What Are Major Issues in Performance Leadership™?
“Company policies and practices can substantially affect an employee’s ability to work out a satisfying career—right from determining the human resource needs of the organization to analyzing the distribution of the employees . . .” (Ahmed & Kauschik, 2011, p. 103).
What Are Major Issues in Performance Leadership?
One of the first to discuss is top management support. The second issue is the amount of trust within the organization. This issue also includes whether the organization is capable of collecting accurate and timely data and of creating the knowledge about performance. A third issue is a potential pitfall: organizational culture. Another is whether you have a personnel office or a human resource management department. The amount of time needed to execute true Performance Leadership is an issue to consider, including the benefit of this process in selection, retention, and discipline. The final issue covered here is person–organization fit, which is a concern for both employers and employees. It is important to note that these are not the only issues that cause difficulties in dealing with performance in an informed way. These are just some of the most common.
To be entirely truthful, a manager can administer a reasonably good performance evaluation system without the support of the top management team. However, it is much easier when the top management team support companywide efforts and the full Performance Leadership System. Hopefully, you are working in such a company. But not all companies have implemented a true system to engage manager’s leadership skills and employee performance. Some try to take an easy route and just use the performance appraisal or evaluation without the component parts.1 Viewing employees as customers of management is a great way to run a company, as Google, 3M, and other examples demonstrate.
Managers might need to do this on their own initiative for their employees. It is possible, and we have done it ourselves. The biggest problem is the resentment from other employees whose managers are not as well equipped. When the completed Performance Leadership System is implemented, employees will know how well (or badly) they are doing on a routine basis. It will be impossible for managers to practice gotcha or chicken management (Theory X management). Employees will know their status on a day-to-day basis, not as a surprise at the end of the year.1 They will know what to anticipate as the time comes for the yearly companywide assessment, which is reflective of Theory Y management.
Trust, Fairness, and Justice
One interesting outcome of an effective Performance Leadership System is trust.2 Trust is the appreciation of other’s expectations.3 Trust is circular; it is a natural outgrowth of people knowing what to expect from each other. Managers have more trust in employees when they fully understand what employees should be doing and what they are doing. As a result, employees will trust managers more. When employees know what their evaluation will be, because the manager has assessed them frequently, trust is the natural outcome.
Trust creates commitment and a positive organizational culture, which allows organizations to achieve their goals.2 Trust is reduced when employers violate employee expectations of reciprocal behaviors.4 For example, when employees put forth a good effort toward an identified goal, but they are not rewarded or recognized for their effort, productivity to decreases.5
There is research to indicate that accuracy in judging performance affects results6 and that it is aided by self-appraisal.7 Appropriate and well-developed feedback further enhances trust.7 Trust is important because:
“Employees make themselves vulnerable to the organization when they expend effort on their jobs . . . the employee is dependent upon the appraisal system to detect the increased contribution. If the system fails to be sensitive to the extra contribution, the employee will not receive economic benefits for the labor. This should lower the employee’s level of trust for those in the organization responsible for the flawed appraisal system.”8
The opposite is also true.
Trust is invaluable and is a competitive advantage for the manager. Employees who trust their manager work harder, produce more, and are more likely to display contextual performance than those who do not. Trust cannot be demanded, but you can earn it using a consistent and the complete Performance Leadership System.
Two other crucial points concerning trust are whether accurate and timely data will actually be collected in the entire organization, and how effectively data are used. Use of the Performance Leadership System must not lead to employees dismissed simply on the basis of the data generated—there must be recourse to feedback and determinations of what caused the performance gap, whether it be environmental factors, a lack of resources, or individual failures.
Fairness perception in performance management systems is a crucial factor allowing managers to run those systems in a more effective and efficient way. “Fairness of performance appraisals has been identified as an important criterion in judging their effectiveness and usefulness for organizations.”9 In addition, fairness and justice perceptions concerning the performance appraisal systems are associated with other important organizational attitudes such as organizational commitment, trust, and turnover intentions.
Organizational culture is what people often refer to as “the way we do things around here.”10 It is a pattern of behavior based on underlying values and beliefs of the majority of the organizational members, which includes their perceptions of fairness within organizational policies and procedures.11 Schein’s book10 and his other writings are probably the most comprehensive, as well as easy to read. In short, the culture can often be determined by looking at what is rewarded and what the employees talk about. In cultures where there are favorites, rewards are arbitrary, and the talk around the water cooler is about who was laid off, there is a dysfunctional organization. This means that there will be little top management support for the comprehensive Performance Leadership System and little trust among employees or between employees and managers.
Policies and procedures are developed by organizations for control.10 Although we have become accustomed to seeing the word ‘control’ as being negative, it is the major function of management and includes both positive and negative components. When policies and procedures are used to promote goals and are transparent, they are usually positive or they are rejected by employees. Secret and/or punitive goals often result in the desire to dismiss or go around them, resulting in dysfunctional employee behaviors, such as theft (including theft of time), bullying, slacking, and the tendency to blame others for poor performance. The best policies, like the best government, are made with the consent of those who have to work in the system. It also continues the idea of having power with employees, rather than power over them.
A note of warning from Mo Amani, one of our reviewers: “Don’t try implementation of an organization-wide system until the entire culture reflects trust and commitment. Otherwise, it is likely to fail.”
Departments have cultures, too, which can reflect the organizational culture or be quite different.10 One of the authors worked in an organization where there was little top management support for a comprehensive performance evaluation system and little trust between members. However, the department where she worked had a totally different culture, with management implementation of a departmental performance evaluation system, which created a great deal of trust between the manager and his subordinates, as well as between departmental members. The feeling of working in that department for that manager was very different from that in the rest of the organization.
Personnel Versus Human Resource Management
There are two sides of human resources.12 One is tactical and is reflected by the activities formerly engaged in by Personnel Departments. This is the science of human resource management: pay, evidence for leaves, and determinations of whether policies are violated. In cases where this is all that the department does, they usually do not have qualified human resource staff. In one instance, a department was staffed by a lower level manager who was unable to perform his former duties due to health reasons.
Timely and appropriate pay and proper use of vacation and sick leave are important, of course, but the strategic and value added part of the department focuses on the employees that produce the goods, services, or knowledge that the organization is critical.12 Human Resource Management Departments are concerned with tactical (personnel) issues, but also with the art of human resource management: aligning organizational strategy with human resource requirements, eliminating poor working conditions, and developing managers and employees. Organizations with excellent human resource management departments already had a comprehensive performance management system, if the organizational culture and top management team has permitted it.1
Sometimes, top management teams prevent human resource management departments from fully implementing these systems. However, even in these cases, true human resource managers are supportive of those managers who work within the constraints of the organization. Having a good relationship with the human resource department can be invaluable. However, those operating solely under the personnel department mentality will fill threatened by these systems, and this can derail managers’ best efforts.
Time
No one has enough time anymore. There are priorities, day-to-day crises, and a million things waiting attention. However, with the Performance Leadership System, managers can be sure that priorities are being met, there are few crises, and the “million things” are being done. Imagine a department where all of the members understood the goals to be achieved and their roles and achieving the goals. From experience, it is a wonderful place to work. One author works in a department where everyone knows the goals for success and has values aligned with the departmental values.
However, it takes time to create the system and implement it, as well as assessing it. Managers have to determine where their time is best spent. Is it better to direct employees, or to have them understand their roles in goal achievement? Is it better to fight crises, or is it better to plan how to meet problems, challenges, and opportunities? That’s the reality of management. And once the Performance Leadership system is created, using it becomes simple and routine but not unchanging.1
One of the common complaints identified by managers is the time assigned for performance evaluations, particularly to complete the paperwork. If managers feel a time pressure on their shoulders, they may not correctly reflect the complete details of the performance of the employees effectively and/or accurately. To overcome this problem, organizations may take advantage of technological advancements, keeping records online.
Another reality of management that deals with time is selection. Selection of the best person to do the job takes both time and money. The cost to replace a frontline employee is at least 1½ times the cost of his yearly wages.13 In the case of a higher level employee, the cost increases to twice the yearly salary or more.13 However, having already performed the job analysis, job description, and job specification reduces the amount of time, while increasing the probability that the hire will be successful in the position, reducing the need for continual selection of new employees! This is a true time saver!
Person–Organization Fit
Person–organization fit is an examination of whether the organizational mission and vision, created from values and beliefs in the culture, will fit the job candidate’s values, goals, and motivations.14 It is a really important, but often overlooked, concept. The best time to examine person– organization fit is at the time of selection. When looking to hire someone for the organization, it will be in the manager’s long-term interest to find someone whose values, goals, and motivations align with departmental and organizational goals.14
A good, although negative, example of the failure of value alignment is Enron, who reportedly had an emphasis on greed above all else, as documented in the book, The Smartest Guys in the Room: The Amazing Rise and Scandalous Fall of Enron.15 The organization and its employees put no effort toward producing something that people could use, and the firm eventually failed, with dire consequences to some of the amoral, unethical top management team. The question is: Why did it happen? The main reason was that the reward structure benefitted those who dwelt on greed, and not on quality of output. Those who did not have their values aligned with Enron’s values saw what was happening, and left. Enron was left with those whose values created an organizational culture of greed.15
Managers use the job description and job specification forms to select the appropriate person for the job. Within this selection process, it is essential that the key values and goals of the organization are clear to the applicant.14 Good applicants will already have investigated the firm where they are seeking to be employed, but managers must make sure that they understand the function of their job within the organization and the tasks that they will be expected to perform. In this way, employees and managers both know what to expect during the first weeks of the new applicant’s arrival.
These are some of major issues encountered by managers using the Performance Leadership System. The correct use of this system creates a sustainable competitive advantage within firms. When employees that are selected using Performance Leadership techniques understand their tasks and roles within the organization, there is little room for failure in goal achievement—the primary role of the manager.
Example 8.1
As the managers sat around the table, Agatha, the Chief Operations Officer said, “You are rating your employees too highly. The graph of ratings should be a bell-shaped curve, but every manager rates their employees as a 3, 4, or 5 out of 5 points. We cannot possibly have all of the employees doing so well. Some must be a 1 or 2 out of 5!”
“But Agatha,” said Dedric, “I can’t have people that rate 3 or lower in my area of the hospital—people could be injured, at the very least. And last month, after reading Senge’s book, The Fifth Discipline, you told us that you wanted a top organization, one that rates 5/5. How can we have a top organization if all of our people are 3 out of 5?”
What Is the Problem Here? How Can Performance Leadership Help in this Situation?
In this case, how much trust can the manager place in the COO, given that she knows that she wants a top-rated organization. It is foolish to make statements that directly contradict each other. Having a top-rated organization is an excellent goal for an organization, particularly as in the hospital in this case. But realistically, did the COO really think that she can get a top-rated organization if her employees are not top rated?
Yes, this is a true story from one of the authors of this book! The rationale behind Performance Leadership is the documentation, not only of performance, but of departmental and organizational goals. Questions about performance ratings are not an issue when there is documentation to support your view of the employees’ work.
Managers and employees must be aware of the difficulties of deciding on raises, particularly in not-for-profit or struggling profit firms. However, reducing ratings to cope with a small raise pool is not the answer. As discussed in the book, reducing ratings can have a devastating impact on the workforce. Remember, employees talk, and it is not legal to prevent them from talking about wage and salary issues in the workplace.
In the particular small rural hospital described here, it was not unusual for employees to have tenures of 15, 20, or even 30 years. The area was multicultural and the city small—the employees were treating their relatives, neighbors, and friends. They enjoyed the workload, which varied from slow to overwhelming, and found it a measure of their resilience to outlast the Chief Officers of the hospital, who usually lasted about 3 years before leaving.
The organizational culture developed by having long-tenured employees made change difficult, but rewarding. Finding buy-in for the Performance Leadership System took time, but the effort was well worth it. Once the system was instituted in the departments managed by the author, productivity increased to unbelievable amounts. But taking the time to change the organizational culture of the department was important in other ways too. The “us versus them” approach was the first to attack, with the goals of the hospital being clearly identified. Everyone was needed to support the patients arriving for surgery, illness, accident, respite care, or to have a baby.
Notes
1. Aguinis, 2013.
2. Mayer & Davis, 1999.
3. Dyer, Dyer, & Dyer, 2013.
4. Blau, 1964; Robinson & Rousseau, 1994.
5. Argyris, 1964.
6. Cardy & Dobbins, 1994; Murphy & Cleveland, 1991.
7. Cummings, 1983.
8. Mayer & Davis, 1999, p. 125.
9. Erdogan, 2002, p. 555.
10. Schein, 2010.
11. Hofstede, 1998; Schein, 2010.
12. Lussier & Hendon, 2013.
13. Cascio, 1999.
14. Edwards, 2008; Edwards & Cable, 2009.
15. McLean & Elkind, 2003.