Recently Peter Capelli, professor of management at the Wharton business school, challenged executives to change their approach to employee performance and potential (tiered paywall). The core of his argument is that employees’ ability – and their potential ability – are not nearly as cut and dried as we are all led to think.
Business needs change, who people work with differs from project to project, expectations evolve, and personal circumstances or other factors can affect an employee’s potential contribution at any given time. Rarely, he argues, is an employee always an A, B, or C player, to quote language made famous by “Neutron” Jack Welch and the vitality curve.
Capelli says, “Broad categories miss a lot of subtleties, so people’s true talents and strengths often get ignored. They also make it hard to recognize when people improve or stumble in their performance. The notion that good performers are always good also contributes to what psychologist Edward Thorndike called a halo effect, the mistaken belief that if you were an A player in one thing, you will be an A player in another.
“That means we assume A players perform better because they have more ability or talent than the others. But we don’t consider that, for instance, they might have gotten a string of easy projects where they could shine. Or maybe we think they’ve done a good job simply because we expected them to do a good job. Likewise, we assume that people performing poorly in their jobs are C players rather than people who are struggling with problems outside of work or have just been given an impossible assignment. Or again, maybe we judged them as performing worse than they actually did because we expected them to do poorly.”
Change Performance Analysis, but Keep Performance Scores
The cornerstone of Capelli’s advice to solve this problem is to assess employees more frequently and objectively. While this is certainly a necessary step, it’s not enough. It is just one of three things companies must do to improve their performance management; they must also:
Expand the number of people from whom managers receive feedback: What constitutes “high performance” in today’s firms is more collaborative, interconnected, and based on “matrixed” organizational structures. To determine the contributions that someone is making, managers need to ask more people.
Make the feedback more forward looking: Rather than simply telling an employee how well they performed in the past, the best managers use past performance as a vehicle for talking about what they should be doing differently in the future. This approach lets managers use performance feedback to develop and evaluate employees.
To be clear, Cappelli is not suggesting that organizations get rid of their performance ratings or their high-potential programs; rather, he’s warning against categorizing employees as high or low performers based on what might be incomplete information.
Although some companies have gotten rid of performance scores as part of an overhaul of their performance management systems, removing scores generally hurts performance and engagement by making it more difficult for managers to give productive and accurate feedback, and for employees to know where they stand.
There are a lot of ways performance management can be made better, but companies making changes in this area need not be afraid of scoring employees’ performance.