Does your performance management (PM) system manage “too much” great performance as well as it does poor performance? For many of us, we would be hard pressed to conclude that our PM does an effective job of dealing with poor performance. But great performance, can we ever have too much great performance?
If you subscribe to a systems view of social systems (which includes human performance) you logically have to answer this in the affirmative.
- By design, all systems assume a performance range (inadequate, expected, superior).
- By design, all systems have means of monitoring performance throughout.
- By design, if performance crosses a “threshold” of performance, the system is put at risk.
The underperformance aspect of system performance is well understood, the notion of excessive great or superior performance is not. I do not recall any organizational (non-commission pay) PM that had explicit means of correcting for excessive superior performance. In fact, I do not really recall much in the way of conversations that this even recognized as a PM design issue. Yet in all other systems we frequently see understanding of the notion of too much of a good thing.
- Qwerty base key boards were designed for what reason? Yes to limit typist speed. Even though the mechanical limits of typing are long gone, the convention of this keyboard design still reigns.
- The purpose of “governors” on systems is well understood and necessary, where safety is required. Fuses are designed to handle system overloads resulting from too much of something.
- In the social realm, one of the benefits of the “tailboard” and “pre-job” sessions is to “slow the work down process down” so those involved can properly assess the safety risks.
A recent situation was reported on “rogue trading” by a European bank financial investor (http://management.fortune.cnn.com/2011/09/19/the-catch-22-of-catching-a-rogue-trader/?iid=HP_LN). I would suggest that we are seeing a form of over performance. As I understood it, the investor over functioned in his role by engaging in riskier and riskier currency investment actions. What stood out for me was this increasingly riskier behaviour was in part a response to undesired outcomes from previous investment actions. There was no performance system feature that played the role of an effective “governor” for this individual. His role was to make these types of investments, my understanding is he was considered one of the organization’s stars in this role.
An observable consequence of out of control superior performance is an ever increasing repetition of the problematical behaviour. “Just one more gamble and I will recover all the previous mishaps!”
The circumstance of too much of a good thing is problematic for PM designers, because we don’t really see enough of it that we see it as something to design for. Furthermore, how would we design for the circumstance?
Our approaches to “managing” human performance are typically one or more of the following:
- not enough performance (incentive pay systems tend to naturally deal with this – you don’t earn enough)
- having reward systems that “roll-off” their payoffs (common in commission compensation systems) these create a form of disincentive to go beyond certain levels of performance
- restricting what is permissible (our favourite rules, regulations, etc.)
- forms of oversight (reviews of one sort or other prior to implementation of an action)
- establishing professional standards around behaviour and related ethics (indoctrination type approaches attempt to “channel” performance behaviours into acceptable norms) where we rely on the self discipline and good will of the sanctioned professional
- sanctions (where we disbar the lawyer)
- setting goals (work on peoples’ natural predispositions to satisfy the expectations of others)
- legal (tort and criminal penalties
One thing that jumps out at me from all of the approaches that are designed to minimize the likelihood of inappropriate performance happening is they will slow the performance down.
But what about roles where speed is critical for successful and great performance to happen? The currency investor role is one of these situations. I am left unconvinced that any of the above.
But what about roles where great performance is based in part on being innovative and clever with the rules/practices/norms? These are situations where the “state-of-the-art is evolving. Rules and the like make sense only in circumstances where the range of what we can do and their attendant consequences are well understood.
The above circumstances are situations where the consequences of inappropriate levels of superior performance fall within the real of uncertainties rather than risks.
So how might we begin to think about designing system limits to great performance?
- slow the number of “transactions down” (less often, less exposure)
- roll-off the payoff for succeeding
- understand that personal accountability is important – win big, you win, lose-big your personal wealth is on the line.
- Use “triggering” alarm flags when certain patterns of behaviour occur
- improve assessment for “the gambling attribute” when under stress or temptation.
- limit access to actionable resources at any one time (signing authorities achieve this, also as the success pile grows – more and more is siphoned off)
We see all of these in one form or other in many organizations yet I think we have an opportunity to build on these to create more successful PM hence talent management systems.