Best practice in performance management

HR practices such as performance management can have a direct impact on the quality of healthcare and patient mortality in hospitals. Michael West and James Guthrie’s research in 2006 concluded that within a hospital, staff who are clear about their roles and objectives, and have their development needs met, are likely to perform their roles more effectively and thereby provide better patient care.

In light of this research, how can HR within a hospital deliver an approach to performance management that creates value and better team working?

Experience has shown me that the underlying problem with much performance management is that, somewhat bizarrely, it is not perceived as an essential methodology to manage and improve performance. Instead, performance management is perceived as an HR process closely linked to irksome red tape designed to prevent managers from doing their job.  

‘The essence of performance management is to ensure everyone is doing what the organisation needs them to do’

If you stand back from all the emotional baggage, it is a very weird perception. Why would a business not be interested in managing people, ensuring they are good at their jobs and creating real value?

The essence of performance management is to ensure everyone is doing what the organisation needs them to do, in the way that it needs them to do it, and that people get better at it each year. What’s not to want?

So, how can HR deliver an approach to performance management that creates value? The principles are simple.

Speak in the language of the organisation  

Performance management is a business process, whether that business is about delivering better health or business products and services. It should be couched in the language of your organisation and use the goals, aims and values of it as the central content. For example, if a particular hospital seeks to develop a workforce where good team working and responsiveness are vital, then everyone needs to know what good team work looks like and what it means, in a day-to-day context. Best practice means there is a common, articulated understanding of the organisation’s language.

Focus on delivering strategy to the frontline

This is the central purpose of performance management: if people do not have clear goals directly focused on delivering a strategy appropriate to their role, they cannot give you maximum value. Managers find setting goals one of their most difficult and time-consuming activities, so it is not surprising it is often poorly done or left incomplete. Providing “SMART” training is useful as an introduction, but does little to improve goal setting in practice. Best practice finds a more effective route to goal setting than managers sitting down with top-line company objectives and a summary of the SMART acronym (specific, measurable, attainable, relevant and time-sensitive).

Know ‘what good looks like’

I hear frequent requests to help managers know “what good looks like”. Performance cannot be managed without standards – if all performance is only relative to others in the team, then the entire organisation can be underperforming yet still ticking the performance box at appraisal time. Standards are not a job description; they are a clear picture of what good looks like in a role.  

Managers need to know what they can expect from people, how to coach for more and when they need to take remedial action. Without standards managers will fail to manage performance. 

‘Most of the time, performance is unaffected by the potential value of a bonus’

There are, of course, cultural norms, and for some the “do it like I do” school of standards suffices. However, any serious attempt to create value from performance management requires an understanding of just what can be achieved. The late Apple CEO Steve Jobs was famously hard to please, nit-picking over every detail. Bill Gates would often look at lines of code written by developers and send them praise, comments or advice. 

This is one area where benchmarking against other hospitals or other areas of the NHS can help. Choose ones that perform highly in areas you want to improve in and see what good looks like to them. Best practice means standards are set to upper-quartile against the benchmark.

Ensure accountability

Let’s face it, giving feedback can be challenging and managers will usually avoid tricky conversations if they can. Setting goals is hard work and, unless done effectively, often a waste of time. If no one chases you to complete a performance review then you are likely to conclude it wasn’t that important (based on the assumption that you are always chased for things that matter). If you are not accountable for how you have managed and developed your team, then how well you do it is more a matter of personal disposition than business commitment. 

Accountability means consequences and organisations can get these horribly wrong. When I was doing my MBA, many of the lecturing staff complained they were endlessly told to improve teaching standards and devote more time to supporting students. At the same time, recognition and reward were based exclusively on the amount of peer-reviewed, published research each lecturer completed. 

Not surprisingly, most were unwilling to devote a lot of time to students. Even now, for many in the NHS the reward for great performance is more work, while less hard working colleagues are asked to do less. 

Balance ‘fairness’ with a drive for high performance

If reward is based on achievement of goals, then all those at a particular level should be set goals of similar difficulty without reference to the capability of the individuals involved. However, to achieve high performance, goals need to make the same level of demand on individuals but in relation to their capability − goals that stretch individuals but which take into account the difficulty level when it comes to rating achievement.

This is a dilemma that needs resolving through policy. It is worth remembering that most of the time, performance is unaffected by the potential value of a bonus, research on motivation and performance have all shown that money is not a factor. 

‘Managing performance is a daily, weekly and monthly activity. Performance can be managed informally through daily contact’

The outcomes of performance management must be debated and agreed at a policy level. Rewarding high performance is good. It encourages people to stay, shows you value their contribution and raises individual engagement. Public recognition is even more effective than reward in many cases. Expecting people to perform better in the expectation of a bonus is largely a waste of time and money. 

There is no perfect solution to the links between reward, recognition and performance management. There are a variety of good options that will work in different circumstances and there are some bad options that notoriously fail (think: investment bankers).

Daily performance management

I cannot think of a single organisation that makes daily financial management decisions based on the previous year’s annual report and accounts. Managers expect monthly accounts, with many having access to daily trading information to enable them to take action to respond swiftly to changing business performance. Likewise, the annual appraisal is the equivalent of the annual report and accounts − it represents a summing up of all that is already known and has gone before.

Managing performance is a daily, weekly and monthly activity. In some environments, performance can be managed informally through daily contact. For larger, more complex organisations (typically more than 100 employees, and definitely more than 250) there needs to be some structure to ensure accountability for ongoing management of people. Best practice requires regular (at the very least quarterly) performance management to underpin annual performance reviews. 

Summary

All the above takes time, a commodity in short supply for many managers. If managers do not have the time to spend reviewing performance with each direct report at least quarterly, it brings into question in what context they can be said to be managing people at all.

Performance management carried out in accordance with the principles above will create significant value for an organisation, and position HR as key players in delivering results and real value.  

Hedda Bird is managing director at 3C Performance Management