It is that time of year again when companies start doing those dreaded performance reviews.
Everybody hates them: the people being reviewed, as well as the people doing the reviews. It is supposed to be about improving the business and growing you as a person. But let’s be honest. If it was about personal improvement, any amateur sportsperson would tell you, you would be eager to see your scores. Runners will eagerly tell you their PB (that’s Personal Best) and what their time was for the last race, and I don’t even want to get started on golfers.
So why would the same person be eager to learn the performance indicator for a run or a game of golf but not for their job?
Let’s start by looking at the differences between the two:
Metrics and Benchmarks
Most runners’ metric is speed. They may measure it as the average pace or perhaps their time to do a 10 km run. Their benchmark is their previous runs. Golfers have the number of strokes, and their benchmark should be par, but most work with their previous rounds’ scores. So the metric is simple, straightforward, easy, and objective. And it is very easy to understand.
On the other hand, performance appraisals focus on many different measures. Often the source of these measures is also unclear, as well as relying on subjective feedback from colleagues. Finally, the benchmark is generally established by the industry you are in, so in other words, the benchmark was determined by people you have never even met.
Reliance on others
A runner would prefer a cool, overcast day for a race; a golfer would prefer sunny skies and no threats of lightning. A runner might grumble at slower runners holding them up, and a golfer might grouse about the caddy. In the end, your performance on the road or course is mostly reliant on you. Outside forces may make it easier or not, but you are still reliant mostly on yourself.
Performance appraisals are the exact opposite: they rely on feedback from others, and the KPIs are the result of the entire team’s effort. In addition, poor behaviour from another department can impact your results.
Goals
For both runners and golfers, the goal is to always have a lower number than the time before, in other words, to beat their benchmark. And for a course you have not done before, you will have a goal based on your history and the nature of the course. So, if a runner is on a hilly course, they know their time may be slower than the equivalent time for a flat race. The important thing is that you know what the goal is, and you have set it for yourself.
The majority of goals for your performance appraisal were not set by yourself, and the benchmark set may be the equivalent of trying to beat a marathon runner’s pace or comparing yourself to Scottie Scheffler.
Timing/Visibility
You get the results of your run or golf game immediately, not months later. Chances are, you also have some clever technology that tracks your progress, so you know how you are progressing along the way.
Performance appraisals happen at the end of the year, with maybe a handful of check-ins during the year if you are lucky. The entire process is also very opaque. You most likely do not know who provided feedback or, if multiple people gave input, whose carries the most weight. In other words, we have a complex, opaque process that seems to have very little to do with you but severely impacts you anyway.
So why do organisations do this?
I believe this is what happened when “You can’t manage it if you don’t measure it” met continuous improvement. I also think this is the equivalent of organisational-level micromanagement.
What should we do instead?
I suggest reworking individual performance appraisals to be more like that of an amateur sportsperson. Find the one thing that each individual can actually influence. For instance, for a salesperson, it would be the number of sales, and for a warehouse picker, it would be the number of accurate picks.
To do this, you work your way from the top down and then backwards up the supply chain.
For the first bit, you start with the most important KPI for most organisations: profit. Based on that, each department will have a measure that drives profitability either by increasing sales, reducing costs, or improving productivity. For instance, the sales department will have the number of sales, marketing will have new sales or leads generated, and the logistics department will have On Time In Full.
Now you work backwards up the supply chain:
- Was the ordered stock dispatched on time?
- Did the checker check the stock properly and correct any issues in time for it to be dispatched?
- Did the picker pick accurately and on time?
- Did the picker have the stock available to pick?
- Was the order entered in time to be picked, packed and dispatched?
From the questions above, it becomes clear that each link in the supply chain can be measured using these steps:
- Was the order issued to dispatch on time?
- Was the order picked accurately and on time?
- Is the stock on the system accurate, both in terms of number and location (Absolute Stock Variance)
- Did sales place the order on time/ Was the order captured on time?
Yes, but what if they don’t reach their target?
This is when performance management truly kicks in. Now, it is up to the manager to determine the reason for the poor performance or areas where the individual can actually make a difference. The first set of questions above is what you use to determine the root cause of the problem and areas of improvement.