Team vs. Individual Performance Management

Last month, a piece in HR Director by Garie Dooley brought the focus back to how we should manage performance in our businesses, advocating a team-based approach to performance management. Dooley argues that the collective talent of a team is what ultimately drives continuous, but also sustainable, performance of an organization. Individuals can hit their own targets, but they cannot single-handedly achieve the goals of their team, and focusing on individuals creates a preference for people to be recognized only for their own efforts, not the team’s collective efforts.

This is not a brand-new debate to organizations. As far back as the mid-1990s, the idea of diverging from the traditional hierarchical structure of organizations to flatter, team-based systems was being discussed. In the journal Team Performance Management in 1995, Samuel Natale et al. used three examples of major US businesses, including General Electric, to highlight the improvements in productivity achieved when using a team-based performance management system. The authors also highlighted the issues some employers had that would lead to hesitancy in adopting a team-based system, including executive-level commitment and a fear of change.

The issues with individual performance management

It was exactly this lack of executive-level commitment that was on show from Bill Michael of KPMG in February this year, determined to stick with their ‘forced distribution’ model of performance assessment. In the Financial Times, Sarah O’Connor explored the key drawbacks with this system. She found that ranking employees can unfairly label workers ‘underperforming’, even if they hit their targets. Such ranking can then negatively impact performance, with only the highest ranked seeing a positive impact on their work. Teamwork is also disincentivized by person-centric management, with early noughties Microsoft a good example of employees sabotaging each other in order to ensure their place in the rankings.

Why team-centric performance management?

The nature of work is one key reason for the change to team-based performance management. Chris Lennon, VP of Product Management at BirdDogHR, argues the team-based nature of work today means that previous ways of managing teams simply do not work anymore. Dr Kelly Monahan, previously of Deloitte and now global lead talent researcher at Accenture, agrees with this, arguing that work solutions are now attainable only by teams or network of teams. This is why some, including Natalie Wickham of Quantum Workplace, feel that teams should be short-term, achievement-based and agile; they are put together to achieve a solution, in line with Dr Monahan’s thinking, and once completed, the team can be disbanded and individuals reassigned to a new project.

Chris Lennon also says a team-centric approach means team goals can be set, fostering cooperation, and removes elements of bias in any individual feedback, as this feedback comes from peers working to the same goal. Eric Mosley, writing in Forbes, agrees with the point on feedback. By, in effect, crowdsourcing feedback from other members of the team (or even anyone else that interacts with team members, such as business partners), bias can be removed as everyone is working for the same goal.

How to lead in team-based performance management systems

If a company does decide to adopt a team-based approach, it can mean a change in how managers approach their teams compared to a more persona-centric approach. Exploring this shift in performance management, Lucia Darino and Christine Johnson, associate partners at McKinsey and Company, argue there are five key areas to focus on:

1. Team Goals
2. Team Development
3. Team Rewards and Recognition
4. Performance Culture
5. Team Appraisals

Goals and appraisals are the two areas that are regularly cited. Darino and Johnson say the importance of team goals is to set goals that align with their purpose for what they will work on, and how they will accomplish their results. With appraisals, it is vital to recognize collective team output, as opposed to individual output. Dr Annette Towler says that team goals must be aligned with organizational goals, in order both to ensure team efforts are channelled in the same direction as the organization, and to provide a benchmark for wider team effectiveness.