Tactics for Tech Leadership Podcast

S2E11 – Performance Management, What Is It Good For?

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by

Andrew Parker
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Show Notes

 Have you had performance reviews where you thought, “What is the point of this?”

 Mon-Chaio and Andy examine the concepts and implications of performance management systems. They swap experiences and insights on the challenges and inefficacies of performance management practices and cover the inconclusive evidence of their effectiveness. Mon-Chaio raises alternative perspectives on employee performance, including Organizational Citizenship Behavior (OCB), and Andy brings up the difference between relational and transactional approaches. The conversation also touches on expectancy and reinforcement theories, questioning their applicability in motivating employee performance.

Find out what they think you can do to have better performance management in your team.

Transcript: https://thettlpodcast.com/2024/03/18/s2e11-performance-management-what-is-it-good-for/

References

Transcript

Andy: Well, howdy y’all. It’s good to be back. I just got back from Montana and now I’m in Northwest England. And so Yeah, it’s a new day. I am a little bit jet lagged. I have no idea how well I’m going to be able to make it through this.

Mon-Chaio: I am ready. We are later in the day because of daylight savings. And I am fresh of mind because I have basically been in Seattle thinking about this stuff. Andy, I think you for the last week have been pulling up floorboards and installing molding in, in

Andy: I was, I was installing molding. I was installing yeah, dealing with cleaning up a floor for flooring it. Installing a shower. What else did I get up to? Oh making a spaghetti meal for about a hundred people.

Mon-Chaio: And did you have any leadership learnings from your time? Because you only think about leadership. That’s

Andy: only thing on my mind ever. I did have a leadership learning, which is you really need to learn how to delegate. That is my learning from working with my dad, is you really need to learn how to delegate. I will leave that as a story for another time,

Mon-Chaio: But we do need to tell our listeners. We have a very good episode on delegating very early on. I think it might have been episode four or five in season

Andy: that is true. Yes, so listen to our episode on delegation and learn what you should be doing. All right, but today what we’re going to be talking about is performance. And specifically kind of performance management. This is, I’m going to say, a topic that caused me, when I first started doing this kind of stuff, like, , a physical reaction when I thought, Oh my god, I have to be the one doing some sort of performance management.

The first time this happened to me, it was really, it was literally, I was handed a pay review letter. This is your new pay. And I was told, Oh, just go tell this person. And for me, that was so much beyond what I was used to that I didn’t know what to do. I didn’t know how to react. We’re probably not going to get into exactly how to have that conversation, although we might touch on it.

But today we’re going to talk about this performance management and we were originally going to do it as just, Hey, here’s this article by this person who’s done a lot of these things. And let’s talk about it. Let’s, let’s discuss their system. And we read it and we thought, there’s actually nothing interesting here. So instead, what we’re going to talk about is, let’s go back to the theory. That’s kind of the purpose of our podcast, is we like going back, what’s the theory say? What’s the empirical evidence say? What’s the philosophy that you can apply here to inform your approach?

And so that’s what we’re going to try to do on this one. We’re not going to go too deep into into what that particular article said. We’ll link it in the show notes. But just to say, if you’ve worked in any larger organization or an organization with a somewhat clear performance measurement process, it’s not going to look that odd to you.

It’ll look exactly like what you’re used to. So we’re going to just ask the question, should it?

Mon-Chaio: Right. I think that’s the question to ask because as we read through this article, and this article came from a community that is built around leaders helping other leaders. It’s a mentorship community. And there were other people that chimed in about how they did performance management, performance reviews, and their philosophy on it.

And as you were saying, Andy, it’s very similar. If you’ve worked big or small, you’ve probably seen something like this. And I think for me, what’s problematic is these are all very senior leaders at some very established companies. talking about a topic that I think for the two of us, we think is broadly misunderstood and misapplied. And so I think it’s important that our listeners and leaders at large get another point of view, a more research and evidence backed point of view around performance management, instead of, as we often say, hearing these other folks talk about things around small sample sizing and cargo culting.

Andy: Where do we start with this? Do you have an idea?

Mon-Chaio: think we should probably start on why people do performance management. And I’m not going to get into the semantics of performance measurement versus performance management versus a performance appraisal. When you look at the research, there is some division there. But broadly, why do companies do performance management?

What do they think are the benefits? Such that every technical company does it in some way or another.

Andy: Let me try it this way. So why, why do performance management? In the end, it’s because you’re trying to get it so that people are doing what’s needed for the organization. And that they’re, they’re sticking around. The ones that you do want to be sticking around.?

Mon-Chaio: Think that’s probably right. There’s one article that has a definition of it. Maybe we like it, maybe we don’t. They say, performance management is a continuous process Of identifying measuring and developing the performance of organization members and aligning performance with the strategic goals of the organization. So, that doesn’t really get into why, though. It talks about what. But why? Why is it important to identify? Why is it important to measure? Why is it important to develop the performance of members? And why is it important to align the performance with the strategic goals of the organization? This might be, might sound pedantic.

I don’t know. Maybe it’s just well known and why are we even talking about it? But I think we should spend a little bit of time challenging that and seeing if it is well known.

Andy: I think that’s a great idea because, I mean, sometimes we get our best insights if we start kind of tearing back those, those onion skin layers and saying, well, but why are we caring about this? So why are we interested in that alignment and those metrics and that that stuff? I can give an answer and we can try tearing that one apart.

I think it’s we are interested in those because they help us to better meet our goals and to be more effective in what we’re doing. That just leaves another layer of, but why do we care about that? But is that even going down a layer, Mon Chaio? Or am I just kind of going in circles on that?

Mon-Chaio: I would say that it’s going slightly down a layer. But I think we can go a little bit deeper, perhaps. In my mind, the reason organizations care about performance management is they have two things that they’re trying to action upon. One, is there is a belief that the performance of individuals rolls up into the performance of organizations. And so the better your individuals perform, the better your organization performs. And so therefore it is important to know how your individuals are performing and improve their performance because there is a strong correlation to the ability of your organization to deliver results. I think that’s number one in my mind. The second one is I’m just going to power through because I think the second one is relatively related, so I’m not going to give you a chance to answer that.

I’m going to let you answer both of them. The second one I think is, they believe they need a way to reward the right people for their contributions to the organizational performance, right? Remember the first thing was better individual performance leads to better organization performance.

So now you have better organization performance, you should be able to go the other way and say which individual’s contributions contributed the most? And I can rank order them to my organizational performance. And therefore those folks should be compensated in some way.

In order to do many things in order to reward them in order to act as a signal to others That this is the type of behavior that we want In order to act as a signal to others that if you drive better impact you will get better rewards And we can get into the theory of that a little bit later but those are the two things I would say are in my mind about why organizations do performance management

Andy: I think that makes sense and that fits with what I would call a meta model of performance management that I found. In fact, I found references to three different meta models. They were extensions on each other. So I’m going to go with the smallest of them. what it is, is this is a meta model of a set of questions that your answers to them outline what your performance management system might look like.

Because they start answering some of those things, and your answers will start telling you, is it about individual performance, or is it not? Is it about something else? Is it, what, what is playing into this? So very quickly, the five questions of the simplest of these models are, “what are the key objectives that are central to the organization’s success, and how does it go about evaluating its achievement for each of these objectives? What strategies and plans has the organization adopted and what are the processes and activities that it has decided will be required for it to successfully implement these? How does it assess and measure the performance of the, of these activities? What level of performance does the organization need to achieve in each of the areas defined in the above two questions? And how does it go about setting appropriate performance targets for them? What rewards will managers and other employees gain by achieving these performance targets?

Or conversely, what penalties will they suffer by failing to achieve them? What are the information flows, feedback, and feed forward loops that are necessary to enable the organization to learn from its experience and to adapt to its current behavior in light of that experience?” So this is kind of that meta model that this paper they were starting, they were putting together.

In fact, this was not theirs. This had been around since the 90s. And then others had built on top of that with other aspects saying, well, maybe you missed this area, that area. But this was one of those metamodels. And it starts getting into, like, why would you be answering that question in terms of, is it about individuals contributing to a whole?

Or is it always about the whole, and people being able to operate within that? Your answers to that start to determine what kind of general rationalities, which is the word that they start using to explain the different forms that these systems take on. What kind of rationality are you applying to performance management?

And, yeah. And, and so they defined a few different rationalities. Which is, are you, are you interested in a relational or a transactional performance management model?

Mon-Chaio: Hmm. I’d be curious to hear more about that. What do you mean, how do they define relational versus transactional?

Andy: I’ll just read from the paper so that we can take from that. So they say, “Whenever a particular performance management system is conceptually defined as transactional, it is likely to have a high level of specificity about the ends to be achieved, e. g. through performance measures, targets, etc., and often a clear specification of the means needed to achieve these defined ends. Transactional PMSs are often organized as projects, with requirements linked to contracts over a defined period of time. It is for this reason that a PMS defined as transactional at its simplest, is similar to a simple, in effect, exchange transaction to achieve a particular end state through a defined set of means.”

So one of those response articles, I remember, said, well, you should be measuring PRs merged, okay. But that’s, that is a very transactional way of thinking about it. I’m going to measure your activity and say that, well, that is about the outcomes that I want.

You do that side of your transaction, you’ll get my side of the transaction, which is the pay or the bonus or the promotion.

Mon-Chaio: I think though we touched on a non controversial thing that perhaps the transactions around pull requests and bugs touched and whatnot is, might not be part of the transact, part of the right types of transactions that we’d want to measure, but I can imagine that there are other types of transactions that people would say, no, these are good to measure things like projects completed.

That seems to be a very popular one, right? In this quarter, what are your goals? You’re going to complete these three projects. Did you complete these three projects? If so, did they ship? And then if so, you get rewarded. I imagine that that would also be a transactional PMS

Andy: It would be. So, absolutely. And let me go on to the relational so that we can see a bit of the distinction. And I, I’m pretty sure you can mix these. . You’re not entirely transactional or entirely relational. It’s just, which direction are you leaning? So, “when a PMS is categorized as relational, the expectation is that the ends and means are deliberately subject to a discourse between the stakeholders and chosen by them.

Specificity, of the sort demanded by a transactional PMS, is possible, but only if chosen, and subject to the agreement of stakeholders. The key factor in this is the extent of choice and ownership of the specific ends and particular means of achieving them.

Often, the specific focus will be less like a defined project, less short term in nature and more concerned with the long term survival and sustainability of the organization or unit through which the stakeholders are working.” So a transactional one is predefined. This is what we’re doing. This is what you have to do.

Relational one is let’s work this out. What does performance look like for this particular thing that we’re doing or this particular time frame? So a career ladder that says, for example, to reach senior engineer, You have to have attributed to you the successful delivery of three projects, or something like that.

Or for I believe IBM’s leadership ladder, to be a fellow, you have to have a certain number of patents.

Mon-Chaio: And you mentioned promotion, which is something I didn’t touch on in my earlier definition. But that is also a reason that people use performance management. Maybe we can categorize it as compensation. So you have cash compensation and you have promotion

Andy: You do. That is a form of compensation. It was in another article I was reading about R& D compensation and performance pay. One of the compensations was was promotions.

Mon-Chaio: But getting back to transactional versus relational, I think you’re right. Most of the performance management systems I’ve worked with at companies I’ve worked at tend to be a mix, do they not?

Andy: Yeah, the ones I’ve worked with where we had a clearly defined performance management system. At least, I should say, performance compensation management system. So there’s a, there’s a critique of a lot of these systems, which is actually where this whole paper started, which that I’m quoting from, which is that almost everything ends up being about the performance metric and tying that to compensation rather than actual performance management and tying that to, well, this more fundamental question that we’re dealing with right now, Mon-Chaio.

Mon-Chaio: And many of the papers I read talk about that. In fact, I read A bunch of what I pulled up this time ended up being meta studies and almost all of their conclusions came down to more research and critical research needs to be done around what is this all for? We have the mechanisms around it. We have the processes around this, but why?

Andy: Yeah.

Mon-Chaio: So when we talk about relational and transactional, does that help us understand the why a little bit better?

Andy: I was going to say yes, but then I thought about it. I’m like, it doesn’t, it doesn’t feel like it. It feels like it’s a description of the different forms it might take, but doesn’t help me get to that. Why should I care about this?

Mon-Chaio: Okay. So then maybe we want to go down another route. See if we can dive into the whys a little bit. Unless you want to explore this concept a little bit

Andy: No, let’s try tackling it from another angle and see where that gets us.

Mon-Chaio: Okay. I Would propose that we go down the path of, do they achieve the goals that they are purporting to want to achieve? We talked a little bit about measuring individuals, pull requests and whatnot. I came across this concept that’s called expectancy theory, which I had not run into

Andy: That shows up all over the place. In this, I came across it in several papers as well.

Mon-Chaio: So for our listeners, expectancy theory was developed by Victor Vroom in 1964. So a long time ago. And he was studying motivations. And so advocates of expectancy theory, they say that the behavior of an individual employee is dependent on the expected reward. They think that employees will work harder when they believe that their effort will be rewarded with something that they value. And they believe there will be a positive correlation between the effort employed And the performance supported by the presence of right, the right resources, the right skills, and the necessary support to get the job done. This paper says that that’s why we do performance appraisals. It’s rooted in expectancy theory. Because if you don’t have an effective appraisal system, then it’s difficult to rate performance, and it’s difficult to ensure equitable allocation of resources, and it’s difficult to promote expected performance outcomes. I think with any discussion around the whys, It feels like we have to have a discussion around do we believe in expectancy theory?

Andy: And I’m going to throw another one in there which was referenced by a paper that I had about this, which was reinforcement theory. ” Reinforcement theory posits a direct relationship between a desired target behavior, performance, and its consequences, pay. It suggests that pay can be used to create consequences for desired behaviors, such as high performance, that will in turn reinforce that behavior.” That was a quote from a paper I have that is talking about these two theories in combination for performance and pay.

Do I believe that expectancy theory holds? If, if someone tells me that I’ll get this kind of outcome if this happens and I will behave different because of that? I mean, I think personally, yes, I will behave different depending on how much I care about that. reward or punishment. If someone says, Hey, if you merge this pull request or Hey, if you finish this project for a customer X by Friday, I’m going to give you I’m going to give you a bag of manure.

I’d probably laugh and be like, I’m not going to do that. Unless maybe, unless I have my own garden and I’m just like, Oh yeah, I need that right now. So yeah the reward could alter my behavior. My expectation of that reward can alter my behavior. I, I think that, that’s completely reasonable. Mon Chiao, what do you think?

Mon-Chaio: I also agree. I think generally speaking that I have no, I have no qualms with this concept that rewards can alter behavior. For me, I think my critique around performance management being based in expectancy theory is this line that says the behavior of individual employee is dependent on the expected reward.

Andy: It’s, it’s, it’s that, yeah, that very tight tying. I think you have to read dependent as in will be impacted by.

Mon-Chaio: Or, I read it as primarily impacted

Andy: And that, that’s where I would not. I would not say I believe it if it says it’s primarily impacted by. There is a, another aspect of it as well, which is, I think, I have to be able to tie, and this then connects to the reinforcement theory, I have to be able to tie that that thing that I got is because of some behavior that I did.

And to be perfectly honest, in, almost every single thing I’ve ever done at work, I can’t connect it from I did this one particular thing or I did it, I did these, maybe these two things in, well, in collaboration with each other, and that’s why I got this increase or this bonus or something. It’s usually much more ephemeral than that.

Mon-Chaio: I think it’s a little bit ephemeral. I don’t know if I completely agree with you. I think you, you can always take your end of the year performance evaluation, and it will tell you why, ostensibly it will tell you why you got the rewards that you did. And so for a particular item, can you say that contributed to it?

Well, it doesn’t say you did this, this was worth 2 percent of your reward. This one was worth 3. 2. But the collection of it purports to say, if you can, if you do this collection of events again, you will likely be rewarded in the same way. That’s that signaling behavior that we talk about because it’s not just signaling to that employee, but it’s signaling to everyone else in the company.

If you were like them, you would get rewards like them.

Andy: But there’s also a, a, a thing in there which is if I do those same things again, will I get that same reward? That’s not necessarily true.

Mon-Chaio: It’s

Andy: And, and so right there it starts to fall apart. But, having gone through some of these things before, I can tell you that being able to tell the person the story, giving them, this is going back to storytelling and the narratives, our episode on that, being able to tell the person the story of why this is, like, the pay change that they’re getting, or the bonus that they’re getting, is really important.

Because it sets up, if there is the possibility of this expectancy or reinforcement. It sets up that that exists. And if that doesn’t exist, then it’s kind of randomness. I actually had one time in a performance management system that I was not happy with. One time, I had to give my input, and for an individual, I said that they were the lowest performer on my team.

I said, yeah, if you took them off my team, likely we would actually do better. It was part of the system was I was supposed to rank everyone in that form. And the review for this person, what happened after that is then it goes from me, it goes to my manager and up the chain and then the results come back down.

And when the results came back down, this person got the highest pay change, highest pay increase and highest bonus of anyone on my team. I was left there thinking, I have no idea what story to tell because. That’s not the story I had, and now I don’t have anything to say, and I’m stuck. So slight tangent aside, performance management systems can be terrible.

But yeah, I, I don’t know. I, I think that the expectancy stuff does fit there, but I think it’s really difficult for us in our, in our kind of profession. There’s not a clear, like, this behavior produces this outcome, and so that’s what we’ll, that’s what we’re going to connect for your pay.

Mon-Chaio: I’m not gonna tear apart Vroom because Vroom came up with expectancy theory just around motivation. And I think on the broad scope of motivation, we can agree that yes, that makes sense. Proponents of performance appraisal processes have taken that and said, we build performance appraisal processes, the whys behind expectancy theory. I think we have some disagreements there. I don’t think we can, at least from my side, I would say that There is some benefit to tying rewards to behaviors But I think that it’s low and I think to your point Andy one of the problems is that it’s so difficult to measure.

Andy: Yeah.

Mon-Chaio: I did this therefore. I got that reward And so then expectancy theory fits less, right?

Because then you can say, well, why would I do this again? If I can’t be expected the same reward, or if I can’t use that to predict the rewards I’m going to get. And I think that’s a big problem with a lot of performance appraisal processes. You come to the end of the year and people expect different rewards because , their interpretation of the work that they did and the results they achieved were not echoed.

By the people doing the performance appraisals. And I think the strongest evidence for expectancy theory not holding very strongly or not being a strong mediator, I think is the research around performance management and company outcomes. There’s a line that I think states this well.

It says, in spite of its appealing rationale, the evidence that performance management plays an important role in firm success is far from conclusive.

I’ll read just one more. So we have something just another quote here. It’s again short. It says, “For decades, research and practice have confirmed that changes in performance management techniques have little effect on either performance management effectiveness or organizational success.”

And I want to note that I’m going to be fair to the research. People are saying it’s inconclusive. It’s not conclusively that there’s no effect. There are some research papers that have found strong effect. There’s some research papers that found no effect, but this is a well studied topic. And the meta conclusion around all of these studies is, it’s very, very inconclusive.

Andy: I’ll add on to that. I have this is also kind of a, a, not quite a meta study. It’s more of a survey of studies. And what they’re looking at is performance pay. And it says, “Lesson one, performance related pay often has failed to trigger expected intermediate changes in employee perceptions necessary to change motivation.”

Basically, we can’t find much evidence that this paying for those different behaviors will cause people to actually do them.

Mon-Chaio: and that I think is so much targeted to that expectancy theory part, which says you can. And this study says, no, you can’t.

Andy: Yep. Even if it does start to seem like there is a, an, a bit of evidence to say that, oh, maybe this could be useful, I think it’s useful to look at what was the context in which that was found useful. For instance, on this one about contingent pay systems impacting those intermediate outcomes, as they said, your, the individual behaviors.

So they said, “when focusing on just 14 high quality studies,” they saw a whole bunch of others, but they weren’t high quality enough to consider, “14 high quality studies, 4 were found to exhibit negative effects, 5 were inconclusive, and 5 were favorable.” But that doesn’t stop there. It says, “the 5 favorable studies were conducted in healthcare settings and assessing piece rate compensation programs. Consequently, it is difficult to determine if the high quality studies showed greater general support for performance related pay or merely situational support based on the service context or the design of the pay systems that were the focus of the research.” And for those who may not know, a, a piece pay, piece rate pay, is where you get paid this amount for doing this thing.

Mon-Chaio: Mm

Andy: that is a very clear compensation system. That shows up quite often. I was surprised that they found it in healthcare settings, but maybe I don’t know what they were exactly looking at in those healthcare settings. You find it in factory settings, where they’re like, Yeah, you, you’re making widget X, we’re gonna pay you 2 for every widget you make. That is a compensation scheme. And that one will very clearly tie to Well, that’s the one where they have found that there is the clear tie to Hey, it will change your behavior. But basically, if you turn it to something else, it doesn’t seem like there’s much evidence that it will change your behavior.

Mon-Chaio: Then it feels like, well, there’s decades of research on performance management and performance appraisal. There is very little evidence supporting strong performance management connected to strong organizational performance. But anecdotally, it feels like, yeah, I mean, better individual performance should roll up into better organizational performance, right? So why don’t we just do it? Are there problems with doing it, even if there isn’t strong evidence supporting it?

I would say, and I haven’t found this in the research, this is just my reaction to it, Why should I be putting effort into something where there’s almost no, almost no evidence that it will help? And there’s some evidence that it will hinder.

Mon-Chaio: And there is evidence that it will hinder. Here’s a line from a paper. It says, “it’s been suggested that when implemented and maintained improperly, performance management systems can become a burden rather than a motivational tool and can create significant employee relation problems.” Which, we don’t even need to take the paper’s study or, or their conclusion.

I think anecdotally we can see that. How many times have you ever had an employee leave because they felt like they were due a promotion, they didn’t get it, and they leave to go to another company. Or when you have employees comparing their reviews, You know, I once worked at a terrible company just for a brief amount of time That tried to make it quote unquote illegal for employees to discuss their reviews and pay with each other You can imagine how well that went But you can also see anecdotal evidence.

Probably you’ve lived it I’ve certainly lived it of employees talking to each other and being like hey wait My manager told me this was why I didn’t get paid and the other employees says oh But my manager is telling me this is why I did get paid and they’re like this is the same And I think anecdotally we can see that that would cause motivation issues.

Andy: So a place I used to work, we, we didn’t want to get caught in this constant conversation about, I need to get this promotion. I want to get that title. I want all these things. But we recognized that people, some people found those important. And so rather than just saying like, oh, we don’t have this, we had a few.

But we said, look, our career progression is what you want to make it. And so that’s what we started having the conversations about. So we made it a very, going back to that transactional versus relational, we explicitly tried to change this to a very relational approach rather than a transactional approach.

And some people didn’t like that. They wanted the transactional, you do this, you’ll get the, that title, or we have all of these titles essentially for you to choose from. And it, and it changed the group that we got in that company. But also I have to say from my perspective as a manager, I don’t want to say it made it easier.

In some ways it made it much harder, but it made it more enjoyable because I could, we could actually have that conversation about what is important to you, what is important to me, what’s important to the organization, and let’s figure out something that works for all of us. Now, I’m not saying that that led us to better outcomes for the company, but it did lead to better outcomes for the individuals involved.

Which is, I wouldn’t say more important, but it is at least equally as important as your organizational outcomes. Because remember, we are, we espouse human centric leadership here. And outcomes for individuals are obviously super important to human centric

Mon-Chaio: leadership.

Andy: I want to bring on another paper that I have. They’re talking about perspectives on performance, like what are different ways you can look at performance management systems. And it says, ” researchers have adopted various perspectives for studying performance. On the most general level, one can differentiate between three different perspectives.

An individual differences perspective, which searches for individual characteristics, such as general mental ability or personality. As sources for variation performance. Two situational perspective, which focuses on the situational aspects as facilitators and impediments for performance and three, a performance regulation perspective, which describes the performance process.

These perspectives are not mutually exclusive, but approach the performance phenomenon from different angles, which compliment one another.” And I think one of the things that I’ve been getting out of this is that a lot of the systems that we work with. I think have that third perspective as like the dominant to the point where the others almost disappear.

Mon-Chaio: Mm hmm.

Andy: regulation perspective. A key, the core question of the performance regulation perspective is, how does the performance process look? What is happening when someone is performing? That’s that article that we read. A lot of the systems that I think we’ve taken part in, their primary focus is on that, answering that question, which is We’re, we’re doing the system because the system needs us to do the system. It’s like, what, what’s the,

Mon-Chaio: Well, getting back into the bureaucracy will expand to fit the ever needs

expanding needs of

Andy: and, and, and I think that’s what we’re getting at is like, that is a portion of these things. It’s one perspective on how to handle this stuff, but you also have to have the individual and the situation.

And you need to, to me, you need to find a way of bringing that all together. And not lose track of the fact that this is all in some ways a waste of time if it’s not helping the people or the organization or yourself in some way. And we’ve got a lot of evidence it doesn’t really help the organization all that much.

Mon-Chaio: So how do we get better company performance then?

Andy: That sounds like a good question, but that also sounds like a rhetorical question. I have a suspicion you’ve got an article already, Mon Chaio.

Mon-Chaio: Well why would I not? Why would I bring up something that I couldn’t talk about? Now this is this is too big of a topic to explore in just the tail end of a podcast around performance management. Because what we’re really talking about is how do you get people to perform the best that they can perform? Which probably in and of itself is several episodes long if we even want to touch on it. There is an article I found titled Factors Affecting Employee Performance. It was a meta study and it attempted to tie in A bunch of the factors that papers research, they have factors around this leadership follower relationship.

Does a particular leadership follower relationship or the strength of that affect a firm’s performance? They have something called innovative work behavior.

Andy: Hmm.

Mon-Chaio: So how much can an individual contribute to innovation? Do they get autonomy? Do they get to create innovative ideas? Things like that. And they try to correlate it based on a bunch of different studies and they take these papers and they say, okay, based on the conclusions of all these papers, what do we think about this collection of papers and what does it tell us?

One of the biggest independent variables that they found, that contributes to higher employee performance is actually not something we talk about very often at all in performance appraisal. And it’s something that they call Organizational Citizenship Behavior, or OCB. This is actually not a new concept, the original paper, I believe, was in 1988. Organizational Citizenship Behavior is defined as “individual behavior that is discretionary, not directly or explicitly recognized by the formal reward system, And in the aggregate promotes the effective functioning of organizations.” And it actually includes five constructs. Altruism, conscientiousness, sportsmanship, courtesy, and civic virtue.

Andy: Interesting. The thing that brings to mind for me Mon Chaio is, I can’t remember if I brought it up on our podcast before, I probably have, which is that I’ve always heard one of the most effective forms of industrial action is work to rule. Which is, it’s the idea, you do exactly what your job description says.

That’s the most effective way of destroying an organization. And, and so,

Mon-Chaio: I think the new term these days is quiet

Andy: oh, is it? Is that quiet quitting? I thought quiet quitting was basically just kind of stop doing everything and wait until people notice. But maybe, maybe I haven’t kept up on that.

Mon-Chaio: I mean, I think part of it might be that, but I think it’s actually a bigger part of it is the you stop going above and beyond. You take a look at your job description, you’re like, this is entirely exactly what it says I have to do, and that’s what I do.

Andy: That approach, if you want to destroy the ability of an organization to operate, that’s what you do, which makes a lot of sense that, well, if you want to be a very high performing organization, you, you get people to step outside of those job roles to do the things that aren’t quite exactly on their description, because doing all of that stuff is what gets everything to work.

I think at this point, maybe we should start wrapping it up. What, what do we leave people with? What are the tactics that someone could take from everything that we’ve said and start applying to the performance management system that they have, or that they’re thinking of putting it together?

What could they do?

Mon-Chaio: I will say the easy and difficult one all in one, which is performance management systems generally don’t work. So don’t do them.

Andy: Hmm. Be that rebel. Yeah, I, I would actually agree. If, if you have some choice in the matter.

What can be useful, I think, is to take that relational perspective that we talked about a little bit and have those conversations. What does it mean for you to be doing well in your own view? What does it mean for you to be doing well for me?

What are we trying to achieve? And don’t make this part of some big formal system. At some point, as a manager, you might have to translate it into the requirements of what’s there. Because the system exists, it is there, you’ll need to interact with it. Unless you have control over that, then you can change it.

But just have those conversations. And it’s, and it’s not necessarily that those conversations will make you this amazing organization. You’ll have better relationships in your group with your, with your people and you’ll maybe find something in that that does work for you.

Mon-Chaio: I agree. And jumping onto that, if you do have to, do which I think most of our listeners will have to do. Understand that that transactional view is so difficult to quote unquote get right. Especially if you’re just stepping outside of the easy transaction, ship this project, you get X dollars or you get promoted.

And I’ll add to that by saying, if you have to do these performance management systems, which I think most of our listeners do, most of them, I would guess, don’t have the, the carte blanche to simply say, no, we’re not going to do these anymore. Understand that it’s very difficult to measure the output of someone, the things that they do, and the outcomes that come from that. And understand that the more sure you are of that relationship, the more problematic it likely is that you believe in that strong relationship. I think that’s what the research has shown, is that people have very strong beliefs about these relationships, but they’re not born by evidence.

Andy: I think this episode, we got to probably some pretty provocative thoughts on performance management, and what you should do with it, or what you should not do with it. So if you have any thoughts on that leave us a message at hosts at thettlpodcast. com. Message us on LinkedIn, or anywhere else you can find us and get hold of us.

Rate this episode, rate other episodes, let us know how we’re doing. And if this was provocative enough for you to send it around and get some other people listening to the podcast, we would be very grateful to you. And so I don’t think we can provide you any performance based compensation for that, but you’ve got our gratitude.

Until next time, be kind and stay curious.

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