What is the Difference Between Performance Management and Developing People?

by | Jul 29, 2021 | Leadership

There are two primary approaches to management. Managing performance focuses on outcomes, specifically achieving personal or collective goals. Developing people focuses instead on personal development to equip employees for greater efficiency and success. Growing people will in turn improve organizational outcomes, yet some managers get their priorities backwards, or struggle with investing the time and emotional energy required to help people self-actualize in their careers.  How organizations define success will determine how they approach performance management. 

Performance Management

Performance management is outcome focused. It assessing performance, looking at whether a person has achieved their goals, or a collective team has achieved organizational outcomes.  In for-profit organizations the focus is on goals and activities that drive profitability.  Non-profit organizations measure non-financial outcomes or impact, based on their purpose. Either way, the manager is focused more on achieving a goal, and may view staff as a means to an end.

Developing People

Developing people is instead focused on optimizing each individual on the team. This focus not only has a strong impact on retention and a positive team dynamic, but it also increases overall effectiveness of employees. Managers who develop people, either through formal or informal methods meet performance outcomes, while improving morale and building leaders in the process.

 

Performance Management and Developing People through the Eras

Industrial Revolution

In the industrial revolution, when people left farms to get jobs in cities, their main qualification was physical capability and the endurance to work hard to produce better and faster.  In the industrial era, where the majority of people were factory workers, it was all about productivity. The yard stick for a manager’s success was how many products came off the conveyer belt. This allowed organizations to outpace their competition by having higher quality, lower costs, and higher profit margin.  The health and well-being of people was not a top priority in most organizations during this time period.  People were viewed as a cog in the wheel; if someone left, they were easily replaced. Managers kept the process going and their people working but didn’t have a necessity of inspiring or motivating their workers beyond the promise of a paycheck.  

Managers and supervisors were trained to get people to show up, work harder, produce more and there was little consideration about their physical, mental, and emotional needs. To get people to do more, the autocratic (my way or the highway) or transactional (if you do this, you get this) management styles were sufficient.  Managers and supervisors may have had to train people, but it was typically focused on teaching them the job, and not focused on career or personal and professional development.  Personnel took care of hiring and firing, and there was no focus on training beyond the functions of the job. This production era was all about getting the job done and achieving production measures.  

Information Age

Fast forward into the information age, where advancements in technology created a shift in the economy from industrial to information technology. In the information age, people were building things such as the internet, software and hardware. It was still a production environment and good managers focused on making sure projects got completed on time and on budget.  During this era, many companies applied similar management practices and styles of leadership to achieve fastest to market goals, but human resources expanded their focus on training and development opportunities.  The goal was to build it faster, better, cheaper, and to give people career growth opportunities through Human Resources.

First-level managers of people developing software didn’t all necessarily need to be leaders to help their teams be productive. During this period, people were rated by subjective managers’ perceptions, performance measures, management by objectives, and goal achievement.  Many companies would create forced bell curves during review cycles and encourage the lowest rated employees to be removed from the organization. 

The Human Era

We are now entering an age where production isn’t equivocal to success; we are seeing enhanced automation, a rapid movement into the IOT (internet of things) where our daily lives are a collection of automated systems and processes (e.g., smart home systems such as Alexa, Google Home, etc.) and job availability is less in the production environment and more in service related or human facing roles.  In addition, the millennial workforce expects a learning component to work; they are not wired for a production environment.  Therefore, the new era we are entering will require a higher degree of leadership.  I refer to this time as The Human Era.   

As technology and automation advancements have greatly reduced or replaced many industrial production jobs and the information technology has advanced into the artificial intelligence period, the majority of people graduating from college are mental labor versus physical labor.  As AI continues to advance, technology neutralizes competition in the sense that we can all just buy the best automation and AI technology, leaving our true competitive differentiator to humans.  In order for organizations to remain competitive, and to attract and retain top talent, they must shift focus from production to people first, creating intentional culture. 

Leadership in the human era requires motivating people to go in a certain direction, setting a vision for others to follow, and helping everyone achieve it. Leadership requires helping people access their potential through inspiration, motivation, and expressing confidence in their abilities.  The production minded manager is a dinosaur in this era.  Today’s leader must lead with the mindset that their primary role is to develop people, and by doing so, they will achieve business results.  

Generational Shifts in the Workforce

Rapid technology shifts are also being fueled by generational shifts in our workforce.  Pew Research Center says that 75% of our workforce will be millennial (born 1981-1996) by 2030, with Generation Z (Born 1997-2015) right behind them.  Millennials and Gen Z workers value learning and culture in their workplace and will not work at or stay with organizations that are archaic in their management and performance management practices.  They don’t respond to autocratic leadership, they expect transformational leadership where their manager invests time in helping them learn, grow, and advance in their careers.  They expect their workplace to value their input, ideas, and to create a safe and equitable environment. 

Growing up in the technology era, Millennials’ confidence and competence in the technical space is beyond that of their predecessors. Moreover, they view technological skills that have only been established in the last 20-some years as common place and are always on the path to learning more. They expect the workplace to provide them the opportunity to grow, develop, and own their career. They desire mentorship and training and are unwilling to settle for the status quo. When an organization fails to give them attention, provide them a voice, and make their career path known, they are likely to move to another company, bringing their skills and drive for success with them. The inability to foster these employees will become any organization’s downfall.  

Developing people requires true people managers, leaders who value people.  Specifically, it requires managers and leaders to take responsibility and ownership for growing people as much as they do for growing profit or achieving impact. Organizations must take this focus seriously by recognizing leaders who develop their people with promotion, recognition, and wage increases; and not recognizing leaders who only focus on production goals, or who don’t live the values of the organization. 

What are some of the best ways leaders can develop people on the job?

Goal Setting

Incorporating a growth goal into annual, quarterly, and monthly goals for employees is a great coaching approach for building people on the job.  Production managers focus goal setting on projects, and people development leaders focus goal setting on developing people with growth goals and ongoing support. 

Giving Feedback

Giving feedback regularly and frequently is one of the best coaching tools a manager has for on-the-job real-time people development.  Feedback includes corrective coaching and providing recognition.  Production managers focus feedback on the present time, and the task at hand, and the employee’s lack of productivity or effectiveness. A people development manager aligns feedback to the employee’s learning goal, and their vision for their career.  A production manager is critical with their feedback, pointing to the problem areas.  A leader who develops people is curious, they ask questions to determine where the individual is struggling, and collaboratively help them come up with ways to improve.

Psychological Safety

Production managers manage through command and control methods, and they create punitive cultures where mistakes and failures are punished, and there is very little recognition for showing improvement.  Leaders who prioritize developing people understand that for people to feel safe to grow, they must feel safe to share their challenges, setbacks, and concerns.  Production managers practice with a fixed mindset, they terminate people who can’t keep up after criticizing them along the way, yet providing little or no support to grow.  Leaders who develop people practice a growth mindset by reminding people that we learn from mistakes and failures, and we get better over time when we continue to work on expanding our knowledge, skills, and experience.  Google’s three-year study on determining highest performing teams at Google proved that psychological safety was the number one factor that differentiated the highest performing teams, and that the whole was greater than the sum of its parts.  In other words, with psychological safety present on a team, each person achieves a higher level of result, together.  

Career Conversations

Knowing employees’ desired career paths gives managers a roadmap for preparing them for the future.  Regular career conversations can be a monthly conversation where goals are set, reviewed and feedback and recognition are given.  Employees discuss where they want to go with their manager and together, they determine how to get there.  This means the goals set, and the feedback given, is related to helping them get to a future place, not a criticism of their current place. 

Does it even make sense to manage performance today?  Yes, performance management is still relevant in the human era, if the intent is to develop people.  Providing ratings on performance is still acceptable as long as the ratings is tied to a career path, future goal, and the employee is given support, feedback, encouragement, and access to learning opportunities.  Rating someone without supporting them is not effective.  The key for success is performance management FOR developing people. 

Performance Management to Develop People

There are formal and informal ways to manage performance to develop people.  First, let’s discuss the formal processes or practices, starting with the annual performance review process. 

Annual Performance Review

Annual performance review processes can be optimized to develop people by incorporating goal setting, specifically providing goals that are relevant to the individual’s role and position, with a clear understanding of how they connect up to the big picture, or organizational goals.  Growth goals should be incorporated into goal setting, and can be set annually, quarterly, or even monthly, depending on the role and the speed of change in the organization.  Some organizations have implemented semester or bi-annual formal reviews replacing the annual reviews. 

In the formal annual review, or bi-annual review, it is very important to allow the employee to rate their own performance, and to reflect on their own learning and growth as part of the process.  It is also important for their direct manager to provide detailed written feedback on their performance, and to cite examples and recognize them for their progress on both goals, growth goal, and how they are living the values in the organization.  Values are very important to recognize and discuss because it holds everyone accountable to achieving their goals within behavioral bumpers set forth by the values. For example, if collaboration is a value, and the individual achieved the goals while hoarding information, blocking others, and taking credit for others’ work, they should not be recognized positively for achieving the goals in this manner. 

 

Quarterly Check-Ins

Implementing quarterly check-ins as part of the formal annual review process is a very helpful way to provide structure across the year for the employee to get formal feedback, recognition of progress to accomplishing goals, and a way to update goals as they are achieved, or as priorities shift mid-year.  Proper documentation during quarterly check-ins makes the annual review process so much easier to prepare for and manage.  Leaders can take the quarterly review documentation and use it to write an annual review that is more comprehensive, and less focused on just the last quarter that is in their short-term memory.  There is also software out there that can be implemented to aggregate the quarterly feedback into the annual report.  Quarterly check-ins in some organizations have replaced the annual reviews. 

Monthly Check-Ins

Regular check-ins monthly, bi-monthly, or weekly provide a way for managers to provide ongoing support to their employees. These check-ins are commonly referred to as touch bases or one-on-ones.   What differentiates a monthly check-in from a project meeting is the topic of discussion is centered around the person in the monthly check-in, and around the project in other types of regular meetings.  In other words, getting together monthly to discuss projects and clients is not considered a monthly check-in that connects to developing people.  Some managers blend project check-ins with people check-ins, and this works well, as long as appropriate time is given to both. 

Electronic Feedback and Recognition

It is more and more common today for managers to provide feedback using electronic communication, such as Microsoft Teams, Slack, email, and other methods of digital communication.  This approach is good as long as it is tied to a structure of regular check-ins, quarterly check-ins, and isn’t the only way people hear from their manager.  It is very important with electronic communication to keep constructive feedback private, and consider the individual and their needs when providing any public recognition.  In other words, some people prefer private feedback and private recognition, when others may be offended if a manager misses the opportunity to recognize them publicly for their contributions.  Knowing each member of the team, understanding their preferences, and talking about them openly, is the way to lay the foundation for getting it right regarding feedback and recognition. 

Informal Performance Management and People Development Practices

Formal performance management and people development practices provide a framework or structure to make developing people a normal part of the overall working and management process.  In addition to formal practices, there are ways to advance learning and development by implementing regular on-the-job, real-time, feedback.  In fact, research shows that on-the-job feedback, when given regularly and effectively can have a greater impact on employee development than formal practices.

On-the-job feedback is effective when it is current, relevant, and meaningful. Feedback given immediately, tells the employee if they are on the right track or need to make adjustments. It should relate to their job, improving at their job, or their future vision for their career. Finally, the manager should put thought into how and when feedback is delivered and the discussion around it. When it is clear, timely and important to the employee they can act on it quickly and effectively.  Considering how the person receives information, differences in communication styles and preferences is essential to the feedback landing and being actionable.  If a person reacts emotionally to the feedback, they may shut down and not be teachable in that moment.

Effective performance management and people development requires trust and relationship between the manager and employee. Without trust, it is hard to feel safe to grow and share true feelings or challenges. In addition, it is important to consider the confidence level of the employee.  For example, if an employee just had a big failure or setback, is it the best time to pile on critical feedback? They already know they messed up. Instead, this is the time to talk about growth mindset, build confidence, and help them get back to a healthier state in order to grow and learn from the experience. 

Keep in mind, a manager who gives feedback, but doesn’t work on themselves, or share their own mistakes, cannot expect their employees to be open and want to learn from them.  A manager must grow to grow others, it is an inside out job.  Managers sharing the lessons they’ve learned is a great way to show the workspace is a safe place for employees to learn and to share their own lessons.  Doing this regularly creates a virtuous cycle of learning, development, and growth.  Over time, these regular touch points with people add up, and you look back on a quarter, a semester, or a year and see their growth and development.  

Managers intentionally growing themselves, and growing their people, creates limitless opportunity for company growth.  It is the foundation of high engagement and performance cultures.  This type of development isn’t optional. In the human era, it is necessary to attract and retain the top talent, because at the end of the day, technology has become so imbedded in our lives it will no longer holds competitive advantage for organizations like it once did.  People are now the competitive advantage, so we must grow them to reach their highest potential.  By doing this, our organizations will achieve higher performance and impact. 

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