Quick. What do you think of when someone says performance management?

The common response is, “Appraisal.” And tagging along is the specter of ratings, pay decisions, and the angst associated with the uncertainties of boss-subordinate feedback.

In short, performance management is viewed as a human resource or personnel process. Yes, goals are part of the story, but often they are more important as a basis for appraisals, ratings, and pay than anything else—even when there is a good connection with larger company and team goals. In people’s hearts and minds, performance management is driven by back-end concerns.

Because of this tilt toward appraisal, and because of the fears and games that are part of a back-end optimizing process (do you know anybody who has set lower goals so they can exceed them, or who sees themselves as below average?), performance management has gotten a well-deserved bad rep.

The latest trend is to move away from comprehensive feedback conversations entirely. Appreciative conversations at short intervals are the new performance management. This is a good correction of an often negative process. Yet, it misses the point that feedback of all kinds is “the breakfast of champions,” according to Ken Blanchard. And, if you look closely, the dominant question behind performance management is still, “How am I doing and what does that mean for my status here?”

After four decades working with companies trying to manage themselves better, I don’t think these issues are uncommon. Performance management remains a personnel and human resource matter patched onto the organization’s strategic and financial business. This remains true, even as companies everywhere struggle to implement increasingly challenging strategies and to create innovation-focused, agile cultures that attract and retain the talent they need and want. Remember that 70 percent of change initiatives fail. It’s clear that performance management is still not doing what we want it to do. 

Time for the New Performance Management: Strategy in Action 

I wish there were another name for it. The phrase performance management is so tainted by back-end concerns that it may be irredeemable. I prefer thinking about it as strategy in action—or the mother of all business processes.

As a business process, strategy in action has three important purposes: alignment, high engagement and performance culture, and successful transformation and change. A key challenge is to be clear about why these practices are essential for business today. Being clear about the why puts you on the road to the what.

Alignment. Business today is fast paced and needs to be more responsive and agile than ever. It’s easy for the strategy and action systems to follow different paths. Meanwhile, people today must juggle a variety of priorities: their ongoing job, their role in business strategies, their own development, and various ad hoc requirements and unanticipated challenges. Performance management is the vehicle for continually sorting these out while ensuring that goals stay in focus and aligned with bigger business agendas.