As I highlighted in the blog on the inhibitors to better performance management systems, one reason it is so challenging and complex is because we are often trying to squeeze many competing needs into a single event. Most leaders accept that this approach is no longer helpful, but are unsure how to transition to a more useful approach. My recommended approach, contains four distinct but interrelated rhythms that add up to an effective approach.

Practice a four-phase drumbeat

Performance Management Coaching

Annual Goals

The individual sets a small number of big goals, that he or she feels will maximise their contribution and move their organization forward toward its aspirations. The manager and individual refine the goals together using the 5C™ and Autonomy-Accountability™ tests. Once the performance goals are agreed, have a conversation about one or two potential ‘blue goals’; goals the individual will not be held accountable for, but will encourage them to dream big. Discuss how the individual can model the standards of the organization, and agree the individual’s most important development opportunity for the next year, given their role and goals. Finish with a conversation about how each party can help the other to be successful, and establish expectations for the rhythm of conversations for the year. Following the meeting, document the key outcomes within ‘the system’ and ensure that the individual has absolute clarity of how performance will be measured, and how financial awards will be calculated and allocated.

Weekly and/or daily coaching

If you were a keen tennis player, and Roger Federer’s coach happened to be at your local court, you would likely not hesitate to ask for guidance or advice. In a corporate environment, however, coaching can induce fear, suspicion and defensiveness. Historically, coaching was primarily associated with remediating poor performance, though this stigma has diminished quite significantly over the past decade given most people now understand it as a crucial factor in personal growth, learning and ultimately, success.

Many fixate on developing the skills for coaching, and these are obviously useful, but there are three principles that are even more important:

  • Just make it part of how we do things around here. If it’s another normal and natural part of everyday life in your organization, any sensitivities or stigma will reduce substantially over time. It also reinforces the close connection between feedback and goal achievement
  • Engage in the moment. Treat every interaction as an opportunity for learning and growth.
  • Engage as you would with a friend. This simple shift in mindset encourages everyone to come from a place of care and support, rather than judgment.

Quarterly and/or Monthly Checkpoint

Given the annual review is likely about performance, accountability and career, we need a vehicle to build momentum and alignment towards those big outcomes. That vehicle is a structured checkpoint at monthly (or at least quarterly) intervals between the individual and their manager, based on a simple personal scorecard to guide the conversation. A personal scorecard is a quarterly view of the individual’s agreed goals, 2-3 key deliverables against each of those goals for the next quarter, why those deliverables are so important, and 2-3 behavioural shifts that the individual is committed to making in line with the company’s values. The goals and the behavioural shifts have a traffic light rating system, and all of this content is captured on one simple page (see format below).

Performance Management Scorecard Image


At least once a quarter, but ideally every month, the manager and individual do a quick review of the personal scorecard, led by the individual. The purpose is to build momentum towards the big annual goals, and to address gaps or changes in priority.

Quarterly (or at least bi-annually), team members share their scorecards with one another to look for gaps, overlaps and potential conflicts, and give each other feedback and suggestions for improvement. The purpose is to increase alignment and build mutual accountability.  Coaching and support amongst peers increases as a result.

Annual Review

The annual review is best used to confirm an individual’s performance, to confirm financial awards (unless you can separate this conversation), and to have a big picture conversation about career opportunities and progression. We use the word confirm very deliberately. If you have embedded the principles and rhythm recommended above, then the annual review will be a confirmation of your ongoing dialogue, based on a huge amount of data and information. Done well, it’s a meeting with very little new information or expectation, and therefore much less anxiety for everyone.


Mark Twain famously once said “reports of my death have been greatly exaggerated” and we have come to the same conclusion about performance management.

The frustrations that many experience with antiquated approaches to performance management are well founded, but to claim the solution is abandonment is simplistic and unhelpful. We will always need a way to enable people to set and achieve worthy goals that move the organisation forward, to have conversations about performance and receive feedback on progress, to shape careers, to identify under-performance, and to fairly distribute compensation and rewards.

Performance management is difficult to do well, but that is precisely why it’s worth doing. I hope this series of blogs will assist you on that journey.

Principles to Better Performance ManagementWhile the challenges are real and significant, there is much we can do to improve performance management; none of which involves blowing it up.

Improving the quality of performance management is best built on a foundation of acceptance; acceptance that there is no such thing as a perfect system, that it can never be completely scientific or objective, and that it will naturally be uncomfortable at times for all concerned.

With that acceptance as a foundation, I recommend nine principles that can dramatically improve both the experience and the results of performance management.

Implement 9 key principles

1. Shift ownership of the process to the individual.

Encourage the individual to self-set goals in line with the team’s overall measures of success. Encourage them to articulate why each goal is so critical. Given the many competing demands that all of us experience, we need a strong internal fire to achieve any big goal. If their fire isn’t strong enough, help them to pick another goal. One way to encourage individuals to stretch without fear, is to distinguish between black goals (on the hook) and blue goals (dreams they will strive for), knowing there is no downside for falling short. In a high trust environment, our experience is that individuals usually land between their black and blue goals – overachieving their targets, but with a greater sense of ownership and enjoyment.

2. Shift the manager’s role to be more of a coach.

Playing this role includes defining a clear picture of collective success, supporting the individual to define his or her unique contribution, providing a sense of meaning and significance for that contribution, providing regular feedback, support and correction on the path to that contribution, and being open to feedback from the individual on how to better support him or her to make the maximum contribution. Increasing the frequency and quality of feedback in this way, creates an environment where individuals are more likely to lean into growth opportunities.

3. Shift to a game you can win.

In order to see if an individual is set up for success, run two simple tests for each of their goals. The first is the 5C™ test; are they crystal Clear on what success looks like, possess or be able to develop the required Capability, have the Capacity, possess the required Commitment, and have the required Confidence? If the gaps are substantial, then chances are the goal is unachievable by this individual at this time. The second test is the Autonomy-Accountability See-Saw™ test: determine the level of autonomy they need in order to accept accountability for each goal. If the see-saw is out of balance, you have the potential for chaos on one end, or a lack of ownership on the other.   

4. Consider separating performance conversations, from the financial rewards conversation.

Even though performance and rewards should be closely linked, it can be psychologically helpful just to put a gap between these conversations. Doing so allows the individual and manager to better immerse in performance conversations, knowing that they will come to a financial discussion later.

5. Maximise collective rewards.

Individual achievement is rare without support from others – everyone knows this. The more that rewards are based on team performance, the more teamwork and collaboration you will experience in pursuit of your goals. Progressive organizations typically have a three-tiered bonus system, with organizational, team and individual components indexed to goal attainment.

6. Maximise the transparency of financial rewards upfront.

The best way to minimise the angst associated with the annual allocation of bonuses and salary movements is, as much as possible, to make this transparent at the start of the year. If everyone understands the variables, quantum and calculations that will be used to determine their pay and rewards at the end of the year, there will be a much greater sense of fairness, no matter what the result.

7. Turn your values into standards.

Many organizations now have company values as part of their formal performance appraisal, and some even have financial implications for living or not living those values in the perception of others. The challenge is that values are highly subjective and almost always mean different things to different people. The key to making this process work for any given value, is to answer – as a team – the question “how would we know if someone was living this value?” For example, if our value is ‘trust’, then a standard could be ‘we never question each other’s motives, we always assume good intent’. Now you have a standard for your value, which allows for a more objective assessment.

8. Strip the system back to the barest essentials.

Most performance management systems are overly complex, often in attempt to cover every possible scenario or control for poor execution by managers. Ask yourself this question; if we assumed an environment of mutual good intention, respect and trust, how simple could we make our system? For most, that will be a system that enables people to define a small number of big goals that will maximise their contribution and move the organization forward, to enable them to model the organization’s standards, and to highlight the next significant development opportunity.

9. Focus on how you want the individual to feel at the end.

Long after we forget what was said and done, we remember how we felt. Ensure that managers prepare for each step of the process by thinking about how they want the respective individual to feel at the end. This simple principle is perhaps the most important of all. It will often overcome all sorts of inadequacies in the system, and guide everyone to a better outcome.

In the next blog I will outline an integrated process that you can use to put the performance back into performance management.

9 Inhibitors to Better Performance Management SystemsBefore we can think about solutions to address the scary statistics and complaints about performance management systems, it’s critical to get underneath the symptoms and explore what may be some of the core challenges inhibiting a more effective approach.

1. It’s a complex, multi-dimensional challenge, but lends itself to simplistic opinions.

The challenge for any HR professional is that almost everyone has a strong opinion on the subject, making it very difficult to have an informed debate and find common ground based on sound research and proven practices.

2. The ‘system’ provides an easy scapegoat.

Managers who are not committed to really manage performance, or lack the capability to do so, blame the system in order to avoid responsibility. There is no such thing as a perfect system and effective managers work with sub-standard systems all the time to get things done.

3. The primary purpose is unclear.

We are typically using one system to try and cohesively solve for multiple needs, some of which conflict with one another:

  • Alignment and fit
    • What is the individual’s unique contribution to our collective success?
    • What is their current trajectory/how are they tracking?
    • How aligned is the individual to our culture/values/standards?
  • Performance and accountability
    • How has the individual delivered against their contribution/goals?
    • How satisfactorily has the individual met expectations of performance?
  • Remuneration and reward
    • How does this individual rate against others?
    • What remuneration/bonus should this individual receive?
  • Growth and development
    • What are the individual’s developmental needs?
    • What is the individual’s potential?
    • What are the options for the next steps in their career?

4. The world has changed, but performance management largely hasn’t.

Performance management has its roots in the 1940s where professional life was much more predictable, linear and slow moving. The speed, complexity and volatility of the world we work in today is radically different, but many of our performance management principles and systems have not changed. For example, a once a year performance conversation is nonsensical in a fast moving world.

5. We aim to objectify a largely subjective process.

One reason many don’t like performance management is because they don’t trust the process, largely because it’s administered by human beings who are subject to all kinds of personal bias. Additionally, there is real pressure on boards and senior leaders to justify financial rewards, and significant legal risks in exiting people from an organisation. All of this encourages lots of time spent on and in the process of performance management, rather than actually enabling performance.

6. We don’t set ourselves up for a game we can win.

Sometimes the team or business unit goals aren’t clear, or obviously relevant enough for the individual to have a clear line of sight to their contribution. We often falsely assume that individuals know how to set high quality goals, when that’s not always the case. Sometimes the balance in a set of goals is missing; meaning that an individual can be deemed ‘successful’ for achieving a narrow set of goals at the expense of others. Sometimes the flipside is true, where an individual with a large and complex remit can be deemed unsuccessful for narrowly missing a particular target.

7. The financial overlay trumps everything else.

In many organisations, the primary purpose of the performance management system is to allocate financial rewards, which everyone in those organisations is aware of. The outcome is not an environment conducive to stretching, development and growth; but one where people may lobby, negotiate and game the system in a way that’s generally uncomfortable, time consuming and often de-motivating for all concerned.

8. We don’t tap into intrinsic motivation.

Performance management represents a golden opportunity to tap into intrinsic motivation, but several factors get in the way. The primary driver of motivation is a self-set goal, which is then achieved, however, individuals may be wary of articulating stretch goals for themselves if there is a chance those goals will become their contracted target. Some managers exert too much control over the goal setting process, robbing the individual of ownership. Very often, there is no detail or discussion about why each goal is critical, which research tells us dramatically reduces the likelihood of its achievement. Finally, quality feedback is a proven motivator for high performers, yet it’s often absent from performance management practices; either because managers lack the capability, or the system encourages a more transactional conversation.

9. Performance management triggers our deepest insecurities.

Perhaps the most basic fear of every human being is that we’re not enough, and performance management can push this button. No matter how experienced the manager, no matter how constructive the individual, most of us feel at least some discomfort in a conversation where we are judging the performance of others, or having our performance judged.

In the next blog I will start to unpack a solution to these challenges.

Why performance management systems need to changeIn my last blog I introduced the topic of performance management and how outdated organizational systems need to adapt to the modern world.

What’s the case for change?

There are a plethora of scary statistics available that indicate a need for change when it comes to performance management systems. Following are just a few examples:

  • Only 8% of companies report that their performance management process drives high levels of value, while 58% said it is not an effective use of time
  • 30% of performance reviews end up in decreased employee performance
  • 58% of organizations rated their performance management systems as “C grade or below”
  • 45% of HR leaders do not think annual performance reviews are an accurate appraisal for employee’s work
  • 62% of rating variance relates to individual rater peculiarities of perception (idiosyncratic rater effects), and only 21% relates to actual performance

Compounding these scary statistics about performance management systems is a list of recurring complaints within organizations.

What are the main complaints?

There are many popular complaints about performance management. The most common gripes I encounter are that it’s:

  • Overly complex, bureaucratic and time consuming; more about completing the process than enabling performance and growth
  • Too infrequent; an annual or even bi-annual review rhythm is insufficient in a fast moving world. It’s difficult to judge an entire year or half year of work in one discussion. Infrequency also increases the risk of surprise, and raises the stakes for each conversation, which ultimately increases the pressure on all concerned
  • Hierarchical and top down; can encourage a judgemental, one way lecture, rather than a collaborative conversation where both parties own the outcome
  • Primarily focused on the negatives or problems; overemphasis on faults relative to successes, and weaknesses versus strengths. Managers may be attempting to justify a pre-determined financial reward. The result is suspicion and mistrust
  • Too much feedback, not enough feed forward; looking for clarity of how to succeed in the future, instead lost in a conversation about the past. Clarity and motivation decrease
  • Saying more about the rater than the rated; personal biases underpin even the most objectively designed systems, and it’s also notoriously difficult to standardize views of performance across an organization
  • A front for the allocation of financial rewards; the direct and sometimes only connection to pay or bonus can impact honesty, openness to learning and feedback, and instead it becomes a forum for negotiation
  • No line of sight; not always clear how “my” contribution makes a difference, means a key lever for motivation and goal achievement is missed

In the next blog on this topic I will talk about the challenges we face in trying to change these systems.

Performance Management ImageMany leaders and organizations have had a love-hate relationship with performance management systems for some time, but there has been a noticeable upsurge in this sentiment in recent months. The dialogue has been fuelled by many reputable organisations publicly declaring that they have abandoned traditional methods in favour of innovative new approaches that produce much greater outcomes with far less effort.

With a little digging, it’s apparent that at least some of these organizations may not be dumping their old ways with as much abandon as their press might suggest. That said, almost every leader or team member we encounter – including HR professionals – agrees that there is an opportunity to significantly improve their approach to performance management.

We do not come to this debate professing deep HR expertise, though we do have some of that in our organisation. Our point of view is based on our experiences of trying to align leaders, teams and entire organizations to their aspirations. And of course, alignment is not possible on this scale without paying close attention to the people and performance systems, of which performance management is the most critical. One thing we have learned for certain is that if your aspirations and your systems are in conflict, your systems will win.

In our view, calls to end performance management are premature and simplistic. The question is not how to get rid of it, but how to adapt it for the modern world.

Over the coming weeks I will discuss performance management through a series of blogs.

Leadership impact imageThe research that led to my book Leadership Transformed was a study of a group of CEOs who had each shown evidence of shifting their impact from that of an ‘ordinary manager’ to that of an ‘extraordinary leader’.  This personal shift coincided with a shift in the effectiveness of their respective leadership teams, and an acceleration in performance across a broad range of performance indicators for their organizations.

We’ve discovered through our practice that leadership is the accelerator or handbrake for everything else. It’s the single biggest influence on culture, and ultimately sustainable performance. How leaders motivate and encourage others to behave is typically at the root of every success or failure, making leadership impact as important as every other alignment lever combined.

All leaders have noble intentions.  I’ve never met a leader who aspires to destroy shareholder value, irritate customers and alienate staff.  Yet we almost always find a significant gap between a leader’s intention and their actual impact.  In order to dramatically increase your leadership effectiveness, we don’t need to go back to childhood and rebirth. We just need to know; how would you like to motivate and encourage others to behave? How are you actually motivating and encouraging others to behave? And if we discover a gap between your intentions and reality, are you interested in doing something about it? If the answer is yes, then the strategies to do so are pretty straight forward. You can read more about them here.

Leadership impact is the final, critical piece of the alignment jigsaw puzzle.  The most perfectly crafted strategy will be derailed by leaders whose impact does not align to their noble aspirations.

Sustainable change imageThe ultimate goal of any change effort is long term, sustainable performance. No leader can achieve this alone. While transformation begins with the most senior leaders, it sustains when these leaders create a virtuous cycle of accountability that cascades through the entire organization. Think of it as a disciplined fitness regime; there is no end point to transformation.

Sustainability in our model refers to “the commitment, momentum and capability required to sustain continuity towards the goals”.  It is prefaced on an assumption that change cannot be managed, it must be led. Read more about this and other assumptions that enable business transformation in my white paper “Why Change Efforts Fail”.

The aim is to create unstoppable momentum that transcends the individual.  Sustainability requires leaders who can deliver short term performance, while they simultaneously shape the organization toward a longer term vision. To do this, leaders must be more focused on contribution and legacy, than they are on personal rewards and reputation. We all know of organizations where a change in leadership at the top can undo the work of the previous leader in a surprisingly short timeframe. While this may be the mandate when performance is poor, change for change’s sake can be damaging to performance and demoralizing for staff.

Sustainability is a process, given life through involving others (collaboration), embedding new ways in the organization (systemization), communication and education.  Leaders aim to create more leaders and change agents aim to create more change agents. The result is a virtuous cycle of growth and renewal, by which people can realize the organization’s goals, while increasing their capability to sustain those goals, whatever the future brings.

Circus Ferris WheelMost people will say there is room for more fun and laughter in the workplace, yet few do anything about it.  Research shows that humour and playthe final type of symbol we will explore – provide a release valve during times of crisis, and amplify our successes. Shared laughter and enjoyment bond us together. We’ve seen organizations do this in a variety of ways.

Charity events can be a feel-good way of bringing fun into the work place whilst raising money for a good cause.  Several of our clients participate in Movember, a fundraiser for men’s health charities where participants grow facial hair for the month of November and seek sponsorship from others for their efforts. Some further leverage the fun by presenting awards for the most outrageous moustaches at the end of the month.

Social events, conferences and parties are also a great avenue for humour and play.  When leaders are prepared to relax and join in the fun, these events break down walls and hierarchy between staff and managers.  One IT CEO we know set the tone for his tenure by opening his first sales conference dressed as Elvis.  This sent the message that business can and should be fun in their work-hard, play-hard culture.

Ideally, humor and play would emerge spontaneously amongst people who get along with each other and enjoy what they do. Unfortunately, the high pressure environments that many of us inhabit today mean that it’s easy to be serious all of the time. The consequences include burnout, stress related illness and disengagement, all of which ultimately reduce productivity and the bottom line. That’s where leaders can step in and promote a culture that balances getting the job done, with the deep need we have as human beings to have fun and connect.

Rites, Rituals and Ceremonies - SymbolsRites, rituals and ceremonies institutionalize an organization’s culture and values – both good and bad. The key is to be intentional about the rituals you have or create, so that they accelerate you toward your organization’s goals.

Whilst brainstorming ways to celebrate staff achievements, the executive team of one large US retailer came up with a simple idea. They agreed that even though the company had annual awards, as a team they didn’t do enough to recognize the things that associates did on a daily basis to delight customers. After sharing a few inspiring stories with each other, they decided on the spot to call the key protagonists to thank them for their contribution.

The first recipient was a regional manager – four layers from the executives calling her – who, along with her team, had gone to extraordinary lengths to open a new store on time and as promised to her local community. The message went to her voicemail, which proved to be a stroke of luck. When she played it back 10 minutes later, she was so excited by the recognition for her team that she forwarded it to the more than 2,000 associates in her region.

The impact of this modest action was profound; on the individuals who received an unexpected call from the most senior leaders in their business, on their peers who they shared the tale with, and perhaps even more so on the leaders who experienced firsthand the delight and surprise of the recipient’s reaction.

So profound was this first experience, the leaders agreed it should become a tradition. Today, in each monthly executive meeting, every leader comes along with one or two examples of individuals or teams who have exemplified the company values. They then choose four or five and make the calls with the whole team on speaker phone.

Almost every client I’ve shared this story with, has since adopted this powerful symbol as their own ritual.

Heroes and Villains - SymbolsIn every organization, there are heroes and villains who symbolically represent what leaders want and don’t want; what they are likely to reward and punish. These archetypes are communicated through story and carried in the organization’s culture. The key challenge for leaders is to work out whether the organization’s heroes and villains are enabling or inhibiting their aspirations.

One client complained that his organization was in a perpetual state of crisis, which in turn created a never ending number of surprises for management and shareholders. To understand some of the origins of this issue, we conducted an audit of the symbols in the organization, which included asking managers about who were the organization’s most admired individuals. Without exception, everyone described some version of the ‘fire fighter’ archetype. We heard countless stories of team members who parachuted into a crisis, worked day and night for weeks on end at great cost to their health, wellbeing and personal relationships; eventually putting out the fire and saving the day just in the nick of time.

In this organization, the only way for people to be truly valued and recognized was to put out a fire. So what did they do when there were no fires? Start one, of course. The leaders of this organization had unwittingly created arsonist fire-fighters everywhere.

The leadership team agreed it was time to institute a new hero; one who quietly and thoughtfully got the job done, on time, within budget and with minimal fuss. Over time, they were able to extinguish their organization’s addiction to crises and create a more consistent and predictable level of performance.

Who is the hero in your organization? Is this archetype enabling or inhibiting your aspirations?

Image Source: Giancarlo Liguori /