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Business Journal
Great Managers Can Fix Broken Performance Management Systems
Business Journal

Great Managers Can Fix Broken Performance Management Systems

by Chris Groscurth

Story Highlights

  • Hiring talented managers can mean a 48% boost in profitability
  • High employee engagement affects everything that matters
  • Great managers spur ongoing performance management activities

This is the first article in a two-part series.

Globally, companies are scrambling to re-engineer their performance management processes -- but many of these initiatives have the wrong priorities.

Too many leaders rely on convoluted HR processes and rigid rating systems that are time-consuming and disengaging for managers and employees to use. Though it's important to evaluate performance, leaders need to understand that excellent performance management requires more than metrics.

To be effective, performance management requires streamlined processes, accurate and efficient metrics and -- the frequently overlooked factor -- highly talented managers. Gallup's extensive research and analysis, reported in State of the American Manager: Analytics and Advice for Leaders, reveals that companies that hire managers based on their talent for the role realize a 48% increase in profitability, a 22% increase in productivity, a 30% increase in employee engagement scores, a 17% increase in customer engagement scores and a 19% decrease in turnover.

Because high-talent managers have a knack for leading, motivating and developing others, they engage their employees and achieve strong outcomes. Great managers can overcome a broken performance management process. And for leaders seeking to revitalize their approach, manager talent is a good place to start.

To find great managers who can overhaul a broken performance management system, leaders first need to understand what these managers are made of and what they are doing right. Here's how great managers deliver performance:

Great managers are innately talented in five specific dimensions. The top-performing managers Gallup has studied come from different regions and different industries, but they all share a similar set of inherent talents. Gallup describes and assesses these traits using five talent dimensions:

  • Motivator -- High-talent managers challenge themselves and their teams to continually improve and deliver distinguished performance.
  • Assertiveness -- High-talent managers overcome challenges, adversities and resistance.
  • Accountability -- High-talent managers ultimately assume responsibility for their team's successes and create the structure and processes to help their teams deliver on expectations.
  • Relationships -- High-talent managers build a positive, engaging work environment where their teams create strong relationships with one another and with clients.
  • Decision-Making -- High-talent managers solve the many complex issues and problems inherent to the role by thinking ahead, planning for contingencies, balancing competing interests and taking an analytical approach.

The experience and skills managers have accumulated are important, but their innate talents -- the naturally recurring patterns in the way they think, feel and behave -- more accurately predict performance. High talent in managers is linked to individual and organizational outcomes, including increased employee engagement, productivity and profitability.

Great managers build engagement through strengths-based development. To help employees reach their full potential, great managers tend to take a strengths-based approach. The majority of managers with high talent (61%) say they leverage and develop their employees' strengths or positive characteristics when managing, compared with just 5% who say that they correct employees' weaknesses or negative characteristics.

Through extensive research, Gallup has found that building employees' strengths is a far more effective approach than trying to improve their weaknesses. When employees know and use their strengths, they are more engaged, have higher performance outcomes and are less likely to leave their company.

Managers With High Talent Are More Likely to Focus on Strengths

Great managers foster high performance by motivating and caring. The best managers understand and relate to employees' inherent human motivations. They build genuine relationships and demonstrate that they care -- not just about employees' work lives but about their personal lives as well. Employees who feel they can talk to their manager about anything or that their manager invests in them as people are more likely to be engaged than their coworkers who do not strongly agree with these statements.

For great managers, the crucial "soft" aspects of management come naturally, helping them connect with and motivate their employees. By getting to know their team members as people first, they take into account each employee's unique qualities while managing toward high performance.

Great managers engage in ongoing performance management activities. Sustained high performance requires regular work on the manager's part. These are some specific activities great managers make a habit of doing:

  • Goal setting: Employee performance goals should align with business strategies at all levels. Great managers set and tailor goals with individual employees -- building ownership for organizational objectives among team members. Gallup recently found that 69% of employees who strongly agree that their manager helps them set performance goals are engaged, compared with 8% engagement among employees who strongly disagree with the statement.
  • Reliable and meaningful communication: Employees want their managers to be open and approachable. Consistent communication helps employees feel safe and supported, and it builds a productive workplace in which people feel comfortable enough to experiment, to challenge, to share information and to support one another. Great managers ensure healthy communication, which is a behavior that fosters engagement. Employees whose managers meet regularly with them are almost three times as likely to be engaged as employees whose managers don't meet with them regularly.
  • Frequent discussions about responsibilities and accountability: Employees require more than a written job description -- they need to completely understand their role and how it aligns with others' work, particularly during times of change. Though helping employees understand their responsibilities might seem easy, it takes talent to do it right. Great managers don't just tell employees what's expected of them. They also frequently talk with employees about their responsibilities and progress. Instead of saving performance conversations for annual reviews, they provide ongoing feedback, which engages employees. Gallup analysis from 2013 shows that 50% of employees who strongly agree that their manager holds them accountable for performance were engaged, compared with 3% who strongly disagree.

Clearly, great managers have it in their power to take their team's performance to new heights. For effective performance management, organizations need these high-talent managers and their performance-driving practices. But there are other necessary elements for ideal performance management, including organized processes and reliable metrics. In part two of this series, we'll discuss additional considerations for leaders revisiting their performance strategy.

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