Performance Management

Deliver results and build a stronger company

CONTACT

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www.qvartz.com
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Published by QVARTZ, May 2016

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CONTENTS
Strategy sets direction; results are delivered by people ....... 6

Deliver results and build the company ...........................................8

The performance management "machine room"...................... 11

We want to get it right; where do we go from here?............. 16

6 WHITE PAPER 2016

Strategy sets direction; results

are delivered by people
Performance management helps you translate your strategic goals to
action and results delivered by the people in your organisation

Performance management is a business process that trans-
cends the organisational hierarchy and has the ability to
create the organisational "buzz" that keeps everyone
focused on the things that matter the most. The essence of
performance management is easy to grasp, but getting it
effectively embedded in the organisation as a value-adding
process can be difficult. You will need to define a set of
principles and a process that matches the needs (and capa-
bilities) of your organisation. The key to getting the most
from performance management, however, is not in the
system or the choice of rating scale, but in how successful
you are in positioning performance management as a key
element of everyday leadership
Performance management means different things to differ-
ent people. Ask someone from Finance, and they will talk to
you about rolling forecasts and budget allocation; ask some-
one from HR, and they will tell to you about feedback and
personal development plans. Ask someone in the line, a lot
of them will tell to you about objective-setting, performance
appraisals and bonus schemes. Unfortunately, a lot of them
will also talk about performance management as a process
that has been imposed on them from somewhere else, which
is time-consuming and the source of a yearly motivational
speed bump, the symptoms of which are disappointment
and cynicism. In other words, organisations struggle to real-
ise the full potential of performance management.
The challenges of getting performance management right
are so pervasive, that they have given rise to whole books
with titles such as "Get rid of the performance review", and
when we laugh at the substantial number of Dilbert comic

The four performance questions

What am I accountable for?
Why is what I do important?
How am I performing?
How should I develop to improve?

strips on performance reviews, our smile often stiffens as we
think "thatcouldhappen here". In some organisations, per-
formance management in the classic sense has been aban-
doned altogether to make way for a more ongoing feedback
culture (and generally higher wages instead of bonuses). So,
if performance management is such a perilous road to take,
why take it at all? Could we not just skip it? Yes, we could.
However, as one leader put it with a wry smile: "If we were to
abandon every process that we do not master, we could end
up with very few processes left". The upside of getting per-
formance management right is such a powerful force in de-
livering results, driving motivation and developing the peo-
ple in your organisation.
Performance management is simple
One thing that is so paradoxical about performance manage-
ment is that it is so simple and so complex at the same time.
The essence of performance management is simple: We
want to align, drive and develop the performance of individ-
uals towards the goals of our organisation. This can be
achieved by ensuring that everyone in the organisation have
concrete and specific answers to the four performance ques-
tions at all times:
What am I accountable for?
Why is what I do important?
How am I performing?
How should I develop to improve?
If we look at the four questions and imagine a conversation
between a leader and one of his or her direct reports, it
seems feasible to find specific and concrete answers to these
questions. That is, if we assume that the leader knows what
he or she is accountable for in the first place and is able to
translate that into contributions from team members. With
these four questions, we should be able to execute perfor-
mance management across the organisation armed with
nothing else than a pen and a piece of paper. A monthly 1:1
between leader and direct reports would enable us to stay
up to date on the answers.
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We have made performance management complex
However, we have a way of making things difficult for our-
selves for perfectly good reasons. We want to be able to
compare the performance of employees, so we invent a rat-
ing scale, which in turn drives the need for defining objec-
tives, KPIs and targets in terms of the rating scale. As if that
was not enough, we go and link it to talent programmes, ca-
reer progression and bonus schemes. Everybody becomes
so focused on the score that inflation sets in, and so we in-
vent calibration to ensure that scores remain differentiated.
We now spend a fair amount of time training to set SMART
objectives, give feedback and create personal development
plans. And we enter it all into a performance management
system that we use so rarely that even if it had been designed
with an acceptable level of user-friendliness, we would still
have to learn it over and over again each time we use it.
"IF WE WERE TO ABANDON EVERY PROCESS
THAT WE DO NOT MASTER, WE COULD END
UP WITH VERY FEW PROCESSES"
Getting performance management right
So how do you get it right? The answer, of course, is: It de-
pends. It depends on what you have already done and suc-
ceeded with i.e. your organisation's performance manage-
ment maturity level. And it depends on what exactly it is that
you want to performance manage i.e. your performance
management scope. There is no one-size-fits-all. Therefore,
whether your performance management idol is General Elec-
tric or Atlassian, you will do well in making a solid assessment
of how far you want to go, and how far you are able to go.
For most companies that have been successful with perfor-
mance management, it has been a journey to get to where
they are today. You need to build your roadmap and plan
your performance management journey too. That being said,
there are many things to learn from the experience of others.
8 WHITE PAPER 2016

Deliver results
and build the company
Performance management is about delivering results now, and building
a stronger, better company for the future

The purpose of performance management is to deliver re-
sults and to build the company. What exactly "results" mean
and what it is that you want to build is, of course, specific to
your company. The scope of performance management may
therefore be very different from company to company.
The what and the how
Some companies focus strongly on the what that is, on the re-
sults. The what is probably best characterised as what we would
call tangible results things that we can set clear targets for and
which we can measure. Things like revenue, costs, quality, cus-
tomer satisfaction, milestones, returns, etc.
Other companies also include the how in performance manage-
ment. They focus not just on what you have delivered, but also
on how you have delivered it e.g. on living the company's val-
ues and on leadership. The how is usually less tangible than the
what, and it is therefore assessed on a more qualitative and of-
ten subjective basis. That is not to say that you cannot create
specific and measurable targets for the how you can and you
should.
Depending on the culture and goals of your company, you will
want to make explicit the relative emphasis and importance you
place on the what and the how. Unless it is clearly stated other-
wise, we experience a strong gravitation towards the what. To
some, this makes perfect sense what good is it to excel in living
our values, if we fail to deliver results? To others, the reverse ar-
gument makes more sense if we cannot deliver results without
compromising our values, then we have failed. Some companies
go results first, others go fifty/fifty and yet others place such
an emphasis on values that they become pass/fail criteria.

FIGURE 1: The GE "9-box". Overall performance score (1-5) is symmetrical e.g. if you are "Below expectations" on either the what or the how, you get a 2 (="Improvement needed")

The symmetric 9-box model often attributed to General Elec-
tric is a great example of how to make explicit the relative
importance of the what and the how (see illustration on p. 6).
No matter if you are strongly focused on the what or have
chosen to include some or many elements of the how, you
will want to align, drive and develop the performance the
contribution of individuals to your organisation's goals.
Align
Aligning individual performance essentially means that we
want to ensure that people use their time and efforts on the
things that matter the most. Alignment must start with a
clear direction from above otherwise, what are we aligning
with?
In most companies, the organisational direction at the high-
est level is set by the Board and Executive Management. A
combination of Executive Management, the Strategy Execu-
tion Office (SEO) and Finance translate the overall direction
to specific objectives and targets. Objectives and targets are
then allocated to business units or regions, depending on the
organisational structure. This is the starting point for a top-
down process of cascading, translation and alignment
throughout the organisation. At each level, leaders cascade
and translate their own objectives to objectives for their di-
rect reports.
Alignment is not a 100% engineering-like exercise. Any at-
tempt to make it so will lead to a counterproductive increase
in complexity. At every level, the leader should strive to en-
sure that the sum of the objectives of his or her direct reports
add up to his or her own objectives. But at the same time, the
leader should not succumb to the temptation of creating ob-
jectives and targets for measuring and controlling everything
their direct reports should do. Focus should be on the few
things that matter the most to the success of the team, the
organisation and the company.
Aligning on the how (e.g. values and leadership) is also a top-
down process, but it works in a different way than the more
strategic or financial business cycle. When it comes to the
how, the standard, the ideals or the code of conduct is typi-
cally defined and described at the highest level of the organ-
isation, but it is more static in nature than the what. That is,
we do not change our values and ideals for leadership every
WHITE PAPER 2016 9
year. Alignment in this case becomes more of an alignment
of individual conduct to the company's defined standard.
Drive
Driving individual performance means to ensure and facili-
tate progress on what they have set out to do. Although
there is a wide variance across different companies, we find
this to be at one time the most essential, the most misunder-
stood and the most neglected part of performance manage-
ment.
It is essential, because objective-setting and performance re-
views are only the endpoints of performance management
it is the everyday leadership that ensures focus and progress
on the things that matter the most. As one client put it: "We
used to say that what gets measured gets done. Now we
know that that is not entirely true. It is what gets discussed
that gets done".
It is misunderstood, because many think of driving perfor-
mance as having something to do with whipping people to
deliver ever more and faster and generally making them mis-
erable. It could not be more wrong who would not want to
have clear and compelling answers to the four performance
questions? Building the habit of frequent interaction around
what we do, why we do it, how we are doing and how we can
do it even better is motivating! Even when driving perfor-
mance sometimes means giving negative (i.e. constructive)
feedback.
It is neglected, because for many leaders this requires build-
ing new skills and acquiring a new habit, which is difficult to
do. Setting clear goals and following up is new to many of
them. Working with performance in a large organisation, one
leader stated it clearly when she said: "We have a tendency
to compensate for poor performance instead of confronting
it".
"WE HAVE A TENDENCY TO COMPENSATE
FOR POOR PERFORMANCE INSTEAD OF
CONFRONTING IT"
Develop
We have already stated a belief that is fundamental to the
understanding and application of performance management:
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Strategy sets the direction; results are delivered by people.
We can add to this: If you develop your people, you develop
your company's ability to deliver results.
Development is another area of performance management
that is grossly neglected. In our work, we find that this can
typically be attributed to two main factors: Lack of im-
portance and lack of imagination. Both of them lead to a de-
crease in employee satisfaction and higher costs.
Lack of importance is plain and simple failure on the part of
a leader to see the value of developing the team members'
ability to deliver on their objectives (and plan and prioritise
accordingly). This is often due to a perception that we are
too busy (with more urgent things) to spend time on devel-
opment.
Lack of imagination occurs because many of us still think that
development equals classroom training. A lot of classroom
training is useless (see David Maister's excellent article "Why
most training is useless"), but classroom training is not the
only way of developing people. Some companies adhere to
the 70-20-10 rule of developing: 70% on-the-job training,
20% books and self-study, 10% classroom training. And this
is not only because it saves costs; it is simply more effective.
To be successful in developing employees, we should take as
our starting point the employees' objectives, and then ex-
plore what skills or competences the individual employee
needs to develop further to improve his or her ability to de-
liver on the objectives. And we then have to think above and
beyond classroom training of skills; If Alice is going to be suc-
cessful with a cross-organisational project, she can develop
her ability to lead without authority by being connected with
someone who has been successful with that and who can
provide her with sparring (she does not need a Prince2 cer-
tification to do that). If Bob needs to improve his oral com-
munication skills, he could hook up with someone who would
give him feedback on a few specific improvement areas be-
fore and after the situations in which Bob is presenting (he
does not need to go to a presentation course for that).
Performance management is an integrated part of
everyday leadership
Performance management is not really a Finance process.
Nor is it an HR process. Finance may have a say in setting
targets at the highest level. HR may play an important sup-
porting role in ensuring that leaders adhere to the same
standards. But more than anything, performance manage-
ment is a key element in and an integrated part of everyday
leadership. At least it should be.
We too often see that performance management is regarded
by leaders as a time-consuming process mandated by some-
one else. Something to be complied with. Sometimes this
perception is fully understandable, as it is created by well-
meaning specialists that over-engineer the performance
management process and systems that (are supposed to)
help leaders.
Given that we accept that results are not created by organi-
sation charts, by PowerPoint slides, by office furniture or
even by all the assets we own, but by people, we should will-
ingly accept that we do need to align, drive and develop in-
dividual performance to organisational goals. Before we look
into the performance management "machine room", we
should remind ourselves of the words of Dee Hock, the
founder and former CEO of VISA:
"SIMPLE, CLEAR PURPOSES AND
PRINCIPLES GIVE RISE TO COMPLEX
AND INTELLIGENT BEHAVIOR. COMPLEX
RULES AND REGULATIONS GIVE RISE TO
SIMPLE AND STUPID BEHAVIOR"
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The performance management

"machine room"
The essential components of the performance management process

The performance management cycle
At the highest level, performance management can be de-
scribed as a business process consisting of a cycle in three
parts: Objective-setting, follow-up and performance review
It is a cycle because the review of one cycle feeds into the
objective-setting part of the following cycle. Most companies
that we have worked with follow a yearly performance man-
agement cycle, but this is not the only way to do it. In some
companies, the cycle is half a year or even a quarter.
Objective-setting
At the beginning of the performance management cycle, we set
the objectives for the next cycle. In an ideal world, objective-set-
ting is a top-down process, which has its outset in the compa-
ny's business planning cycle. At the highest level, objectives are
things like revenue, costs, return on invested capital, etc. This
starts a top-down process of cascading and translation of ob-
jectives down through the organisational hierarchy. At each
level, objectives are either cascaded structurally (i.e. by dividing
them between team members) or translated (i.e. by translating
them into a set of objectives that will produce the desired out-
come), or both.
Objectives are not just objectives, but are made up of objectives
that describe the intent, key performance indicators (KPIs) that
describe how we are going to measure progress, and targets
which are then the "number" i.e. the quantification of what
needs to be accomplished. Entire volumes have been written on
the topic of objective-setting, but (at least) two things are of
particular importance: At each level, the objectives must add up
to deliver the intended impact at the level above, and every per-
son must understand the intent of the objective and how it fits
into the larger scheme of things.
And of course, objectives must be SMART i.e. Specific, Meas-
urable, Achievable, Relevant and Time-bound (or any of the
other popular definitions of the acronym). Note that we see a
tendency to go overboard on the Measurable part. Measurable
does not mean that we have to be able to pull a number out of

FIGURE 2: The performance management cycle

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a report it just means that we have clearly defined the success
criteria and how we are going to determine (levels of) suc-
cess. Objective-setting addresses the two first performance
management questions: What am I accountable for? and
Why is what I do important?
In reality, objective-setting becomes a bit more difficult as
leaders at the highest level set or receive their objectives late
when we try to set objectives in a dynamic business environ-
ment (e.g. the market slows down or speeds up, unforeseen
opportunities or crises demand our attention, etc.), when we
have to set goals for teams of people that have the same job
description but different levels of experience and efficiency
and much much more.
No matter the situation, objective-setting should be com-
bined with thorough management of expectations. What is
"expected" performance? It must be clear how performance
will be evaluated and what can trigger adjustment of targets
(if anything).
It is common to use the time of objective-setting to create a
personal development plan. Based on your objectives, your
capabilities and your career path, what are things that you
should develop to improve in the coming cycle? How should
those capabilities be acquired, how much time and effort
FIGURE 3: Follow-up dialogues takes many forms depending on topic and personal references (the leader's and the employee's)
should be devoted to it, and what support is needed to
achieve it? How can we measure improvement, and where
do we see the result? This addresses the fourth performance
management question: How should I develop to improve?
The personal development plan can also be used to address
improvement on the how whether it be on values, on lead-
ership or on something else.
Follow-up
The largest part of the performance management cycle is fol-
low-up. Even if you run a half-year or quarterly cycle, the bulk
of the cycle is about follow-up as part of daily work. Follow-
up addresses at a tactical level the two performance ques-
tions: How am I performing? and How should I develop to
improve?
Follow-up can be scheduled as periodic 1:1s, e.g. on a monthly
basis, ad-hoc sessions, or both. We typically distinguish be-
tween planned and ad-hoc sessions and between formal and
informal follow-up sessions.
When and how to follow up depends on style, preferences
and the topic at hand. Some prefer to get feedback on an
ongoing basis; others prefer the planned and formal setting.

Independent of preference, follow-up should balance the
positive and the negative. What this means is best captured
as "give negative feedback when there is a need and positive
feedback when there is an opportunity", and it should always
be qualified feedback that is, it should be based on con-
crete observations and facts no matter if it addresses the
more tangible what or the typically more intangible how.
Again, there are volumes to be found on giving (and receiv-
ing) feedback. Two things should be stressed: Feedback
should always be followed by forward looking actions (i.e.
make it specific what to do from here), and you must follow
up often (this is one of those instances where less is not
more).
To most (at least in a Nordic setting), follow-up and feedback
is an acquired taste, and it requires a lot of discipline to get
into the habit. Once established, the habit of frequent, bal-
anced, qualified and constructive follow-up is a key enabler
for being successful with performance management.
"THE HABIT OF FREQUENT,
BALANCED, QUALIFIED AND
CONSTRUCTIVE FOLLOW-UP IS A KEY
ENABLER FOR BEING SUCCESSFUL WITH
PERFORMANCE MANAGEMENT"
Because good follow-up and feedback is an acquired skill for
most of us, it must be trained and sustained. More than so
many other things, the will and skill to establish this habit is
something that flows top-down in the organisation. In this
respect, follow-up and feedback is closely linked to the com-
pany's culture a company that embraces an open and hon-
est feedback culture may find it easy, while a company that
does not at the outset have this culture may find it hard at
first. However, the determination to drive frequent follow-up
as part of everyday leadership may have positive effects on
the company's culture that goes far beyond performance
management.
Performance review
Although it is less than 1% in time and effort, the performance
review is the part of performance management that attracts
the most attention. This, unfortunately, is most often due to
our failure to take care of the preceding 99%.
WHITE PAPER 2016 13
In some companies, the performance review of one cycle and
objective-setting for the next cycle are combined. In others,
they are separate sessions. Some companies require employ-
ees to prepare a review of their own performance before the
review itself, while others leave it up to the leader. There are
many variations in between.
The intent is to review the preceding performance cycle and
to look forward. It sums up the answers to the two last per-
formance questions for the full performance cycle (How am
I performing? and How should I develop to improve?). As
such, the performance review should be a positive occasion
to look back as well as forward.
Why is it then, that in so many companies, the performance
review is associated with disappointment the complete op-
posite outcome of what was intended?
One of the reasons is the failure to manage expectations
through frequent follow-up. This leads to surprises for both
the employees and the leaders. Employees may be surprised
by what they see as a harsh, disproportionate or poorly qual-
ified assessment of their performance. Leaders may be sur-
prised by the employees' surprise, and so on. Either way,
what follows is a review where too much time is spent on
discussing (and even arguing about or negotiating) the as-
sessment of the past year's performance instead of on the
constructive and motivating forward-looking conversation.
There are faults to be found at both sides of the table, but in
the end, it falls back on the leader's failure to set clear and
stretched targets and to manage expectations through fre-
quent, balanced, qualified and constructive follow-up. We
have seen many examples on the part of the leader of what
one of our clients termed the "5x5" five minutes of prepa-
ration five minutes prior to review. On the other hand, we
also see employees going into the year with a statement like
"if at any point I am not exceeding expectations [or equiva-
lent] then please say so".
"GIVE NEGATIVE FEEDBACK WHEN THERE
IS A NEED, AND POSITIVE FEEDBACK
WHEN THERE IS AN OPPORTUNITY"
14 WHITE PAPER 2016
Of course, there are also ways in which the process and prin-
ciples prescribed by the organisation can set the leaders
and/or employees up for failure. Common pitfalls include
putting too much focus on "the math" by using a lot of num-
bers and assigning weights to objectives leaving very little
room for "leadership judgment". This is the engineering (or
accounting) approach, which is dangerous, because it re-
quires you to be absolutely sure that the numbers describe
the truth, the whole truth and nothing but the truth, which is
very rarely the case. We have seen numerous examples of
organisations that go overboard in numbers, requiring lead-
ers to score each employee on proficiency in a range of skills
and competences as well as on performance on objectives.
Before you know it, you spend so much time discussing a lot
of more or less irrelevant numbers, and not enough time dis-
cussing the few very important parts of performance and de-
velopment. We recommend going with fewer, more relevant
objectives rather than going for a large number of less rele-
vant numbers.
Another process pitfall is the by now infamous calibration,
which some organisations do in connection with performance
reviews. Calibration is a perfectly sound concept, which is ap-
plied with good reason: To ensure differentiation between
good and bad performance. The problem is that calibration is
so often mismanaged, and that the mismanagement leads to
disappointment and cynicism among employees.
Calibration is good, because it helps us ensure that we apply
the same yard-stick when we assess performance. In the sim-
ple case, we propose to give both Alice and Bob a score of 3
(average); but if we compare the targets we set for them, the
conditions under which they were to fulfil the targets and
their results do we then think that this should be so? Should
Alice get a higher score than Bob or vice versa?
Calibration may help us to differentiate. If we do not differ-
entiate between good and bad performance, we undermine
the performance management system. Then everything be-
comes "Fine. OK". Without focus on ensuring differentiation,
many leaders are tempted to let their scores "slide to the
right" (on the rating scale). This is quite natural after all,
high scores will make employees happy, and will save you
the hassle of arguing why they are not getting high scores.
Calibration becomes a problem when it is mismanaged.
Some companies apply a more or less strict "bell curve" to
the distribution of performance scores. The bell curve is
based on an American study from the 90s and in short, it tells
us that for a large population, performance should follow a
normal distribution (a "bell curve"), with most people per-
forming average, fewer people performing good or bad, and
very few performing very good or very bad. A problem arises
when this principle is applied to too small populations (e.g.
<30-50 employees) or applied too strict. Another problem
arises when leaders use "the process" as an excuse to hide
behind when giving scores to their employees: "you know
Bob, I would have given you a 4, but HR forced me to give
you a 3".
An alternative to the strict calibration is to review the perfor-
mance scores that leaders give to their employees. If a leader
repeatedly awards high scores to employees, there are three
possible explanations:
1) The leader is unable to set stretched targets
2) The leader is too generous in performance scores
3) By some miracle, the team repeatedly outperforms
stretched targets
In the first two cases, there is basis for a discussion of the
leader's performance on leadership.
Adjacent processes
Performance management itself is simple. It is about having
clear and compelling answers to the four performance ques-
tions, and it could be managed on a piece of paper. As we
stated, we made it complex the moment we invented the
performance score. But we did that for a good reason we
wanted to compare performance, and we wanted to be able
to differentiate between good and bad performance. We use
the performance score for more than just performance man-
agement.
We use it for incentive pay. That is, we want to influence or
stimulate people's focus and behaviour by rewarding them
for performing well on the goals we have set out. Each com-
pany has their own incentive system, but in most companies,
it includes an element of performance-based bonus.
 WHITE PAPER 2016 15

We use it for talent management. We use performance "YOU KNOW BOB, I WOULD HAVE
scores to spot talent, or to identify areas where we need to
GIVEN YOU A 4, BUT HR FORCED
set in to ensure that we build or improve an adequate talent
pool. In this way, performance management can also have a ME TO GIVE YOU A 3"
direct or indirect influence on your career opportunities.
No surprises
It is important to remember that to most of the people in Good performance reviews have no surprises. Your perfor-
your organisation leaders and employees alike there is no mance management process and principles should be
distinction made between performance management, bonus simple, but clear. Once that is in place, the most important
schemes, talent management and other adjacent processes. element for successful performance management (and per-
It is all performance management or performance review. formance reviews without surprises) is frequent, balanced,
qualified and constructive follow-up.
Therefore, even if performance management in itself is simple,
we need to carefully build and maintain the performance man-
agement "machine room" to ensure that it becomes and stays
an enabler for delivering results and building the company.

FIGURE 4: To be successful with performance management, we have to make it an integrated part of everyday leadership and the way we work
16 WHITE PAPER 2016

We want to get it right;

where do we go from here?
Create a strong, shared and fact-based foundation for your
performance management journey

It starts from the top
Successful performance management can only start from the top
of the organisation. Top-level leadership must lead the way. They
must make the choice to make performance management a priority
in everyday leadership throughout the organisation. They must cre-
ate a clear and compelling "core story" about why the organisation
needs performance management and what they want to achieve
with it. They must define the scope of performance management
and the relative importance of the what and the how. They must
state the few, simple and clear principles for how to go about per-
formance management. But most importantly, they must walk the
talk. They must actively engage themselves in performance man-
agement of their direct reports to show and lead the way.
An early step in making this happen is to ensure understanding and
agreement on performance management as a strong "machine" for
strategy execution. To support this discussion, we sometimes dis-
tinguish between business performance management (the process
governed typically by Finance at the highest level of the organisa-
tion) and people performance management (the process driven by
leaders at every level of the organisation typically supported
by HR). An easy way of explaining the full scope of performance
management i.e. the integration of business performance man-
agement and people performance management is to say that
business performance management helps your organisation re-
peatedly set the right goals, and people performance management
helps your organisation deliver the results. To gain a sustainable
competitive advantage, you need both. Since clear direction is a
prerequisite and the starting point of the performance manage-
ment cycle, an organisation must have control over its business
performance management before it can make any strong moves
on people performance management.
Never start with systems
There is a tendency to become preoccupied with perfor-
mance management IT systems. We can only

FIGURE 5: To achieve sustainable improvement to business performance, we must master both dimensions of performance management

speculate that it is rooted in the need to demonstrate pro-
gress and tangible results and it is tempting to translate the
demand for strengthened performance management into a
project that implements a performance management system
(think of the scene with "the machine that goes bing" in
Monty Python's "The Meaning of Life").
However, there are a lot of decisions to be made, an entire
mindset to be established and a habit to be created before
we are able to determine what we want from a performance
management system. If you do not know what you want from
performance management, then a system provider will tell
you. And guess what, it somehow always includes a lot of
features that you did not know you needed, and which hap-
pen to be part of that system. This is not to say that system
providers cannot help you they can, and they have experi-
ence from many different companies. They just cannot and
should not take from you the arduous task of making the
range of important decisions and commitments needed to
be successful with performance management.
FIGURE 6: Performance management maturity assessment on five dimensions
WHITE PAPER 2016 17
Create a strong starting point for your performance
management journey
Performance management is a business process that spans
the entire organisation. A lot of people will have opinions
about what performance management is, about how you are
doing on performance management and about what is
needed to improve it. There are a lot of opinions, and if your
company is like many of the ones we have worked with, they
are just that opinions. Very few of them are fact-based and
shared views. If you ask HR, they will point to leaders in the
organisation or to the IT systems for improvement. If you ask
leaders, they will point to lack of support from HR or cum-
bersome and time-consuming processes. And so on.
While different opinions can be stimulating to an initial debate,
in the long run it can be a hindrance to coordinated action and
progress. To establish a strong, shared and fact-based foun-
dation for the performance management journey, you should
assess the current state of performance management in your
organisation and its readiness to take the next step.
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Performance management maturity assessment
To assess the performance management maturity of an or-
ganisation we explore five different elements of performance
management in the organisation:
Buy-in and ownership
Do leaders and employees buy in to performance
management as an enabler of organisational per-
formance?
Do leaders at all levels take ownership of perfor-
mance?
Execution
Do leaders have the skills needed to effectively ex-
ecute performance management?
Do leaders execute performance management as
an integrated part of leadership?
Line of sight
Are value drivers being cascaded and translated
from the strategic to the individual level?
Is there a clear line of sight from individual objec-
tives to team/business objectives?
Motivation
Are we balancing key motivational drivers: personal
development, recognition/feedback, career oppor-
tunities and rewards?
Process and systems
Are processes simple, transparent, and perceived
as fair and value-adding?
Are tools intuitively simple and easy to use?
The maturity assessment should be conducted as a combi-
nation of qualitative analysis (i.e. interviews) and quantitative
analysis (e.g. survey). This ensures that both the insight to
build hypotheses and the numbers to confirm or reject them
are present. This combination makes a very strong tool for
pinpointing strengths and key areas for improvement.
The maturity assessment can seem daunting when you
consider large organisations. But in reality, it is a manageable
task to conduct interviews across business units and organi-
sational levels and the larger and more diverse the organi-
sation, the more important it is to get this performance
maturity assessment right. What white-collar workers in HQ
think of performance management is probably different from
what they think in a regional office, or what blue-collar work-
ers think in an off-shore environment. The performance
maturity assessment does not have to start entirely from
scratch. Most often there is valuable data to be found in al-
ready existing engagement surveys.
The important thing is to get to a point where it is possible
to get key stakeholders on board and to understand, agree
on and commit to where we want to take performance man-
agement and why.
It is refreshing
It is refreshing to experience when executive leadership
teams broaden their view and begin to see performance
management as what it should be: a positive enabler for de-
livering results and building a better, stronger company.
It is refreshing to experience when Finance and HR look up
and realise that what is needed to be successful with perfor-
mance management is not more numbers, a new scale or a
new process for calibration, but rather simplicity, clarity and
empowerment of leaders.
It is refreshing to see leaders and employees become ener-
gised by monthly 1:1s that address both the good and the bad
and ensure that both parties are up to date on the answers
to the four performance questions.
It is refreshing to see engagement scores and results move
in the right direction.
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Performance management is simple.

It is about providing clear and

compelling answers to the four
performance questions at every
level of the organisation:

What am I accountable for?

Why is what I do important?
How am I performing?
How should I develop to improve?
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 WHITE PAPER 2016 21

CONTACT
Anders Brahe:
anders.brahe@qvartz.com
+45 42 12 01 15
22 WHITE PAPER 2016
www.qvartz.com