Thoughts on ways to improve the management of professional services firms

Friday, August 24, 2007

The Problem with Performance Agreements - Limiting staff contribution

In my last post in this series, I talked about ways in which performance agreements limited manager freedom - and responsibility. This post looks briefly at the way in which performance agreements can actually act to limit staff contribution.

The problem can be simply stated. You get what you measure. The more precisely you prescribe, the more you limit activities to those things you prescribe.

Two examples to illustrate my point.

Many professional firms use simple performance metrics focused on yield per hour. They then wonder why their staff are not prepared to become involved in, interested in, other activities such as marketing. Why should they? There is no return from such involvement.

In other types of organisations further removed from direct time based charging, performance agreements often focus on specific activities or projects. You will do x by y. That's fine, but do not expect your staff to do z or k, no matter how important z or k may be.

Talking to staff in this type of organisation, I find it interesting that many actually see performance agreements as a protection. If I do what is in my performance agreement as required, then I cannot be criticised. So negotiation of performance agreements becomes a process of working out the minimum that will satisfy given the particular views at the time of manager and management.

This type of limiting or satisficing behaviour can make it very difficult to really improve performance or to do new things.

This need not happen, but avoiding the problem requires a very particular approach to the development and management of performance agreements, an approach that can be difficult to achieve in most organisations.

In my next post in this series I will look at what is involved in this particular approach.

Introductory post. Previous post. Next post.

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