More than 50 years of research has attempted to improve performance management (PM) systems by changing every element of the process: what’s rated, who makes ratings, how often feedback is given, what documentation is required, and what rating scale is used. Unfortunately, none of these strategies have been shown to consistently lead to higher performance.  The quest to develop the “perfect” performance management system has caused us to lose sight of what effective PM really is all about: building a high performance culture and driving employee engagement.

Rather than continue to invest significant resources—both time and money—into formal PM systems that have not delivered results, we need more fundamental change for PM to achieve its potential. Such change must be woven into the very fabric of an organization’s culture. It begins by teaching managers and employees how to perform the behaviors that really matter and then holding them accountable for demonstrating these behaviors on a daily basis. 

Based on extensive practice and research, we have created three new rules for changing your organization’s DNA to drive high performance and engagement.

Rule 1:  Shift Your Mindset

The promise of PM can only be realized if there is a fundamental shift in our collective mindset about what PM is supposed to accomplish. It is important, therefore, to distinguish PM from performance appraisal.  While performance appraisal is concerned with the formal process of evaluating and documenting performance?often just once a year?PM is an ongoing process that happens on a daily basis. Performance appraisal happens outside of work while PM is integral to the work. The key behaviors that drive effective PM are:

- articulating the organization’s mission for employees and helping them see how their day-to-day work fits in
- setting clear expectations and providing feedback on an ongoing basis?not just once or twice a year?to let others clearly know where they stand
- providing opportunities for growth and development through real world experiences to help employees build knowledge and skills and operate more autonomously. 

Inducing a collective mindset shift begins with communication from senior leaders, but it must cascade down through every level of the organization. Constant repetition and reinforcement of key messages is needed for the shift to become permanent. In addition, the organization must ensure its processes support rather than detract from these messages. A thorough review of the organization’s current PM system is critical to identify what should be continued, scaled back, or stopped altogether to reinforce the new mindset. 

Rule 2: Lay the Foundation

Knowing that change is needed is different from taking the action needed to actually produce change.  Beyond simply hearing repetition of key communications, busy managers must understand the WIIFM (what’s in it for me?) of PM.  While managers may comply with change when faced with the carrot or the stick, true commitment will only come from an inner belief that change is in one’s own best interest.

Managers must be convinced that effective PM can actually make their jobs easier. For example, setting clear expectations makes it more likely that employees will do tasks right the first time?causing less hassle and stress for the manager down the road. Clear expectations require an investment of time up front but pay dividends over time. A manager who has experienced this first hand is much more likely to buy-in to the importance of communication and feedback.

While some managers may see the value in PM behaviors they may not always have a realistic perception of how effective they are at performing these behaviors. In these cases, direct feedback may help motivate change. For example, organizations such as Google have successfully used surveys to evaluate the current level of PM behaviors demonstrated by its leaders and the resulting impact on the mission, according to a March 12, 2011 New York Times article titled “Google’s Quest to Build a Better Boss.”
Such feedback provides the foundation for change by making more managers open to the idea that change is needed.

Rule 3:  Go Organic

Initial PM training is important for providing a common understanding of how to perform PM behaviors. However, beyond initial training, reinforcing and internalizing PM behaviors is critical for long term success. Managers and employees must be supported, reinforced, and given feedback on how they are doing. This can be accomplished through pulse surveys to provide feedback on PM behaviors, automated tools that facilitate communicating ongoing expectations and feedback, and informal learning events to reinforce key behaviors.  

Ultimately, if PM continues to be seen as an HR initiative, managers and employees will not take full ownership of new approaches. The PM culture must permeate all aspects of the organization. For example, social networking tools can help reinforce a PM culture by providing an informal forum for employees to share stories, lessons learned, and questions and answers.  Peer coaching programs can provide support and accountability for handling tough PM challenges.  Finally, reward and recognition programs should focus on reinforcing the behaviors that matter and not simply adherence to formal policies and procedures.

Summary
Weaving the behaviors that matter into an organization’s DNA is the key to building a high performance culture. This improvement begins with helping everyone in the organization shift their mindset about performance management; laying a firm foundation; and sustaining the change through organic activity.   
True culture change is not an easy or quick proposition. Educating the workforce?both employees and supervisors?on how to actually engage in day-to-day behaviors that have real impact is a critical step in transforming the organization. However, training is only the beginning. These behaviors must be reinforced on the job, and supervisors and employees need to be held accountable for performing them. At a fundamental level the behaviors that matter need to be acculturated throughout the organization until they become part of its DNA.