high-performance-management

High-Performance Management In A Nutshell

High-performance management involves the implementation of HR practices that are internally consistent and aligned with organizational strategy. Importantly, high-performance management is a continual process where several different but integrated activities create a performance management cycle. It is not a process that should be performed once a year and then hidden in a filing cabinet. 

High-performance management origin story

High-performance management as most recognize it today has only existed for around 100 years or so. 

Taylorism and principles of scientific management

Engineer and management consultant F. W. Taylor was one of the first to research the link between employee potential and productivity. In 1908, he developed scientific management principles that:

  1. Replaced “rule-of-thumb” work processes with those based on the scientific study of the tasks involved.
  2. Selected, trained, and developed each employee instead of leaving them to train themselves.
  3. Created a collaborative environment with employees to ensure scientific methods were being followed.
  4. Divided work between managers and employees in such a way that management could incorporate these principles into planning.

Henry Ford was an early proponent of Taylor’s performance management system. He divided vehicle manufacture into simple, repetitive tasks that any factory worker could learn.

Taylor’s performance appraisal model

In 1914, Taylor then introduced a formal performance appraisal model with a core focus on improving employee productivity. This time, he considered the experience, punctuality, loyalty, and personality of the employee as opposed to organizational objectives.

W.D. Scott

One of the earliest documented uses of performance appraisals can be seen in Australian company WD Scott & Co. As early as 1914, the management consultancy firm introduced an employee comparison scale that was influenced by Taylor’s earlier work.

However, this more formal appraisal system was largely unknown outside of the company until the 1930s. When improved labor agreements and government practices became established in the 1950s, an annual performance appraisal based on Scott’s original system was instituted in organizations around the world.

A shift to aspirational performance management

Until the 1960s, performance management was based on an employee’s personality traits which had little to do with their productivity in the workplace.

In response, organizations started to focus on what employees may be able to achieve in the future with emphasis given to goals and objectives. It was around this time that the management by objectives approach became popular, a system first proposed by Peter Drucker in 1954.

Further refinement

In the 1970s, high-performance management was often associated with court battles because of the subjective and biased nature of appraisals. This precipitated a shift toward performance rating scales and psychometrics, with further enhancements such as 360-degree feedback introduced in the 80s and 90s.

360-degree feedback was different in that it focused on employee motivation and engagement as a tool to increase performance. Concepts such as teamwork, conflict resolution, efficiency, and communication became the defacto measurements of choice.

Future of high-performance management

Today, many organizations have ditched annual performance appraisals with a more frequent or continuous strategy now common. Employee motivation and engagement are considered in the context of positive and productive workplace culture.

Moving forward, the role of artificial intelligence in human resources is likely to shift the focus from quantity to quality. In other words, the quality of employee feedback will supersede the frequency of appraisals between the employee and their superior. Feedback itself will also become more flexible, contextual, and less complicated.

Understanding high-performance management

Performance management is often seen as the weakest part of human capital management by employees and managers alike.

Indeed, performance management rarely results in improved performance. This is despite the fact that it is a resource-intensive exercise. Employees are often left feeling deflated, unmotivated, and disengaged. Managers become frustrated at a distinct lack of buy-in and the resultant poor performance levels. Alarmingly, research has shown that only 14% of organizations are satisfied with their current performance management system.

The situation is made more difficult because of a lack of clarity on what constitutes high-performance. However, author Michael Armstrong provides a useful definition. He notes that “performance management is the continuous process of improving performance by setting individual and team goals which are aligned to the strategic goals of the organization, planning performance to achieve the goals, reviewing and assessing progress, and developing the knowledge, skills, and abilities of people.

Importantly, high-performance management is a continual process where several different but integrated activities create a performance management cycle. It is not a process that should be performed once a year and then hidden in a filing cabinet. 

The high-performance management cycle

Microsoft, General Electric, Adobe, and Deloitte are examples of companies that have abandoned once-a-year performance appraisals and adopted a more cyclical model.

This model incorporates the following elements:

  1. Plan. Here, the focus is on developing SMART objectives (aligned with organizational goals) and a personal development plan. Employee job requirements should be evaluated and updated where necessary.
  2. Act. The employee should then carry out their role and achieve stated objectives. The personal development plan should be implemented.
  3. Track. Progress should be tracked regularly with regular feedback or coaching given to address obstacles. Some suggest that feedback should be given once every quarter to ensure employees are given the time and necessary support to achieve their goals.
  4. Review. At this point, the employee and HR manager should reflect on what they have learned and review past achievements. Career goals and future actions should be discussed and agreed upon.

Basic elements of high-performance management

To encourage high-performance, HR managers should consider these building blocks:

  • Goal setting – goals need to be set as early as practicable. To increase engagement and empowerment, the employee must be made aware of why their goals matter. How are they furthering organizational and personal objectives?
  • Transparent communication and collaboration – employees must be shown the respect of being kept in the loop at all times. If the company is enduring hardship, they should be informed. They should also be kept abreast of important information and given the chance to build collaborative relationships with their co-workers and managers. Transparency also means that both parties never shy away from raising difficult or uncomfortable topics.
  • Recognition – high-performance can be bolstered via incentivization. This can take the form of a bonus or an award but if nothing else, every employee should be told that their work is valued and appreciated.
  • Honest and regular feedback – the more frequent and concise the feedback, the higher the employee performance. 
  • Employee development – if an organization is succeeding at high-performance management, then it will naturally produce employees who want to further their own ambitions. Businesses should invest in their staff and not be afraid to lose important talent to a competitor.

Key takeaways

  • High-performance management encompasses a suite of HR practices. These practices have a focus on the continual improvement of employee and organizational performance.
  • A cyclical high-performance management approach has been adopted by several large companies including Adobe, General Electric, and Deloitte.
  • High-performance management occurs when employees set goals they are empowered to achieve. Transparent communication, recognition, regular feedback, and employee development are also crucial.

Read Next: Eisenhower Matrix, BCG Matrix, Kepner-Tregoe Matrix, Decision Matrix, RACI Matrix, SWOT Analysis, Personal SWOT Analysis, TOWS Matrix, PESTEL Analysis, Porter’s Five Forces.

Organizational Structure Case Studies

Airbnb Organizational Structure

airbnb-organizational-structure
Airbnb follows a holacracy model, or a sort of flat organizational structure, where teams are organized for projects, to move quickly and iterate fast, thus keeping a lean and flexible approach. Airbnb also moved to a hybrid model where employees can work from anywhere and meet on a quarterly basis to plan ahead, and connect to each other.

eBay Organizational Structure

ebay-organizational-structure
eBay was until recently a multi-divisional (M-form) organization with semi-autonomous units grouped according to the services they provided. Today, eBay has a single division called Marketplace, which includes eBay and its international iterations.

IBM Organizational Structure

ibm-organizational-structure
IBM has an organizational structure characterized by product-based divisions, enabling its strategy to develop innovative and competitive products in multiple markets. IBM is also characterized by function-based segments that support product development and innovation for each product-based division, which include Global Markets, Integrated Supply Chain, Research, Development, and Intellectual Property.

Sony Organizational Structure

sony-organizational-structure
Sony has a matrix organizational structure primarily based on function-based groups and product/business divisions. The structure also incorporates geographical divisions. In 2021, Sony announced the overhauling of its organizational structure, changing its name from Sony Corporation to Sony Group Corporation to better identify itself as the headquarters of the Sony group of companies skewing the company toward product divisions.

Facebook Organizational Structure

facebook-organizational-structure
Facebook is characterized by a multi-faceted matrix organizational structure. The company utilizes a flat organizational structure in combination with corporate function-based teams and product-based or geographic divisions. The flat organization structure is organized around the leadership of Mark Zuckerberg, and the key executives around him. On the other hand, the function-based teams based on the main corporate functions (like HR, product management, investor relations, and so on).

Google Organizational Structure

google-organizational-structure
Google (Alphabet) has a cross-functional (team-based) organizational structure known as a matrix structure with some degree of flatness. Over the years, as the company scaled and it became a tech giant, its organizational structure is morphing more into a centralized organization.

Tesla Organizational Structure

tesla-organizational-structure
Tesla is characterized by a functional organizational structure with aspects of a hierarchical structure. Tesla does employ functional centers that cover all business activities, including finance, sales, marketing, technology, engineering, design, and the offices of the CEO and chairperson. Tesla’s headquarters in Austin, Texas, decide the strategic direction of the company, with international operations given little autonomy.

McDonald’s Organizational Structure

mcdonald-organizational-structure
McDonald’s has a divisional organizational structure where each division – based on geographical location – is assigned operational responsibilities and strategic objectives. The main geographical divisions are the US, internationally operated markets, and international developmental licensed markets. And on the other hand, the hierarchical leadership structure is organized around regional and functional divisions.

Walmart Organizational Structure

walmart-organizational-structure
Walmart has a hybrid hierarchical-functional organizational structure, otherwise referred to as a matrix structure that combines multiple approaches. On the one hand, Walmart follows a hierarchical structure, where the current CEO Doug McMillon is the only employee without a direct superior, and directives are sent from top-level management. On the other hand, the function-based structure of Walmart is used to categorize employees according to their particular skills and experience.

Microsoft Organizational Structure

microsoft-organizational-structure
Microsoft has a product-type divisional organizational structure based on functions and engineering groups. As the company scaled over time it also became more hierarchical, however still keeping its hybrid approach between functions, engineering groups, and management.

Read Next: Organizational Structure

Read Also: Business Model

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