Redefining Performance Management at the Top

By Lee, Robert; Rose, Jan et al. | People & Strategy, June 2013 | Go to article overview

Redefining Performance Management at the Top


Lee, Robert, Rose, Jan, O'Neill, Colleen, People & Strategy


Globally, 77 percent of organizations surveyed by Mercer in 2013 use a one-size-fits-all approach to performance management for all employees, either relaxing the rules for executives or failing to tailor the process for the top tier. Because companies subscribe to myths about executive competence, organizations often neglect to apply the same accountability standards that they do to other levels of management. Furthermore, many companies have not developed an agile feedback process that can accommodate the complexity of executive roles. Instead, many companies rely on external executive coaches to do the real work in driving executive performance. Organizations would get better results by building a distinct performance process that recognizes the unique challenges and feedback needs of executives.

Employee performance management is a perennial hot topic among human resources professionals. In most organizations, the primary purpose of performance management is to drive results and build organizational capability. Prevalent approaches include structured goal setting, competency assessment, calibrated performance evaluation and rewards, and development planning. Over time, many companies have improved these approaches as they relate to their broad-based populations, and some companies have enhanced their CEO evaluation process. But senior executives--the top tiers that report either to the CEO or his/her direct reports--have been largely overlooked.

Inadequate Execution of Performance Management at the Top

In many companies, the effectiveness of executive performance management is diminished by low compliance and lack of accountability. Compared to managers at other organizational levels, executives typically invest less time in facilitating goal setting and feedback for their direct reports, show lower completion rates for written performance and development plans and appraisals, and face much easier targets for performance rating distributions. Moreover, at the executive level, supervisors sometimes "outsource" the delivery of meaningful or tough feedback to an outside coach. Other performance management processes such as appraisal forms and development planning are often bypassed entirely.

These execution issues stem from two problems unique to senior executives. First, organizations tend to hold onto several myths about the needs and motivation of executives that inhibit the desire of all parties to invest in such practices as rigorous performance planning or feedback. Second, standard performance management processes are typically not aligned to the unique demands of the executive role. These issues are described here.

Myths About Executive Behavior

Myth 1: Senior Executives Do Not Need Feedback.

Effective senior executives receive a constant flow of information about what is happening in their business unit or department by tracking the actions of their direct reports, customers, vendors, regulators and other key stakeholders. But conversations with top executives reveal that many have not ever had a candid feedback session with their own supervisor, often the chief executive officer. They are left to infer how they have performed based on macro financial results, hallway conversations, or year-end compensation outcomes. This lack of direct performance feedback can cause anxiety among executives and lead to misperceptions, as it is not uncommon to see discrepancies in perceptions of performance among executives, their supervisors and other stakeholders. Honest feedback from peers and from direct reports is even rarer unless there is a special program for sanitizing that data.

Myth 2: You Can't Teach Successful Dogs New Tricks.

The organizational assumption that senior executives are already at the top of their game can cause complacency and result in an inflated self-image, leading an individual to believe that he/she is a "whole" leader and needs no further improvement. …

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