4. Jan, 2017

Does Performance Management have a future?

In the meantime I finished the economics basic training offered by the government labor office with 83% and I am now free to start the Udacity experience shortly, will be fun.

On the McKinsey list of the Top 10 articles of 2016 (http://www.mckinsey.com/about-us/new-at-mckinsey-blog/our-top-ten-articles-of-2016) I found a great article about Performance Management from May 2016 (http://www.mckinsey.com/business-functions/organization/our-insights/ahead-of-the-curve-the-future-of-performance-management).

Being responsible for globally distributed, multi-cultural and multi-national, mainly virtual teams in the last 18 years, I always appreciated the availability of a Performance Management system. As long as we properly manage expectations and have the basics (what, why, how?) defined and agreed, this can be a very helpful process and tool:

  • What: What are we planning to do, what are the roles and responsibilities of the involved parties, what are the prerequisites for the process and tool, what is the transparency level the company is willing to offer, etc.?
  • Why: Why are we doing this, what is in it for the management, company and employees, what are the expectations that we have to meet, what are we willing to invest in time, effort, money and resources, etc.?
  • How: How is the process and tool implemented, has there been proper training and discussion about the details, how are we collecting the information, which information counts for performance, how are we measuring performance, who is part of the decision making body, what are the reference points, is salary connected to performance, etc.?

In a nearly perfect world this can be a very powerful tool and I have seen cases, where it was working great. BUT I can also understand the general criticism and the several requests to stop using performance management processes and tools, what is also coming up in the McKinsey article. My team and I have been impacted by performance management tools going wrong, with unclear decision making processes and no transparency about measurement and ratings. So I do understand the concerns and agree that there is a lot of room for improvement and a need for change to the better.

Fits to my general approach for leadership and management: Steal with pride, what is working well and find a different approach for the cases, you do not like at all.

Quick comment with respect to disruptive changes in an industry, have a look at https://www.youtube.com/watch?v=WRG1UFz1ZSM#t=10.082271 the Faraday Future “FF 91” full presentation from CES 2017. This company will give Tesla and all "vintage car makers" are hard time, because they are not talking about a petrol or diesel engine at all, it is all about connectivity and making the customer life and experience easier. Have a look ...