Today’s flattened organisational design and team-based work practices demand a sleek and high-performing workforce. Yet, Gallup research shows how 85% of the global workforce is disengaged.

Traditional Performance Management needs an overhaul to address disconnected and underperforming employees. Industries are challenging their leadership to rethink the Performance Management process. According to Gallup, if leaders get Performance Management right, engagement will naturally rise – and underperformers will be motivated to deliver.

Performance Management…or mismanagement?

Convincing research is setting the stage in favour of altering Performance Management systems. The traditional Performing Management process often consists of long hours spent completing forms, conducting meetings and building ratings. An internal Deloitte case study, in fact, found that the time devoted to Performance Management equated to two million hours a year.

That is many hours spent on an inefficient process. The Global Human Capital Trends 2015 report from Bersin by Deloitte, found that 49% of responding companies’ Performance Management process is not an effective use of their time, and a mere one in 10 respondents said it drives employee engagement and high performance.

To add insult to injury, research by Gallup shows that traditional Performance Management evokes feelings of fear anxiety, stress and anger. Disengagement and underperformance are the damaging results.

Industry 4.0 has ushered in a host of changes for Performance Management. Across industries and geographies, numerous businesses are reformatting Performance Management from top to bottom, including goal-setting and evaluation to incentives and rewards – and seeing the business benefits.

Help employees take responsibility for their (under)performance

In this light, Deloitte says that Performance Management should be a means of empowering the employee to be “more responsible for his or her own career”. Encompassed in taking responsibility for their own career is also being accountable for when their performance is not up to standard.

However, harshly bombarding the employee will not facilitate an intrinsic motivation to self-evaluate or to achieve. In fact, a research duo at the International Institute for Management Development says that “bosses do not realise that their tight controls end up hurting subordinates’ performance by undermining their motivation.”

In successful Performance Management, the 21st century is demanding an explicit level of consultation with the employee, which is a two-way conversation about outputs, timelines and appraisal tactics.

Human Resources specialist Susan Heathfield explains this as participative management, involving employees in creating an environment in which they have an impact on decisions and actions that affect their jobs.

Participative management facilitates a psychologically safe space where employees agree to the terms and conditions of how their manager is evaluating their performance. When the leader involves the employee in their performance management process, it accelerates buy-in and induces a self-motivation towards optimal accomplishment. And, by implication, it also circumvents underperformance.

Leadership’s role in underperformance

 It takes skilled leadership to navigate the potentially arduous task of addressing underperformance. But, says HBR’s Paul Michelman, leaders “simply can’t tolerate underperformance”.

Resources are scarce, margins are close, and budgets are tight. The need for growth is too overwhelming for even the most prominent organisations to be carrying any dead weight.

“Underperformers take an inordinate amount of energy to manage,” says Jim Bolton, CEO of Ridge Associates, a communications consulting firm. “You not only have to manage their performance but, as chronic offenders, they become problems in your performance.”

At the same time, Jean-François Manzoni cautions leaders to consider how they might be contributing to the performance issues. Manzoni is professor of management and co-author of The Set-Up-to-Fail Syndrome: How Good Managers Cause Great People to Fail.

He advises leaders not to focus exclusively on what the underperformers need to do to remedy the situation, adding that “it’s rare that it’s all the subordinate’s fault just as it’s rare that it’s all the boss’s.”

As part of the intervention, the manager should bring up the subject of how his own behaviour may affect the subordinate’s performance. Ideally, the plan should include a 360-degree feedback system to help the manager understand how his team members perceive him. Alternatively, he may approach a trusted confidant about the shortcomings he has not seen in himself.

From there, leaders should compile a concrete, measurable improvement plan for themselves and the underperformer, in conjunction.

Participative management and the psychological contract

The manager and underperforming team member should arrive at an agreement – or psychological contract – about their performance objectives and on their desire work together.

The psychosocial contract between manager and team member should identify the ways that both parties can improve on their skills, knowledge, experience, and personal relationship.

The discussion around the psychological contract should also include an explicit conversation of expectations from the manager’s side.

In turn, the team member should be allowed to disclose their needs and concerns. The manager then takes the role of a coach, not of a disciplinarian.

As Deloitte underlines, people perform best when they are given tools to succeed and coaching to improve performance.

Clarity paves the way to accountability

The supervisor should be frank about the metrics they will use to measure performance. He should provide a list of clear expectations and outline areas that are not negotiable.

Clarity goes a long way toward curbing underperformance, which is often fuelled by unstated expectations and priorities.

According to Joseph Weintraub, a professor of management at Babson College, performance issues most often revolve around a common lack of understanding of expectations between managers and team members. When team members know what is expected of them, the benefits are twofold:

  • Managers have a point of reference to insist on performance.
  • Employees want to be held accountable and to show that they can perform.

Employees who strongly agree that their manager holds them accountable for their performance are 2.5 times more likely to be engaged in their job, according to Gallup research. Also, Gallup says that employees want measurement as well as feedback when they are underperforming.

Research duo and co-authors of Speed: How Leaders Accelerate Successful Execution distinguish between positive feedback and corrective feedback. It’s an important point to note that corrective feedback is ‘pointing out something that was done in a less than optimal way’ and not scolding, belittling or punishing the person in question.

Their study, consisting of more than 900 respondents, found that 92% agreed with the assertion, “Corrective feedback, if delivered appropriately, is effective at improving performance.”

The main concern is that most leaders don’t know how to address underperformance. The result is that they either ignore it or they don’t tackle it constructively.

Leaders don’t know how to deal with underperformance

Most managers don’t deal directly with underperformance, says Joseph Weintraub, co-author of The Coaching Manager: Developing Top Talent in Business. More often, he says, instead of acting, the manager will transfer the person somewhere else or let them hover without contributing.

The other side of the coin is when managers’ feedback is vague or sugar-coated. Michael Schaerer and Roderick Swaab, Professors of Organisational Behaviour, call this the illusion of transparency.

They explain the illusion of transparency as a common cognitive bias in which the supervisor is so focused on their own intense feelings of apprehension and anxiety that they overestimate the extent to which their intended message comes across. As a result, their words may be too vague to convey their real intent.

Research shows that transparency illusions are most pronounced for negative (versus positive) feedback. However, managers most often deliver inflated feedback unintentionally. One of the main reasons, as Schaerer and Swaab put it, is that managers “are bogged down by multiple demands, especially during the end-of-year period when appraisals usually take place.”

Performance Management for underperforming: from reactive to real-time

The new world of work asks managers to move away from the once-a-year performance review and to adopt a process of continuous two-way communication and coaching.

The traditional Performance Review places severe stress on the leader and degenerates into a tick-box event which is disliked by both the manager and the person appraised.

Performance Management systems should not be viewed as a system at all, says Ursula Fear, Director, Human Capital: Deloitte Consulting. It should be adapted as a process of constant employee engagement and reciprocal conversation.

With regular feedback, employees can initiate conversations about their objectives (instead of waiting for their leaders to do so), request feedback regularly (to avoid unpleasant surprises at annual review time) and adjust as necessary to keep their careers on track.

Short and regular check-ins facilitate a sense of accountability and consistency within the team. As high-performing teams’ outputs are synergistic, all team members benefit if teammates’ performance is calibrated and aligned to reach the team’s goal.

On this note, managers should be extremely vigilant to judge everybody by the same yardstick. Manzoli says that around 90% of all managers treat some team members as though they were part of an in-group, while they consign others to an out-group. The supervisor might not be aware of his propensity to favour some above others, but it’s a behaviour that lowers the morale – and the performance – of the entire team.


Deloitte Global Human Capital Trends, 2019. Leading the social enterprise: Reinvent with a human focus. Retrieved from

Jack Zenger & Joseph Folkman, 2014. Your Employees Want the Negative Feedback You Hate to Give. Harvard Business Review. Retrieved from

Jean-François Manzoni & Jean-Louis Barsoux, 1998. The Set-Up-To-Fail Syndrome. Harvard Business Review. Retrieved from

Jim Harter, 2019. Dismal Employee Engagement Is a Sign of Global Mismanagement. Gallup. Retrieved from

Marcus Buckingham & Ashley Goodall, 2015. Reinventing Performance Management. Harvard Business Review. Retrieved from

Michael Schaerer & Roderick Swaab, 2019. Are You Sugarcoating Your Feedback Without Realizing It? Harvard Business Review. Retrieved from

Paul Michelman, 2008. How Should You Handle Your Underperformers? Harvard Business Review. Retrieved from

Stacia Garr & Andrew Liakopoulos, 2014. Performance management is broken. Deloitte. Retrieved from

Susan M. Heathfield, 2019. How to Provide Feedback That Helps Employees Improve. The Balance: Careers. Retrieved from

Ursula Fear, 2019. The future of Performance Reviews. Deloitte. Retrieved from

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