NGO Whisperer: Performance Management

Our Associate Principal Consultant, Ana, based in Portugal, featured in the NGO Whisperer with an article on Performance Management.

Performance management is an integral part of ensuring organisations are meeting their strategic and programmatic objectives, at an organisational and individual level.

On an organisational level, performance management and evaluation systems look into understanding progress made by NGOs in achieving its mission, by carrying out monitoring, evaluation and learning initiatives, to help assess the progress made by programmes and activities and creating the desired impact.

The performance management indicators set out will depend on the nature of the organisation (humanitarian and/or development) and the sector programmes they implement. However both focus on measuring the extent to which the organisation has adequate resources to achieve objectives and whether they are allowing the organisation to be accountable to their stakeholders, specifically in relation to their donors and the populations they serve.

Equally, on an individual level, NGOs will be implementing performance management systems that will feed the overall institutional performance management indicators, which will allow understanding from an individual and organisational perspective, on how well it’s people are performing in achieving strategic and organisational objectives.

Performance Management vs Performance Appraisal

As people are the greatest contributors of value in organisations, then performance management of people is about creating a culture of feedback that encourages continuous improvement of individual skills and behaviours, to allow contribution to organisational success. Staff need to understand what is expected of them and in order to achieve these goals, they must be managed in a way that they feel motivated and have the required skills, resources and support to achieve their full potential. As performance management focuses on the critical area of maintaining and improving people’s performance in line with organisational objectives, then performance should be managed through regular, frank, and supportive feedback processes, as an intrinsic part of the relationship between staff and managers.

Effective performance management relies on formal and informal processes. It connects organisational to individual planning with the definition and revision of objectives linked to business goals.

Possibly, I would say that this is the most desired leadership process, but, at the same time, the most unpopular within organizations. Why?

As many organisations approach performance management as a performance appraisal done once at the end of the year, this can be inaccurate and soul-crushing for people. Unfortunately, quite often too, formal performance reviews can become a self-serving exercise on politics and not a realistic assessment of an employee’s strengths and weaknesses. Managers may give bias ratings and is not uncommon to hear that a manager has given a bad performing employee a good rating, so that the employee could get promoted out of the department. Some organisations even have a quota system in place to measure employee performance, which may be hampering motivation and growth potential.

Another common challenge is the implementation of global performance systems across multiple countries, where there is a need to consider country-specific characteristics and cultural dimensions in dealing with underperformance issues. Last but not least, some cultures avoid addressing performance issues and see annual performance appraisals as a synonym of discipline or even an instrument of punishment, where staff can be told off by the manager where they failed to meet performance expectations.

The ability to bring about desired behaviour change drives any attempt to create a performance culture. The tools of performance management, performance planning and development performance appraisals are theoretically good, but they have been quite often done as a “check box” exercise. These often lack clear expectations, involve insufficient feedback and coaching, focus too much on employee weaknesses and gaps, provide little time for learning, and drown everyone in documenting things, often once at the end of the year.

The suggestion here is not getting rid of performance appraisals but making them an integral part of a holistic performance and development system. But what does this mean?

Organisations should complete the process by setting performance management that connects individual targets to organisational objectives. Most importantly, this needs to provide people with ongoing feedback and coaching, tracking their achievements, which are then all rolled up into a yearly snapshot, recognition and rewards, and professional development planning.

Many organisations rely on employees’ outputs for measuring their performance and balance these learning and development objectives with assessments of their behaviour, for example, with surveys of how supportive they are to other colleagues, subordinates or even external stakeholders.

To be able to create a performance culture and holistic performance management system within your organisation, there is the need to train and coach managers to help them improve their skills. This could be in providing ongoing feedback on observable and/or measurable performance outcomes, focusing on people’s strengths and the future, ensuring employees are engaged with their goal-setting and encouraging self-appraisals, so people feel they are contributing in meaningful ways vs. being “average.”

Conclusion

Performance evaluation is fundamental in that it compares results obtained with expected results and defined objectives. It allows us to know and measure the effective performance of each employee in the organization.

For the organization’s growth, the option of evaluating performance or not is not a choice. Without this information, through specific tools, leaders have difficulties in defining the paths to follow and the strategies to be implemented.

As such, performance management cannot be an old-fashioned process, it must be responsible, standardized, and an objective approach that entails responsibilities for change for the organization and the employee. By promoting engagement, it makes everyone more accountable, and by enabling a performance culture with bidirectional feedback, it brings the possibility and opportunity for change, making everyone more efficient and effective.

Organisations should also consider separating the performance pay/rewards aspects from the development conversations in performance management. It is not surprising to see that many organisations still tie pay to performance, especially in a scenario that appraisals are often the only formal record of employee’s contributions. It may not be easy to implement this in practice, but it is an important aspect to consider if organisations are really determined to implement a performance culture. When discussions on performance directly determines raises and bonuses (self-assessments instead of focusing on learning and development), then staff can be caught into trying to justify a pay raise in their performance reviews. To separate compensation/ performance pay from ongoing staff development, coaching and feedback conversations would be an important way to lay the foundation for reflecting on actual performance and helping employees’ future development.

When money is part of the conversation, anxiety around reviews kicks in and it can be difficult, if not impossible, to focus on self-reflection and learning.

Many leaders are eager to change the way they evaluate their staff, but few have the institutional readiness and/or courage to do it and to reduce the performance evaluation to a single annual moment, where increases, promotions and awards are decided.
Effective leaders clearly articulate a strategic framework of mission, vision and values, strategic goals, and the “critical few” measurable priorities. They design and take accountability for managing efficient business processes and structures. Leaders engage people and work closely with them, to learn about their strengths and preferences. They manage talent effectively and encourage others to actively seek ongoing learning. They communicate regularly and consistently.

In highly effective performance cultures, people understand the importance of business analysis that is based on a rigorous examination of their top performers. A search for innovative best practices is constant and these should be adapted to align with local practices to become the roadmap for others.

Human performance is interdependent of accountability, feedback, motivation, skills and knowledge, rewards, and recognition. It is the unique combination of these factors that results in the desired performance from people and the associated leadership behaviours that support an effective performance culture. This systemic approach accrues benefits for organizations, teams, and individuals.

At the end of the day, there is no “one-size-fits-all” approach to performance management. In the current uncertain times and with global and diverse workforces, there are no silver-bullet solutions that will deliver high performance. The intention of this discussion is not about judging how other companies choose to structure their performance management. But more, to help leaders understand that their processes must connect the “what” and “how’s” and align these with and support behaviours that are actually going to drive performance.