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02.01 – Why Structured Performance Management & Evaluation?
02.01 - Why Structured Performance Management & Evaluation?
Hello. It’s great to see you again. This week we’re talking about managing performance, evaluation, and feedback. Let me ask you, why do you think we need structured performance management and evaluation in organizations? Having structured performance management is not a freebie for companies. It’s actually a very expensive process. It takes a lot of time, energy, and effort, to define performance, come up with performance dimensions, rate every single employee, fill out performance appraisal forms, have conversations about performance and developement. So why do it? While you’re pondering this question, I’m going to ask you to fill out this quick online poll.
I’m asking you to rate yourself, compared to other students taking this course, on the following dimensions that range from public speaking to the ability to lead teams.
You can see your aggregate results, but here’s what we know about our self evaluations. First, we tend to have inflated perceptions of our skills and performance. We tend to be overly optimistic about how good we are.
In classic studies, scholars asked people how good of a driver are you? And more than 90% of respondents, that’s 90, said they’re an above average driver.
Similar studies were replicated with computer programmers, who also believe that more than 90 percent of them, are above average. So we tend to have inflated perceptions of the self. But there’s a further complication to this effect, which is it turns out that we’re especially confidant in our superior skills and performance, if we’re less knowledgeable in a given area.
Think about this for a minute. The less experience and expertise we have in a given area, we’re more confident we are about our superior skills and performance.
It’s known as the Dunning-Kruger Effect. It seems completely counter intuitive. Why would this be the case? It turns out that if we’re less knowledgeable in a given area, it becomes harder for us to anticipate a variety of nuances, risks, and contingencies, that can accompany different projects and tasks, and, as a result, it’s difficult for us to evaluate our skill set, in terms of, both anticipating and dealing with those contingencies. We don’t know what we don’t know.
Now let me provide you with an illustration. In the medical education system of many countries, including the United States, once you to finish medical school, you start your internship, which is a period of supervised medical practice. As a recent graduate of medical school, this is the first time when you begin to see patients and work with patients on a regular basis. In a study published in the Journal of Medical Education, Les Bernstein colleagues asked first year interns to evaluate their skill of Venipuncture, which is a process of obtaining intravenous access, such as when you need to draw blood for analysis or make an injection.
And in response to this question nearly 100% of first year interns said that they’re so good at Venipuncture, they can teach it to others, which you can see is the highest level of skill and confidence in that skill, which ranges from, I’m not even sure I can do it myself unsupervised, to all the way, I feel so good about my skill that I’m capable of teaching it to others. And then these scholars ask experience doctors, nurses watch these students perform Venipuncture, and evaluate their skill set. And you can see that in only 10% of the cases, experienced doctors, clinicians, agreed with the interns, that they were so good that they were capable of teaching Venipuncture to others.
In nearly 50% of the cases, and you can see on the graph here, the experience clinicians believed, these interns need supervision themselves when performing that procedure. So forget about teaching it to others. You don’t even know how to do it yourself. Ignorance is bliss in this particular case. We don’t know what we don’t know. In the words of a famous Chinese philosopher Confucius, real knowledge is to know the extent of one’s ignorance.
Watson colleagues conducted a similar study with first year nursing school students where they asked them to dress a wound, and video recorded these experiences. And then these experiences were debriefed with experienced nurses and clinicians. And while first year nursing school students, on average, spotted about three mistakes of how they could contaminate a wound, experienced clinicians identified more than six.
Similar effects were found in financial services. In investment decisions. In project management. So you can see that when left to our own devices our evaluations of ourselves can be biased. It can be biased in a way that’s particularly dangerous for organizations, because the people who are gonna be most confident in their superior skills and performance, are the least knowledgeable in that particular area. Now from this standpoint, a formal validated standardized approach to performance management can help us mitigate those biases. Now you can think of performance management as a continuous process of identifying, measuring, and developing performance of individuals and teams, while aligning performance with the strategic goals of the organization.
It’s an absolutely critical part of organizational life. It’s a central pillar of formal systems of most organizations. Performance management helps us understand who deserves and should get the next raise. Who should be promoted. Who is the right person to take on more responsibility. Who needs extra development, and if so, in what areas. I should also tell you that this week we’ll talk predominantly about identifying and measuring performance. You’ll talk about development in subsequent weeks with Scott and Sherry.
So if you get structured performance management right the benefits for organizations can be enormous. Robust performance management systems can help increase motivation and engagement. They can help us acquire new skills and competencies. They can give you a wealth of insight into your talent’s current skills and competencies. And because you compare the performance of your talent against organizational goals and objectives, a robust performance management system can also give you greater clarity and commitment to organizational goals. But more importantly, a robust performance management system can help you attain alignment between your strategy and talent. It’s nice to have a great strategy, but you need to execute it. And this is where your people become a critical piece of the puzzle.
A strategy is carried out by people. The key question here is, do your people have the right skills and competencies to execute the strategy? And having a, well designed, robust performance management system can help you give a positive response to that question, because your system will help you evaluate, reward, and develop the skills and competencies, that would enable your people to carry out that strategy. Let me give you an example of Borders. Many of you may remember this brick and mortar retailer of books. The company was headquartered in Ann Arbor Michigan right next to The University Of Michigan. One of the Borders brothers went to the University Of Michigan.
Now this store had forty year old brand, that at its peak operated more than 1300 stores globally, and employed over 35,000 employees, filed for bankruptcy, and went out of business in 2011. Few people know that in 2001, Borders signed a partnership agreement with Amazon, where it redirected all of its online sale of books to Amazon. And at the time, Amazon was just gaining foothold in the market for book sales. So in a sense, Borders bred its largest competitor that in the end killed the company, but this is not why I’m telling this story. In 2008, Borders broke off the partnership with Amazon, and tried to integrate online sales into the company.
The strategic message was clear, going aggressively into online sales of both printed and electronic books. And this is where they found it challenging to implement that strategy given the skills and competencies of their talent. They realized that their people were not well equipped for and trained, to develop and attract even functional online sales platform, to design and execute online promotions, to develop and integrate electronic readers, into that online sales platform. And one of the things that malfunction at Borders was exactly the system of performance management. Where the skills that the company was evaluating, rewarding, and developing, were much more aligned with a traditional brick and mortar strategy, as opposed to the new digital age strategy.
So if you don’t get this right, if you don’t get your performance management right, the consequences can be equally significant. Poor performance management can lead to disengagement, dissatisfaction, high rates of turnover. It can lead to damaged relationships at the workplace. It can lead to perceptions of inequity, where I might be feeling that I’m just getting a piece of cucumber, while somebody else is getting a grape for comparable contributions. Poor performance management can even invite high risks of litigation, in the form of wrongful termination and discrimination lawsuits.
And more importantly, poor performance management can undermine your strategy execution, because the skills and competencies you will be developing your talent might not be very well aligned, with those needed to carry out the strategy. So this week, we’ll talk about some of the central approaches that companies use to perform as management. Different ways to collect performance feedback. We’ll talk about some of the key rater errors and stereotypes that permeate our evaluations of other’s performance. We’ll learn how to recognize them, and discuss possible countermeasures. I’ll look forward to seeing you in the next session.
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