lanzarone, M. (1996). Legal guide performance appraisal validity or
internal safeguards to ensure the to human resources. Boston: fairness depends on their ideology
fairness, effectiveness and credibility Warren, Gorham & Lamont, 6-2 to (liberal or conservative) and type of
of NSPS, and (2) how DOD civilian 6-58. charge (gender or age discrimination).
personnel perceived NSPS and what They examined 39 cases between
actions the DOD had taken to address Written by practicing experts, this guide 1992 and 2000 and found some
these perceptions. Based on the reports on the continually changing impact of both ideology and type of
GAOs work evaluating performance laws that affect human resources. charge. Appendix A contains a listing
management in the public sector Broad in scope, this comprehensive of all the cases; appendix B contains
and on the DODs challenges in volume provides guidance on current a glossary of validity terms to classify
implementing NSPS, as well as reviews issues, such as sexual harassment, cases; and appendix C contains a
of relevant documents, employee discrimination, employment at will, glossary of fairness terms to classify
survey results, interviews with officials, privacy, employer and union unfair cases. The paper also includes an
and focus groups with employees labor practices, collective bargaining, extensive list of references.
and supervisors at 12 selected compensation and benefits, retirement,
installations, a list of safeguards that and other benefits laws. An appendix Lombardo, M. M., & Eichinger, R. W.
NSPS should include to ensure its is provided that includes state (1989). Eighty-eight assignments
fairness, effectiveness and credibility employment laws and a table of cases. for development in place.
was developed. The list included using Greensboro, NC: CCL Press.
McCauley, C. D. (2006).
a third party to analyze rating results
Developmental assignments: The Center for Creative Leaderships
for anomalies, publishing final rating
Creating learning experiences continuing studies of executives
distributions to improve transparency
have found that learning on the
and developing action plans to improve without changing jobs.
Greensboro, NC: CCL Press. job is the best way for a person to
negative employee perceptions.
develop. Often people are given new

22
Building a High-Performance Culture: A Fresh Look at Performance Management

positions in order to provide them with appraisal (e.g., layoffs, promotions, my organization is as good as or
developmental experiences. But what discharges, merit pay) that attract better than the security offered by
if such a transfer is not possible? This a significant amount of legal other organizations in our geographic
report contains 88 assignments that attention. A sample of cases was area. Although just half the workers
can be added to a current job, offering used to demonstrate prudent, and (49 percent) said they believe their
individual developmental opportunities. not so prudent, use of the results organization is well managed, that
of performance appraisal as they figure is significantly higher than the
Longenecker, C. O., Sims, H. P., relate to discrimination issues under 40 percent reported three years ago.
Jr., & Gioia, D. A. (1987). Behind Title VII of the Civil Rights Act of
the mask: The politics of employee 1964, the Age Discrimination in Murphy, K. R., & Cleveland, J. N.
appraisal. Academy of Management Employment Act, the Equal Pay Act (1995). Understanding performance
Executive, 1(3), 183-193. and other closely allied statutes. The appraisal: Social, organizational,
authors conclude that evaluations and goal-based perspectives.
While management books and of performance should be based Thousand Oaks, CA: Sage.
manuals claim employee appraisal is on the results of performance
an objective, rational and accurate appraisal processes that incorporate This book examines the performance
process, there is extensive evidence organizational justice and fairness. appraisal process from a social-
to indicate that executives deliberately psychological perspective,
distort and manipulate the appraisal Mercer Human Resource emphasizing the goals pursued by
process for political purposes. Consulting. (2005). Whats raters, by employees being rated and
In-depth interviews with 60 upper- working survey. New York: Author. by the various users of performance
management executives revealed appraisal. The authors apply this goal-
that their first concern is not the The 2005 Whats Working Survey, oriented perspective to developing,
accuracy of the appraisal, but how to conducted by Mercer Human implementing and evaluating
make use of the review process to Resource Consulting, reflects the performance appraisal systems. This
reward and motivate their employees. thinking of a representative sample of perspective also emphasizes the
The executives generally felt that workers employed by more than 800 context in which appraisal occurs
this focus was appropriate. Factors organizations across the U.S. The and shows that the shortcomings
affecting the appraisal process survey is part of Mercers ongoing of performance appraisal are
include the economic health and effort to capture contemporary sensible adaptations to its various
growth potential of the organization, perceptions of work and to develop requirements, pressures and demands.
the executives personal belief scientific norms that employers Relevant research is summarized,
system, the degree of communication can use as they design, implement and recommendations are offered for
and trust between executives and and communicate their human future research and applications.
subordinates, and the appraisers level resource strategies and programs.
in the organizational hierarchy. Other The first edition of the survey Partnership for Public Service.
results reveal that 1) executives in was conducted in 2002. Mercers (2007). The best places to
large corporations are political actors 2005 research revealed signs of work in the federal government.
who try to avoid unnecessary conflict, enhanced employee commitment Retrieved July 29, 2010, from http://
and that 2) executives will try to and confidence compared to 2002. bestplacestowork.org/BPTW/about.
make use of the existing bureaucratic For example, nearly two-thirds of the
procedures for their own benefit. workers surveyed (64 percent) felt a Designed to help a broad audience
strong sense of commitment to their of job seekers, researchers, federal
Martin, D. C., Bartol, K. M., & organization, up from 58 percent in employees and government leaders,
Kehoe, P. E. (2000). The legal 2002. More than 7 in 10 (73 percent) the Best Places to Work in the Federal
ramifications of performance workers said they are confident their Government rankings draw on
appraisal: The growing organization will be successful in responses from more than 263,000
the future, compared to 63 percent civil servants to produce detailed
significance. Public Personnel
in 2002. Some 65 percent (up from rankings of employee satisfaction
Management, 29(3), 379-406.
59 percent in 2002) agreed that and commitment across 290 federal
The article provides information the level of job security offered by agencies and subcomponents.
concerning outcomes of performance Agencies and subcomponents are

23
Building a High-Performance Culture: A Fresh Look at Performance Management

ranked according to a Best Places to Over the decades there have been that represent intractable problems
Work index score, which measures many debates about the best format that have plagued performance
overall employee satisfaction, for rating scales and components for management systems almost from
an important part of employee performance management systems. their inception. While no quick fix is
engagement and, ultimately, a driver of This book discusses the more salient offered, a thorough understanding of
organizational performance. The Best arguments on these matters and these issues and their implications
Places to Work score is calculated provides practical implementation is the first step toward mitigating
for both the organization as a whole advice, tools and actions to avoid them. The top challenges faced by
and specific demographic groups. In in implementing performance U.S. organizations include viewing
addition to this employee satisfaction management systems. It describes performance management as an
rating, agencies and subcomponents a comprehensive performance administrative burden rather than a
are scored in 10 workplace categories, management process that begins with strategic business tool, the reluctance
including effective leadership, specifying organizational objectives of managers and employees to
employee skills/mission match, pay and then moves down through each engage in candid performance
and work/life balance. level, rating employees on job-relevant discussions, and judgment and
factors and effectively developing time factors that impede effective
Peterson, D. B., & Hicks, M. staff. The primary audience is not appraisal. Implications of these
D. (1996). Leader as coach: psychologists but rather human challenges are discussed.
Strategies for coaching and resource staff and the managers
developing others. Minneapolis, who are responsible for developing, Pulakos, E. D., & OLeary, R. S.
MN: PDI. implementing and defending a (2010). Defining and measuring
performance management system. results of workplace behavior.
This is a straightforward, practical It also provides useful information In J. L. Farr & N. Tippins (Eds.),
book intended to help lead people for those who oversee training on its The handbook of employee
and organizations to greater success. application. selection (pp. 513-529). New York:
The tips and practices are designed
Psychology Press.
to sharpen coaching skills so that Pulakos, E. D., Mueller-Hanson,
readers can attract and retain the R. A., & OLeary, R. S. (2008). This chapter discusses how to
talent needed for success, foster Performance management in the define and measure performance
growth in others, provide effectiveUnited States. In A. Varma, P. results in organizations. Some of the
feedback, orchestrate learning topics discussed include cascading
S. Budhwar, & A. DeNisi (Eds.),
opportunities and groom high- goals, SMART goals, performance
Performance management systems
potential performers. accomplishments, and defining
around the globe (pp. 97-114).
performance objectives, among
Pulakos, E. D. (2004). Performance London: Routledge.
others. The circumstances under
management: A roadmap for which these types of performance
Although there is enormous variety
developing, implementing in the performance management measures work best, as well as their
and evaluating performance systems used in the U.S., this limitations, are discussed.
management systems. Alexandria, chapter discusses key factors and
VA: SHRM Foundation. challenges that impact the vast
Pulakos, E. D, & OLeary, R.
majority of these systems. Three S. (2011). Why is performance
This report describes practice management broken? Industrial
key factors have had a particular
guidelines for developing formal
impact: a focus on results, automation and Organizational Psychology,
performance management systems and
and the legal environment. While 4(2), 146-164.
is the precursor to the present report.
these factors are neither positive
While extensive research and practice
Pulakos, E. D. (2010). Performance nor negative, they represent major have focused on understanding and
management: A new approach for trends with significant implications
improving performance management
driving business results. Oxford, for performance management design
systems in organizations, the
UK: Wiley-Blackwell. and implementation. In contrast, the
formula for effective performance
chapter also discusses key challenges

24
Building a High-Performance Culture: A Fresh Look at Performance Management

management remains elusive. This Rodgers, R., Hunter, J. E., & Weatherly, L. A. (2004).
article proposes that a significant part Rogers, D. L. (1993). Influence of Performance management: Getting
of the problem is that performance top management commitment on it right from the start. Alexandria,
management has been reduced management program success. VA: Society for Human Resource
to prescribed steps within formal Journal of Applied Psychology, Management.
administrative systems that are
78(1), 151-155.
disconnected from the day-to-day This paper recognizes that establishing
activities that determine performance The literature on many different types a performance management system
management effectiveness. of management programs reports that in an organization is a significant
The authors further argue that effective program installations depend undertaking. HR practice leaders have
interventions to improve performance on the level of top management grappled with this issue for decades,
management should cease their commitment: the stronger the and academic and professional
exclusive focus on reinventing commitment, the greater the potential journals contain a plethora of ideas
formal system features. While well- for program success. A meta-analysis and approaches on this subject too
developed tools and systems can of 18 studies that evaluated the numerous to count. While no one-
facilitate performance management, impact of management by objectives size-fits-all solution exists for all
these alone do not yield effective was presented to test this hypothesis. organizations, and each must find its
performance management. Rather Results showed a significant own niche in the marketplace, this
than make further changes to formal gain in job satisfaction when top paper argues that there are certain
performance management systems, management had high commitment fundamental criteria in developing
more attention to improving manager- to program implementation. Little performance management systems
employee communication and aspects improvement was found in studies that apply equally across organizations.
of the manager-employee relationship that had moderate or low commitment These critical success factors are
are likely to hold more promise for from top management. presented and discussed.
improving performance management
processes in organizations. Smither, J. W. (Ed.) (1998). Werner, J. M., & Bolino, M. C.
Performance appraisal: State of (1997). Explaining U.S. courts
Pyrillis, R. (2011). Is your the art in practice. San Francisco: of appeals decisions involving
performance review Jossey-Bass. performance appraisal: Accuracy,
underperforming? Workforce fairness, and validation. Personnel
Management. Retrieved from www. This edited book is part of the Society
Psychology, 50(1), 1-24.
for Industrial and Organizational
workforce.com/article/20110505/
Psychologys Practice Series. It This paper examines circuit court
NEWS02/305059995.
contains chapters that bridge the gap decisions relevant to performance
This article discusses the between research on performance appraisal between 1980 and 1995
ineffectiveness of the yearly appraisal and practice, offering and shows that these decisions were
performance review, providing survey a comprehensive, practitioner- explained by use of job analysis,
results from a variety of sources oriented guide to best practices in provision of written instructions,
that substantiate the authors performance appraisal. Addressing employee review of results and
assertion. The article further presents an issue vital to all organizations, it agreement among raters. However,
specific examples of companies introduces readers to cutting-edge appraisal frequency and type (traits
that have implemented performance thought and theories in the area versus behaviors or results) were
management practices that deviate of performance management. In unrelated to judicial decision. Of
from formal processes in lieu of more addition, it provides nuts-and-bolts other factors examined (e.g., type of
informal practices that reinforce guidance to a broad spectrum of discrimination claim, statutory basis,
ongoing feedback and employee issues such as legality, fairness, team class action status, year of decision,
development. The article argues settings and incentive programs. circuit court, type of organization,
that the heart of performance purpose of appraisal, evaluator
management lies in effective race and sex), only the circuit court
leadership behavior. approached having some impact. The
authors conclude that issues relevant
to fairness and due process were
most salient to judicial decisions.
25
Informal, continuous feedback is the most valuable type. If feedback is
provided immediately following good or poor performance, it helps employees
make real-time alterations in their behavior and enables them to perform their
work more efficiently.

26
Building a High-Performance Culture: A Fresh Look at Performance Management

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Management. Retrieved from www. Minneapolis, MN: PDI.

28
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