Why companies need to rethink performance management

From Silicon Valley to the Savannah, like the world famed wildebeest migration, progressive firms are ditching the traditional performance management and consequently migrating, metaphorically speaking, to greener pastures.

Decades after implementing performance management in Kenya, time is ripe to ask fundamental questions regarding efficiency and effectiveness of performance management as currently implemented within firms in Kenya.

We are in the age of change, where management processes must be transformed to be flexible, agile and lean. Recent strongly expressed discontent with performance management system for teachers should not be ignored. Best practice from leading global giants, coupled with research, is on the side of those dissatisfied with performance management as it is currently implemented. Firms are ditching the traditional approach, replacing it with continuous performance management.

The terms performance appraisals and performance contracting are commonly used in Kenya. They are insufficient, as they denote a stage and not the holistic philosophy behind performance management. Performance appraisal describes one of the poorest methods of reviewing performance. It also implies performance review.

The overarching and correct term is performance management. Traditional performance management concentrated on past behaviors instead of being developmental. It is a drain on firms' financial resources and wastes employees’ time. Like a ritualistic endeavor, performance is given prominence very few days in a year. In most cases, it never produces the desired results.

Performance objectives

A disturbing and recurring trend is manifested when employees’ evaluation results are not reflected on companies' bottom line. This trend indicates poor integration of performance management with business needs. Practitioners and researchers alike have been questioning the wisdom of formulating yearlong performance objectives when the business environment in this age of uncertainty is extremely turbulent. To most employees, traditional performance management is perceived as an irritation and unnecessary exercise.

The scales are now turning on the side of continuous performance management. It is employee centred and more developmental. This new approach operates on mutual learning mindset. As the name suggests, it makes performance management a continuous process.

Literature search on the internet reveals a plethora of articles from reputable sources marveling at new experiences of corporates that took a leap of faith and discontinued traditional performance management system. Key within the new thinking is abolishing of annual appraisals, rankings and ratings, which are permanent features of the old order.

There is also a reluctance to link performance management to reward management. In our country, performance management has been used as a tool of instilling fear and in many cases as a basis for sacking “non-performers.” This violates the reasoning behind this concept, with disastrous ramifications to organisations.

The new approach is characterised by the setting of dynamic objectives; more frequent reviews as opposed to the annual rituals, and focus on employee development than on past employee behavior. The Harvard Business Review, citing one progressive company, noted that it was cumulatively spending many hours on performance management.

After the company analysed the results from the findings, they decided to discontinue the traditional approach and adopted continuous performance management. This HR function does not need to be painful to managers and employees alike.

Millennial generation

The new approach relies on HR technology that eliminates the rudimentary nature of the old approach. It saves on cost and time, enabling managers to focus more on strategic issues. The icing on the cake is the fact that this new perspective is well adapted to the millennial generation; a group that most government institutions have found difficult to attract and retain. Thus, organisations need to familiarise with this distinct approach to performance management.

For a complete shift in thinking and practice, change of policies and procedures on performance management and training is necessary. In Kenya, solution ultimately lies in recasting performance management in our firms and infusing new thinking in line with best practices. There is a need to entrench underlying philosophy and make this HR function more employee centered. Performance management cannot thrive in a tug of war environment.

Dr Mutua teaches at Jomo Kenyatta University of Agriculture and Technology.