Research

How to implement effective performance management

It is a process that few managers look forward to, and one that most employees dread: the annual performance review. The workplace ritual is a task to cross off the list, something that needs to be done but rarely is taken seriously enough to get done right.

2013-12-11

Organizations spend time and money on annual reviews because managers recognize that regular employee performance reviews help organizations meet their full potential. But the actual process of performance management — how the process is put into practice in the workplace — is broken in most organizations. Management professor Angelo Kinicki makes the case that fixing the performance management process starts with the managers.

It is a process that few managers look forward to, and one that most employees dread: the annual performance review. The workplace ritual is a task to cross off the list, something that needs to be done but rarely is taken seriously enough to get done right.

Organizations spend time and money on annual reviews because managers recognize that regular employee performance reviews help organizations meet their full potential. But the actual process of performance management — how the process is put into practice in the workplace — is widely seen as a nuisance. One San Francisco consulting firm once found that 98 percent of employees found their annual reviews to be unnecessary.

In other words, the performance management system in most organizations is broken; some experts have concluded that performance management is ultimately hopeless — and should therefore be abandoned.

Management professor Angelo Kinicki disagrees. Kinicki has been studying the culture of businesses and organizations for 30 years, and first investigated the ugly state of performance management while writing his dissertation at Kent State in the early 1980s. Even then, as a young researcher, Kinicki could see that most companies handled the performance management process poorly, and that few employees and managers took the review process seriously.

Sadly, Kinicki says, little has changed since then. But now, three decades after his first foray into performance management, Kinicki believes he may have found the key to unlocking the hidden potential of the performance appraisal process. In a new paper published by the Journal of Personnel Psychology, Kinicki and a team of fellow researchers make the case that fixing the broken performance appraisal system starts not with addressing how employees view the process and not by purchasing software to streamline it.

Instead, he focuses on how well managers handle it — how well, or how poorly, they manage the process leading up to that sometimes painful end-of-year ritual.

In their paper, "Development and Validation of the Performance Management Behavior Questionnaire," Kinicki and his colleagues — including W. P. Carey's Suzanne J. Peterson, Kathryn Jacobson of the University of New Mexico, and Gregory E. Prussia of Seattle University — unveil a 27-item measure of performance management behavior. The instrument can help organizations better understand whether managers have the skills and understanding to make the performance appraisal process valuable.

Kinicki and his team found that probing a managers' overall ability in executing performance management behaviors such as goal-setting, providing feedback and coaching, can quickly and easily determine where their managers are excelling and where they’re falling short. With that information in hand, organizations can then go about the work of getting those managers the training they need to do better in the future.

Most importantly, the researchers say, if and when those managers are trained to improve their efforts on those 27 performance-management tasks, companies can and will see bottom-line success. Managers will be seen as more effective, and employees will be happier, too.

"I think most companies have a (broken) model for performance management and that's why they have problems with them," Kinicki says. "What they haven't done is identify the leadership behaviors that can actually make the process work. That's what our article does — it points out that these companies haven't trained these managers on how to exhibit these behaviors."

Worth the effort

There is nothing particularly surprising to be found among the 27 key behaviors that Kinicki and his team listed as part of their Performance Management Behavior Questionnaire, or PMBQ.

The questionnaire covers six competencies of performance management leadership: the process of goal setting, communication, feedback, coaching, providing consequences and establishing/monitoring performance expectations. Questions drill down to such performance management basics as providing direction to employees when needed, being a good listener, giving honest feedback and rewarding good performance, among others. In essence, the PMBQ covers every aspect of the performance management process, specifically from a manager’s perspective.

For their study, the researchers distributed the questionnaire to nearly 6,000 employees — 5,246 employees working in a variety of industries and professions as well as 676 undergraduates working in full- or part-time positions — and asked respondents to evaluate their managers based on all 27 behaviors listed. All respondents were given the following instructions: “After reading each statement, please rate the person you are evaluating in terms of how frequently he/she engages in the behavior. Indicate your answer by selecting the description that best represents your observations or experience. The descriptions range from rarely/never, once in a while, sometimes, fairly often and very frequently/always. There is no right or wrong answer. The correct answer is the answer which expresses your honest observations or experience.”

After collecting and evaluating their data, the results were clear. The researchers found “strong evidence” that high levels of achievement related to the 27 behaviors outlined in the PMBQ were positively linked with better overall outcomes. As a result, the team concluded, the PMBQ can be a useful tool for organizations that wish to improve their performance management processes.

“The most important thing that we found was that when managers excelled in these six dimensions of performance management leadership, the more highly they were perceived as being effective by their bosses, colleagues and direct reports,” Kinicki says. “Moreover, the more they engaged in these behaviors, the more likely it is that their direct reports will have positive job attitudes. If managers can develop these skills, then, it will translate into tangible, positive performance-management improvements for companies.”

The practical implications of the research, says Kinicki are obvious. First, the results show that the PMBQ can serve as a “key component” of any organization's human research management practices and “can be used to help recruit, select and promote people.” Second, the PMBQ can be used as “one criterion for recruiting, selecting and promoting managers.” Finally, the researchers say organizations can and should incorporate the PMBQ into their processes of evaluating managers and integrate it as well into their career development systems.

More simply, says Kinicki, the PMBQ is a tool that most organizations — and most managers — can benefit from greatly.

“These performance management processes take up a lot of time,” Kinicki says. “You’re filling out a lot of forms. It’s a lot of money to spend. And in many cases, it’s just not working. And if it isn’t working, our contribution is that we now have this survey that we believe can help assess if managers are using the right behaviors in the right ways. Once you measure that, you can train them to be better.”

For more information about the PMBQ contact Kinicki & Associates Inc. Kinicki.com

Management Strategy