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Managers manage performance. Performance comes from people.

People are human, however, and will often disappoint their managers.

When managers’ frustration builds, they look for an easy solution. I remember when I first heard about performance management. At last, a system that could make my problems go away!

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Instead of solving them myself, with better communication and being more realistic about my expectations, I grasped for a magical potion that promised salvation. Fortunately, I had a boss who had little enthusiasm for managerial enthusiasms.

Then came Jack Welch. During his tenure as chief executive, General Electric Co. made performance management seem so seductive and sensible. There were endless meetings, with executives carrying large binders filled with data on employees, debating each person’s performance to judge it perfectly and then acting with courage. There were rewards and advice on performing better. Those in the bottom tier were jettisoned, so the company could continually get better and better – which it did, either because of this rigour or despite it; none of us will ever know.

These days, many organizations are admitting that performance management is not working for them. They are throwing out the systems or retooling them, often with an emphasis on feedback throughout the year rather than semi-annual meetings that raise anxiety and create disappointment. McKinsey & Co. found two-thirds of companies in the previous 18 months made at least one major change to their system.

First, some obvious points. Feedback is best given regularly, close to the incidents that prompt the need to discuss performance. That doesn’t mean a broader discussion shouldn’t occur at other junctures, however. Good performance requires more than feedback. It requires motivation, which comes from within the employee, not from the manager’s inspirational words. Forced rankings are arbitrary and cruel. Yes, managers can be too kind judging employees, deciding that everyone on their team is above average. But compensating for that by arbitrarily deciding that a certain percentage of people are subpar and thus need to be turfed is unreasonable.

People don’t want to be compared with others in performance reviews. They want to be compared to themselves. Jinseok Chun, a PhD candidate at Columbia Business School, along with Joel Bockner, a professor at the same university, and David De Cremer, a professor at the Judge Business School in England, conducted four studies looking at comparisons to colleagues’ performance during the same time period or the employee’s own performance in the past. Employees consider comparisons to past individual performance – the trajectory of their work – fairer than social comparison evaluations.

“Employees whose performance was compared with another person’s performance believed that while delivering such evaluations their manager failed to account for specific details of their performance. Thus, they considered the evaluations to be less accurate. They thought that their evaluations were less respectful, perhaps because they felt like they were being treated like another face in the crowd. Importantly, these differences in the perceived fairness between temporal and social comparison evaluations were independent of the favourability of the evaluations,” the academics write in Harvard Business Review.

Fairness has surfaced as an important issue in recent discussions on performance management. That issue has, of course, always been there, just ignored by performance management enthusiasts. Gallup has found only 29 per cent of employees feel their performance reviews are fair. So you are alienating two-thirds of your employees – as was Mr. Welch, undoubtedly – when you conduct them. Not a great tactic.

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Consultant Bruce Tulgan says on LinkedIn, “I have a motto when it comes to performance management: Management should be good news! Employees shouldn’t dread the moment their boss comes to speak with them about their work.”

McKinsey consultants Bryan Hancock and Bill Schaninger, along with Elizabeth Hioe, an alumna of the consultancy, says procedural fairness is the concern: “It’s far from a platonic ideal but instead addresses, in this context, the practical question of whether employees perceive that central elements of performance management are designed well and function fairly.” They don’t suggest killing ratings, because that can lead to a struggle in telling employees where they stand. But the ratings need to balance many complexities, including the fact that work is collaborative.

Is your organization’s performance management system perceived as fair? You can’t manage performance with a widely detested approach.


  • The five main causes of burnout, as delineated by Gallup Research, all stem from poor management: unfair treatment at work, unmanageable workload, lack of role clarity, lack of communication and support from a manager, and unreasonable time pressure.
  • Be available to your team less often. This will protect your time and also encourage the team to figure things out on their own when they can’t consult you, says trainer Maura Thomas.
  • Research on hurricanes shows the people who are least prepared are those who have been through a storm that wasn’t very big. Similarly, says Bryant University management professor Michael Roberto, repeated mild competitive threats leads managers to reduce their concern about risk.

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