This week The Wall Street Journal (WSJ) reported on yet another large company making changes in how they review and manage their people. According to the newspaper's August 22nd article, Kimberly-Clark is getting away from “backward-looking, once-a-year reviews framed largely as a compliance requirement – a paper trail for potential job cuts and salary decisions – to a process that is real-time, continuous and focused on helping people meet ambitious goals…”
In the last year, a number of business news articles have reported on moves away from annual performance reviews and toward more frequent, forward-looking one-on-one conversations. These changes have been characterized as a shift to what’s called Performance Management (PM). According to the WSJ, “in the past year firms including Accenture PLC, and General Electric have dropped annual performance reviews. The WSJ notes that Adobe Systems scrapped its annual review in 2012 in favor of frequent “check-ins.”
In our practice with mid-market companies, we draw a distinction between Performance Management and Execution Management. PM is, in our experience, usually oriented around improving individual employee productivity. Though its aim is also improved organization results, its focus is really around professional development and productivity improvement. Too often, it’s an HR function not integrated with the strategic plan. PM seldom connects individual’s job roles and goals to the organization’s top priorities, at least in a truly meaningful way.
While performance improvement is both necessary and laudable it doesn't necessarily lead to improved overall results. That is why we differentiate between Performance Management and Execution Management. What's that? Getting fully accomplished what you as a company committed to getting done in your one-year plan.
Execution Management goes beyond a focus on individual performance by directly connecting each individual’s performance commitments with the company’s top initiatives. It's about clarifying, deploying and achieving the organization’s objectives, a far broader goal than improved employee performance.
It's true that as in the case of Kimberly-Clark “Millennial workers, meanwhile, demand more feedback, more coaching and a stronger sense of career path.” We agree. Why wouldn’t you want to improve the outdated employee review process? Just don't assume Performance Management as it's generally understood will lead to closely the wide gap between most company's strategic plans and their ability to execute them completely.
If the goal is organizational achievement, changes along the lines of Performance Management are necessary but not sufficient. Here's one quick test. Take the goals of employees in a performance management system and check how many tie directly to the achievement of the company's top three initiatives.
Execution management's keys: Individual performance commitments must be collaboratively developed, such that they become the individual's promise to their leader. Second, there must be a rhythm of one-on-one check-in's monthly. These are meant to cause the right conversations, and include a review of core values, the individual's day job responsiblities and their goals. And third, goals must be developed, once again collaboratively, so that all company's initiatives are supported adequately, and directly by individuals' goals. The leader always has final say on whether the Performance Agreement is acceptable but people won't commit fully unless they have full understanding, participation and buy-in.