Performance Management: The Next Generation

Wednesday, June 28, 2017

Performance Support & Management
Quick. What do you think of when someone says performance management?

The common response is, “Appraisal.” And tagging along is the specter of ratings, pay decisions, and the angst associated with the uncertainties of boss-subordinate feedback.

In short, performance management is viewed as a human resource or personnel process. Yes, goals are part of the story, but often they are more important as a basis for appraisals, ratings, and pay than anything else—even when there is a good connection with larger company and team goals. In people’s hearts and minds, performance management is driven by back-end concerns.

Because of this tilt toward appraisal, and because of the fears and games that are part of a back-end optimizing process (do you know anybody who has set lower goals so they can exceed them, or who sees themselves as below average?), performance management has gotten a well-deserved bad rep.

The latest trend is to move away from comprehensive feedback conversations entirely. Appreciative conversations at short intervals are the new performance management. This is a good correction of an often negative process. Yet, it misses the point that feedback of all kinds is “the breakfast of champions,” according to Ken Blanchard. And, if you look closely, the dominant question behind performance management is still, “How am I doing and what does that mean for my status here?”

After four decades working with companies trying to manage themselves better, I don’t think these issues are uncommon. Performance management remains a personnel and human resource matter patched onto the organization’s strategic and financial business. This remains true, even as companies everywhere struggle to implement increasingly challenging strategies and to create innovation-focused, agile cultures that attract and retain the talent they need and want. Remember that 70 percent of change initiatives fail. It’s clear that performance management is still not doing what we want it to do. 

Time for the New Performance Management: Strategy in Action 

I wish there were another name for it. The phrase performance management is so tainted by back-end concerns that it may be irredeemable. I prefer thinking about it as strategy in action—or the mother of all business processes.


As a business process, strategy in action has three important purposes: alignment, high engagement and performance culture, and successful transformation and change. A key challenge is to be clear about why these practices are essential for business today. Being clear about the why puts you on the road to the what.

Alignment. Business today is fast paced and needs to be more responsive and agile than ever. It’s easy for the strategy and action systems to follow different paths. Meanwhile, people today must juggle a variety of priorities: their ongoing job, their role in business strategies, their own development, and various ad hoc requirements and unanticipated challenges. Performance management is the vehicle for continually sorting these out while ensuring that goals stay in focus and aligned with bigger business agendas.

Culture. Enough posters on walls! It’s time to live the engaged, diverse, accountable, respectful, agile, participative, developmental, innovation-friendly, and customer-focused culture described in those posters. Culture lives in interactions and conversations. And performance management includes having key culture-creating conversations about strategies and goals, performance and development, and feedback of all kinds and in all directions. Performance management is the connective tissue between the living and theoretical business.

Transformation. Most organizations are in a continual state of reinvention. But it is easier to strategize change than to make things happen. Performance management should be the always-ready vehicle for rapidly channeling change agendas throughout the business performance network. Many organizations need to replace the traditional authoritarian, top-down way of operating with something more participative, while ensuring differentiated roles and appropriate decision authorities. When you reinvent performance management, you can simultaneously help entrench a view of roles and the business that will actually support agility and innovation as well as performance rigor—a view that will attract the best talent for our fast-changing times.

The new performance management includes the full cycle of strategy-in-action practices that enable an enterprise to do its ongoing work and achieve its strategic priorities in the agile way required by today’s environment. It includes:

  • the practices by which strategy is developed and communicated throughout the enterprise 
  • the practices by which people align their goals and priorities with the larger business and team programs and continually develop and manage themselves within and around the performance environment 
  • the practices by which everyone tracks what is happening, working, and not working, and accommodates agile learning and redirection when necessary 
  • the day-to-day actions by people in formal leadership roles, and employees, that ensure continual alignment, culture excellence, and agile change and transformation.

All these practices need to be reinvented with alignment, culture, and transformation in mind. Human resource and talent professionals can be change agents here, but it means giving up ownership of the performance management process and repositioning it as a business process that is fully owned and implemented by senior management. Leaders must see performance management as strategy implementation—and as a major source of competitive advantage. And they must be willing to redesign and actively lead (not just endorse) the entire strategy-in-action system with these purposes in mind.

This is not an easy task. It is easy to shift responsibility for these matters to HR and talent leaders. It is easy to mandate forms, technology, ratings, and required monthly, quarterly, and yearly feedback sessions. It is easy to think that town halls, good top-down communication, and redesigned reward systems will be enough to implement difficult strategies. But it is not easy to continually align and reinvent today’s complex enterprises in a way that ensures business success and retains the best talent.

This is the important role of performance management today. It calls on HR and talent leaders to shift their paradigms to embrace this new view, which places responsibility for performance management on line management and employees themselves—where it belongs. The most forward-thinking talent people will take it one step farther. They will work with line management to transform performance management into the potent business process that it can and must be for the future. In the process, talent professionals will also earn a more prominent place at the leadership table.

You can assess your organization’s performance management impact by completing the short survey at For a deeper dive into new performance management and strategy practices for today’s business environment, check out Unstoppable You: Adopt The New Learning 4.0 Mindset and Change Your Life.

About the Author
Pat McLagan’s life and career are all about helping people improve their performance and development. Her book On-the-Level: Performance Communication That Works focused on shared responsibility communication, Change Is Everybody’s Business helped readers learn about their role in change, The Age of Participation: New Governance for the Workplace and the World looked at the systemic issues of participation, and The Shadow Side of Power: Lessons for Leaders looked closely at leaders’ use of power. In 2017, she will publish a book with ATD to help empower learners in all learning situations. She has received awards for thought leadership, worked all around the world, and served in professional leadership roles. Her focus has been helping people unleash their power and work toward a higher purpose at work and in life.
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