How to mitigate the negative effects of performance management

Welcome to this eighth talk on Performance Management. My name is Pietro Micheli. I'm a Professor of Business Performance and Innovation at Warwick Business School in the UK. The topic today is how to mitigate the negative effects of performance management.

A key question when we look at performance management practices is to think about how much shall we measure. In many organisations, we tend to have an approach, perhaps that is to measure very little. We don't want to spend too much time gathering data, we see that as a hindrance, we don't want to control employees and so on. But then sometimes we recognize that this approach is not giving us a sufficient understanding and that we probably want to guide people a bit more, we need to create some more alignment. So, what we do is we swing, as a pendulum, to the other side, and we start to measure everything. We want to monitor everything, we want to control, we want to try to make sure that we've got data about everything. At some point we realize that that's too much. We are constraining employees, we're controlling them. It creates a lot of problems, it's quite costly to measure and report performance, and then we swing again. One of the key questions that we really need to address is how do we ensure that we understand and provide guidance while at the same time not overcrowding the system. If we can find the sweet spot, we're already in a good position to try to reap the benefits out of performance management. At the same time, whenever we measure performance, there is something that happens that is almost endemic to the process of measuring and managing performance that we can mitigate but never really eradicate, and it's called gaming.