Naiman Labs Newsletter #25. The driving force that everyone hates 🏎️

Hi friends and welcome to the newest flash of Naiman Labs newsletter!

In my career, I have been working a lot with various performance management systems and approaches. This has been one of my main areas of focus in consulting for a while, and I also worked as a performance management lead in a large retail company where my goal was to introduce and establish a performance management process for several thousand employees. I believe that a well-designed performance management system is essential for driving companies forward. I consider as a driving force for the engine.

But there is a strong “but”. It is extremely hard to find a well-designed and effective performance management approach. Six out of ten team managers consider performance management a "necessary HR evil" that steals their precious time during the annual performance review. For them, it's merely about manipulating numbers and evaluations to ensure salary raises or annual bonuses for their team members.

I could also often hear that performance review caused extra anxiety for managers. They have to think of their team members performance and they worry if they evaluate their performance fairly. They have to spend a lot of time to remember what was done, what their team members were working on and somehow evaluate that work done.

The Promise of Performance Management: Looking at performance management as a management approach in general, there is a clear promise. A well-designed system should establish a link between the company's strategy, team performance, and individual contributions. That promise makes it a perfect roadway to establish individual development as well as acknowledge and guide individual contributions to overall company results.

I think there are several things that need to be done to make performance management right.

The "Rights" of Performance Management:

🧠 The Right Mindset: You are a manager all year long, not just during the performance review session.

🔦 The Right Understanding: Performance is a year-round subject. Performance reviews should not bring surprises but serve as regular check-points of ongoing work.

⚙️The Right Process: The purpose of performance reviews is to celebrate progress, align individual performance with objectives, and prepare for the future. Adequate preparation is key to conducting stress-free reviews.

🎯 The Right Expectations: Clear objectives need to be set with your team to evaluate their performance effectively. Regular check-ins ensure objective relevance and allow necessary adaptations.

Bonus Tip: Metrics Alone Are Not the Answer. The biggest mistake I experienced working with performance management is over-reliance on metrics. There's a common understanding that managing performance is about measuring some metrics. However, metrics are just one component of performance evaluation.

🏎️ Just like when you need to drive somewhere and you drive a car, your speed (metric) is only one component of success. You also need to consider the car's condition, the road, timing, rules, safety, and passengers.

Similarly, in performance management, metrics are just one component. It starts with the right expectations, goals, objectives, process, and methodology.

So, dear team leaders, don’t hate performance management and it is not a necessary evil. It is an evil when it’s done wrong. Let’s make it right and let’s help team members to prosper and develop!