ILM’s Women in Banking research identified a culture where connections are valued over merit. Scott Beagrie asks how employers can implement a system of performance management that measures productivity rather than presenteeism
No forward-thinking organisation wants to think that it’s still stuck in the age of the old school tie, where your contacts count for more than your capabilities. But that’s exactly what is still going on, in the banking sector at least, according to a report by the Institute of Leadership & Management (ILM), Women in Banking. The research found that only 22% of respondents agreed that people in the banking industry are promoted based on merit alone, while almost half (48%) agreed that promotion is determined by who you know.
While banking may well be a bastion of the old boys’ network, it’s unlikely to be the only sector suffering from this outmoded attitude. So what can employers do to make sure they are promoting the right people based on competence not contacts?
A key recommendation of the ILM report is that banks need to develop more effective systems of performance management and it highlights the need for recruitment and career progression to be more objective, open and focused on outcomes. Moving towards a far more transparent system of performance management will help give employees confidence that they are graded against openly-stated criteria and targets, and will ensure the right people are promoted. Jon Ingham, executive consultant at HR consultancy Strategic Dynamics Consultancy Services, reckons that, in theory, banking lends itself well to outcome-focused performance management because it is more “quantitative” than other sectors. “You can determine performance in some areas of banking, especially investment management, much more objectively than in other areas of life,” he says, suggesting that one reason it is failing could be down to the overall profile HR has in the sector. “It’s one of the sectors in which HR gets less respect. It can be a tough sector for HR so maybe that is why performance management isn’t done so well.”
Moving towards a far more transparent system of performance management will help give employees confidence that they are graded against openly-stated criteria and targets
Outlining good performance
To establish effective performance management in any sector, Ingham stresses the importance of HR and line managers being clear on what output and performance both looks like and means in a far more systematic way. “We need to be more intelligent about how we are monitoring performance as there are lots of different things that lead to the way performance is delivered,” he says, adding, for instance, that a person’s performance can be determined by the individuals they are linked to as much as individual capability. “Unless we understand all of those reasons, performance management doesn’t work. Managers in the organisation will intuit the way performance is delivered and this can lower the credibility of the performance management system.”
The rise of remote and flexible working places even more importance on making sure managers understand how to judge workers on outcomes rather than input. According to Ingham this will also help to combat presenteeism in the workplace, which has made an unwelcome return during the recession. “It will provide a healthier working environment where people can really focus on what they need to do and not worry so much about having to be seen at their desks until late at night,” he says, although he adds that the focus on outcomes must be balanced by a proper assessment of competencies and behaviours.
Sufficient collaboration between HR and line managers is also essential for good performance management. Too often in the past, HR’s remit has been to focus on the mechanisms and systems for delivering it and has then largely left implementation to individual managers. While it is down to the latter to physically assess and manage the performance of their teams, Ingham underlines the need for HR to take far more of a lead in an organisation’s overall approach to managing performance as well as helping to shape the culture that surrounds it. Organisations can sometimes envelop performance management with too much “structure and process”. “So people forget about managing performance and instead focus on the bureaucracy,” he explains. “Performance management should be kept light enough that people are able to lift their eyes and minds a bit higher and focus on what they need to achieve to develop their people and lift the bar on performance.”
Discussion on the conference circuit for many years has centred on how employers can evolve their performance management systems and the findings of the Women in Banking report clearly demonstrate that it is something that organisations are continuing to struggle with. There is little doubt that a more transparent and outcomes-focused approach is required but it also needs to be fully embedded in both the culture and practices of the organisation. Ingham is hopeful that the new generation of social and digital tools may help with this. Social performance management is already being embraced by companies like Spotify, Facebook and LinkedIn where the “guesswork” of annual performance appraisal has been replaced by real-time feedback and continual monitoring of performance, enabled by use of such technology, in a supportive and collaborative environment. “We know how compelling Facebook-style systems and other technologies can be and can make performance management an intrinsic part of the way people do their jobs,” he says. “They will [eventually] make a big contribution to the ease of use and credibility of performance management and therefore increase engagement in the process as well.”