Performance Reviews in a Knowledge Economy

Over many years of consulting to a wide range of organizations I have constantly been asked, “how do we get our staff to perform better?” In fact that is the reason I am most often contracted. As part of the performance conversation, most believe that if they can measure people’s performance properly, they will somehow improve it. So every year we are asked to roll out training on the dreaded yearly Personal Development Review. It was because of this request and the complaints, we hear every year from managers and leaders, thatSnapp360 was formed. But more on that later.

Performance in the workplace has become an increasingly complex topic as the nature work has changed over time.

Post the industrial revolution the ability to measure a workers’ performance, and therefore set their remuneration, was quite simple. The number of products workers produced over a specific period of time could be simply counted, and the quality assessed. The factory owner could then set specific targets and then set a specific monetary reward.

Factory owners hoped that they could get humans to behave just like the machines they were producing. This project failed dismally.

As the nature of work developed in complexity and the microprocessor took hold, what was required of workers fundamentally changed too. The average employee spent less time producing products, and more of their time thinking. This required a change in not only how work was measured, but also how workers were remunerated.

The change in the nature of work went hand in hand with political and social changes. The power relations between business owners and the workforce changed to. Employees became more educated and as they did their work options increased. Business owners could no longer merely rely on paying for a specific product output, but had to factor in employees input too.

The understanding of work motivation shifted in line with changes in the nature of work. Monetary remuneration in the form of a salary, which was growing exponentially, came to be seen as merely one way to reward employees and keep them engaged and motivated. In the developed world in particular other forms of reward such as share options and bonuses were developed to keep highly regarded employees from leaving to join competitors.

How businesses defined high performance became more and more difficult to asses. A whole discipline of organizational psychology and business science developed to look at performance assessment and management. Much of the responsibility in terms of measuring and driving performance was placed in the hands of business and work group leaders and human resource departments.

Very quickly we started to realize that expecting such a small group of people to asses and measure quite subjective subject matter was filled with pitfalls. Psychology helped us to understand that we all have biases, many of them unconscious. Leaders therefore tended to rate those most similar to them more highly in terms of performance, which frustrated business owners and employees equally. They quickly came to realize that all of this measurement did not necessarily increase performance.

In response businesses in spent more and more money on developing leaders and measurement instruments. In 2015 alone it is hypothesized that $13.6 billion was spent on training and development of business leaders.

360’ reviews started to become popular. In these employees are rated by leaders, peers as well as subordinates. These were seen as providing a much more balanced perspective on performance, and allowed for a simultaneous review of leadership.

The instruments developed for such processes, whilst useful, have proved to be labor intensive, expensive and time consuming. Most organizations that employ them have to select users very carefully, and tend to to only use them sparingly. This doesn’t allow for monitoring of changes or growth on an ongoing basis

Furthermore, the technology used in administering these instruments has not kept up to date with technological advancements. The platforms they utilize are often clunky and non intuitive.

As a result of the complexity and cost of these review processes, a few large and influential companies have decided to throw the proverbial baby out with the bathwater and have gotten rid of reviews all together.

This has not in our opinion solved the problem of driving performance, at best it has got rid of some beauracracy and saved money.

The problem of understanding and driving performance will not go away. It will become a more and more complex issue. The golden fleece is being able to find a way to objectively measure subjective phenomena. An algorithmic solution in our minds does not solve the problem. We believe that a platform that allows organizations to define contextually relevant behaviours and personal styles and to be able to change these as work requirements change is where performance management will be heading and Snapp360 is driving this pathway.