The standard definition of an organisation is "a group of people with a particular purpose, such as a business or government department". The key word in this is people, according to Great Place to Work chief executive John Ryan, who points out that it is individuals at all levels who ultimately determine an organisation's performance.
While this has been well understood for many years, the fact remains that more than a few organisations fall down badly when it comes to managing the performance of individuals. The problem frequently lies with the performance management system itself or the type of targets being pursued.
For example, employee retention has been used as a benchmark but this is often not useful. “One thing about well-managed organisations is that they are not obsessed with zero turnover,” Ryan notes. “Turnover can be a good thing both for the people and the organisations concerned. When you look at organisations you see that an awful lot of people get into them and find it difficult to get out. They get a bit too comfortable but this is not doing anyone any favours. It’s good to move on to new things.”
On the other hand, people sometimes find it easier to get ahead in their career by moving from organisation to organisation. These are known as regretted losses, for obvious reasons. Had the organisation involved been able to provide the right opportunities, they may have been able to hold on to a valued employee.
Sometimes the opposite is the case and the individual and the organisation simply do not fit. “The organisation and its culture can be inconsistent with the employee’s beliefs,” Ryan explains. “They are in a job they don’t like and may not have the skills for. Sometimes an organisation will simply push them out. The employee thinks the world has ended but six months later they are saying it was the best thing that ever happened to them because they are now doing something they love and playing to their strengths.”
He believes a good performance-management system will do that properly by enabling employees to leave on good terms. That will naturally help improve performance by ensuring there are fewer unhappy employees in the workplace.
Annual review
The old annual review is a particularly poor performance-management system, in his view. “Many big organisations used to have an annual review which was related to pay. It was based on a bell curve with a forced distribution which left everyone feeling unhappy. If there were 10 people on a team, two had to be at the top, six in the middle, and two had to be at the bottom. But what if you have a team of 10 exceptional people? Exceptional performance was not supported or rewarded. That’s the last thing you want. In these situations, what managers really want is a team of fools. They don’t want all A-players. It creates a situation where managers don’t want to hire very talented people.”
Ryan says most well-managed organisations have now abandoned this in favour of 30:30 reviews – 30 minutes every 30 days with a manager. “This takes the form of a conversation. There are no documents. One of the big complaints about the annual performance review was that people didn’t know how they were doing for the 12 months between the reviews. People need to know these things. It creates high levels of stress if they don’t know.”
He describes this as the “If it changes, I’ll let you know”, attitude. “If people are doing a good job they need to be told. This gives them more confidence and they will get better than they were before. That’s the kind of performance management you need.”
Another issue is how poor performers are managed. Ryan describes these as “difficult characters” – people who are poor at their job, difficult to deal with, and don’t have the skills to leave the organisation. “Managers tend to ignore the difficult character,” he says. “Talented individuals see someone getting away with it and feel demotivated.”
And then there are the brilliant performance managers. These are the managers who keep an eye on their teams and when they see someone doing something which could be improved upon or something deserving of compliments they write it down for discussion at their next regular meeting.
“If it has been a few weeks since the last conversation, having something noted down in the diary really helps. For example, if a manager tells an employee that they could improve on some area, the natural response might be to seek a specific instance. The brilliant manager has the answer at their fingertips.
“You have poor managers in every organisation,” he concludes. “Brilliant managers are worth their weight in gold. If you have a brilliant manager they will have a brilliant effect on the organisation by helping people tap their full potential. Brilliant managers bring out talents people didn’t even know they had. They don’t see you as a job role, they see you as a bunch of talents.”