Performance follows pay, or is it pay follows performance? It's an age-old question and not easily resolved, but we know there is a connection between the two, at least in high-performing organizations.

I thought you might be interested in the just-published i4cp report Performance Management Playbook: Tools and Techniques for Managing Performance.  Performance management (PM) has long been a thorn in the side of many organizations. In fact, two-thirds of the organizations surveyed by i4cp admitted that their performance management processes are inefficient.  It's difficult to imagine another process that consumes so much time and so many resources, yet all too often leaves participants feeling dissatisfied. At the same time, most organizations see the need for performance management and consider it important, even if less than effective.

A key element of any effective PM program is leadership buy-in and support. Without leadership buy-in, PM simply becomes a painful experience about which no one is quite sure why they are going through.  Nearly three-quarters of high performance organizations say their leaders consider PM to be vital to a high or very high extent. Only about half of lower performers said the same.

I once worked in an organization where late performance and/or poorly completed reviews were considered a serious management deficiency and chronically late managers usually became former managers. As a result, reviews were rarely late or brushed over.

The i4cp PM playbook goes on to highlight six common challenges to PM that organizations face and the solutions to overcoming them.  Below are the six challenges the playbook addresses.

1.       The performance appraisal process is perceived to be too complex and time consuming by employees at every level.

2.       Leadership does not consider performance management to be integral to overall business strategy.

3.       There is a disconnect between the pay-for-performance culture and the performance management process.

4.       Organizations often focus on the wrong aspects of performance management.

5.       The performance appraisal process is rarely calibrated properly, if at all.

6.       Performance management is not yet fully integrated with other talent management processes.

Just in case you're wondering if its really worth it to spend so much time and effort on performance management, see the table below and let me know what you think (many thanks to Ann Bares of the Compensation Force blog for allowing me to use her table!).

I believe the data coming out of the study clearly shows that it's worth the effort to incorporate effective PM as a key element to becoming a high-performance organization (or working to stay there).

More to follow in future posts...

Most HR professionals would agree that happy (or at least satisfied) employees generally make better employees overall.  They tend to complain less, show up more, and make for a better work all-around environment.  Most HR professionals would also likely agree that more satisfied employees are also generally are more engaged and better performers overall.  For these reasons alone, it's worth it to try to build and maintain a happy/satisfied workforce.

But assuming increased job satisfaction automatically leads to increased job performance is a false assumption.  Many HR professionals believe that if we can just increase job satisfaction/happiness, that this will increase job/organizational performance in the process, but this is where the relationship breaks down.  Just because more satisfied employees tend to be better performers, does not mean that increased satisfaction causes increased job performance.

In reality, the satisfaction = performance equation should be reversed. If employees are successful at work, they tend to be more happy.  They tend to feel better about themselves, their work, and are more engaged and invested in what they do.  As a manager, if you can teach and lead employees towards improved job performance, you will also end up with more satisfied and happy employees in the process, and fantastic "two-fer" to have as a manager (better performance and morale).

A recent discussion on the LinkedIn HR Executives Network and a great article on the the Street.com reminded me of this topic. I've wanted to write about it for some time, and these reminders finally got me going. 

The Street.com article started out by stating: "We've got a fundamental premise wrong. We believe that making employees satisfied will make them successful. That's not true. In fact, the relationship is reversed -- make people successful and they will be happy. Employees, at least those you want to keep, don't want to be indulged, they want to be successful." "Causality flows from success to satisfaction. We've got it backward." It then goes on to provide supporting studies and other evidence of this relationship.

So, if you want happy employees who are more engaged and less likely to become unwanted turnover, then help to make them successful, and you will be helping yourself, your organization, and your employees to be better off.

We need to stop trying to make people happy so they will perform better and/or turnover less.  Instead, help to make them successful in their jobs, and you'll get higher job performance, and several other beneficial outcomes in the process!