Performance management is supposed to empower your staff, release their potential and propel your organisation into the big time – which is funny, because half the time it just seems to lead to recriminations and arguments about salary. Rob Lewis wonders if HR can help manage performance management.

Ah, the annual performance management review: it’s the season of jealousy and insecurity, where line managers get to spend a little one-on-one time alone with their staff to flatter or intimidate them, or possibly both. Yes, it’s a performance alright. Surely, HR can find a better way?

If performance management (PM) at your organisation is anything like the fiasco above, there are many things you can do. The first step, counter-intuitive as it may seem, is to spread it around a bit more. Rather than an annual hauling over the coals (or a blessing of rose petals), performance management needs to be done throughout the year – which isn’t as bad as it sounds, argues Angela Baron of the Chartered Institute of Personnel and Development (CIPD).

"Performance management needs to be holistic and ongoing if it’s going to work," she says. To this end, Baron suggests encouraging line managers to keep up-to-date performance logs. This makes the review process easier and allows everyone to stay focused on the future rather than worrying about the past. After all, it’s a big part of what performance is about.

Winning over the line

One of the perennial problems with HR is that whenever you try to break out of your functional silo you can step on people’s toes. The issue of PM is no different. Yet, HR can have a vital role to play. "Performance management will only ever be as good as the line managers who implement it," says Baron. “HR can design the processes, but line managers will only work with them if they feel it’s really going to help them.”

The trick to embedding good PM into the line may well be to ensure it includes recognition of your line management’s staff handling abilities. In the past, line managers have normally been promoted for their operational achievements rather than their competence in managing people. Acknowledging their people skills will help promote the fact that they have an added field of responsibility now.

More cynically, it’s the equivalent of letting the line manager know that their contribution to PM will be part of their own evaluation. But once it’s accepted that your organisation needs a PM overhaul, and that HR is involved, the next step is explain how you’ll be contributing.

Providing a framework

The most important aspect is to give everyone the space and responsibilities they need. Since the nature of each job can differ, it will ultimately be the line managers who must define performance. Instead, HR should concentrate on process, says Sue Filmer, principal at consultants Mercer.

"You can define PM on three levels," she says. "There is organisational performance on a corporate level. That’s a matter of business planning and strategy development. The second level is turning that corporate view into team performance planning: what are the main things the team contribute and should deliver? The third link is converting that into individual performance: what are my priorities for the coming year?"

HR’s job is to provide links between the three so the organisation’s values and objectives can cascade all the way down. Filmer says she’s seen plenty of companies that have spent a lot of effort in designing management forms and booking individual meetings, only to see it all wasted because there is no performance culture.

A balanced scorecard approach can help here. All the underpinning levers (reward, career development, training, general skills management) all need to point in the same direction. The next thing is to ensure your PM makes a genuine differentiation between performance levels. There will be those who are truly high performing, those who are your solid core contributors and those aren’t meeting expectations.

"Quite a lot of processes we see don’t do that," Filmer observes. "Differentiation has been corrupted because managers are using it to allocate bonuses or pay rises or promotion. It needs to be a genuine business process that’s about communicating performance expectations for the next year."

Control vs learning

For Professor Andrew Neely, chairman of the Centre for Business Performance at Cranfield School of Management, that lack of differentiation is part of a bigger problem. "I think a really important distinction people are not always clear about is that PM should be seen as a learning system, not a control system," he says.

A control system tends to involve setting targets and tracking progress, and if people or teams fall short, intervening and thinking about how to get back on track. The problem is, often it’s a negative process and can lead to all sorts of defensive behaviours.

"If you have a performance review and you know that your team is below target, you’ll come armed with reasons why you’re below target," Neely explains. "There’s always a passing of the buck."

A slightly broader way of looking at it would encompass the issue of targets but also address how individual actions connect with the broader organisational performance. All good PM systems should give individuals a sense of where they fit in the business as a whole. For the same reason, DHL used the term ‘performance planning’ rather than performance management because they wanted to focus on the future.

PM is, after all, about energising people. Staff should come out of meetings feeling motivated and energised, not dejected and alienated. The reason it is tricky is because one unfortunate aspect of PM is that you will uncover employees who simply aren’t performing.

Doing the nasty

"There’s a positive side and a negative side to performance management," says Alan Phillips, manager of the business support helpdesk at employment law specialist Croner. Most of the performance management calls that Phillips and his team take relate to the negative side. "Normally they want to sack someone, so we have to take them back a step or two," he says.

Once you’ve identified a poor performer, of course, there are a number of steps that must be taken before redundancy becomes an issue. If an employee can’t meet requirements, issues such as training and mentoring have to be addressed before formal disciplinary procedures can begin. It outlines one of the key ironies about performance management: those organisations that are doing it well don’t need it.

From Phillips’ perspective, HR’s greatest contribution to PM is to keep things "on the straight and narrow." It can create problems as well as solve them and grievances are not uncommon, especially if targets have been unrealistic. Get it right, however, and you will trigger a spiral of success.

"Problems occur because of the rules, or the rules haven’t been followed," Phillips concludes. "This is where HR becomes important because it is possible to set a PM system up which enlightens and enriches its participants, and they in turn can guide their colleagues that much better."