Performance Management Tension

For a while now we’ve had a performance management module in our software. We think it’s pretty good – it links the person’s annual review with their 360 scores by competency, and allows HR managers to monitor everything easily. We developed it for one particular client, and they’ve recently had a bit of trouble with their ‘annual review politics’.

The basic problem is this: there is an inherent tension in doing performance reviews between consistency and openness. There are basically two ways of doing it:

  1. Have the review reflect an honest conversation between the manager and the individual about the individual’s performance over the year
  2. Have the review reflect a ‘calibrated’ measure of performance that fits correctly with everyone else’s performance reviews (and which can therefore be used to feed into bonuses / raises / etc.)

If you go for option 1 then the obvious thing to do is for the manager to only decide on the review score at the end of the review meeting. Whereas if you go for option 2 then it is important that the review score is agreed with other people (e.g. among the department leadership team) before the review meeting even happens.

Our client’s managers were using option 1, but then they all got together and realised that some managers had been far too generous, and so they had to ‘recalibrate’ everyone’s reviews, which was obviously very disappointing for some individuals who thought they were in line for fantastic bonuses! In other words, the reality (that performance reviews have to be consistent and agreed among many stakeholders) undermined the ideal (that performance reviews reflect the conversation between the manager and the individual).

So anyway, we’ve been thinking people could potentially redesign their performance management tools more closely around a new sort of process that would try to overcome this problem. You could actually have 2 separate review scores – one which is ‘what the manager thinks’, and another for ‘what the company thinks’. To avoid confusion, the two scores would deliberately be on different scales (e.g. the first on a 4-point scale and the second on a 6-point scale) in order to avoid one devaluing the other. You’d be making explicit something which is usually hidden – that a person’s final review score arises from their manager making their case to the other people who control the finances.

We think it might be a great idea, but can’t help wondering whether people really want to be made so aware of the truth?

Mark.


One thought on “Performance Management Tension

  1. When people find there is a bigger disparity between their two scores than their colleagues’ two scores, they may feel disadvantaged and want to know why they have been marked down while their colleagues haven’t – in which case calibrators will have to be open about the mechanism for calibration and the criteria by which scoring decisions are made.

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