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. For many companies, 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. It’s time for a fresh look at performance management.
Most employees and managers view their performance management systems as largely ineffective and incapable of delivering results. But research performed by the Corporate Leadership Council (CLC) has shown that over half of the most important drivers of employee engagement and performance are precisely the behaviors that define effective performance management: setting clear expectations, helping employees accomplish work, providing regular feedback, and finding new opportunities for employees to succeed and develop. These behaviors are clearly valuable, yet our performance management systems are not seen as producing these. Why? What can firms do to improve results? At Google the answer came in the form of Project Oxygen, an attempt to build better bosses. By analyzing performance reviews, feedback surveys and nominations for managerial awards, Google identified eight habits of highly effective managers and three pitfalls that hamper success. Google found that what its employees valued most were even-keeled bosses who made time for one-on-one meetings, helped them solve problems by asking questions rather than by dictating answers, and took an interest in their lives and careers. One surprising result was that the manager’s ability to perform technical work ranked last among the top eight behaviors. Google discovered that bosses have a great impact on employees’ performance and job attitudes. Simply put, better bosses translate into bottom-line results. This thinking reflects the old HR adage that “people don’t quit their jobs, they quit their managers.” Google’s best managers— those who embraced the habits and avoided the pitfalls—had teams that performed better, stayed longer and maintained positive attitudes.
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