Academy of Management

By Daniel Butcher

As the nature of work is changing rapidly due to hybrid schedules, automation, AI, and other factors, the most effective ways to define and measure performance are also changing, Academy of Management Scholar Herman Aguinis of the George Washington University School of Business and author of Performance Management for Dummies. And it’s challenging to measure anything that is constantly evolving.

Aguinis said organizations usually measure performance through two approaches:

• Behavioral or process, which is measuring how people do their work.
• Output or results, which measure the outcomes of employees’ work.

For example, athletes might measure how many hours a week they practice and exercise, what they eat, and the hours they sleep. That’s the behavior or process approach. The results approach would measure how many points they scored and other game statistics and whether their team won.

“You have to do both—obviously, results are very useful for allocating rewards, so if you’re a salesperson, if you sell more, then you will earn more, or if you’re a researcher, if you publish more papers or get more citations, then you will get the goodies,” Aguinis said. “How about improving performance if someone is not doing well, is not scoring many points, not publishing research, or not selling anything?

“If you only measure results, then you will not know what’s wrong with the process, so you also have to measure that—it’s a dual approach of measuring both results and behaviors,” he said. “When you do not see employees perform in person, as in the case of remote work, or for many jobs that can be done in many different ways, then managers would probably emphasize results a lot more because they don’t see how they do the job face-to-face.”

Another performance-management challenge is for jobs when the results are not known for a long time.

“If you look at the NASA team trying to put people on Mars in 20 years, managers will not wait 20 years until they see if they succeeded, so they’re right to measure the performance in terms of how they do things along the way,” Aguinis said. “In that case, I would emphasize the process and the behaviors instead of the results, but both are critical.

“You have to measure how the job is done and what the results of the job are once it’s done,” he said.

Analyzing performance in context

It can be difficult for managers or supervisors to analyze results in their proper context. For example, in a challenging business environment where sales and marketing people aren’t hitting their key performance indicators (KPIs), managers should judge that differently than if they’re operating in a favorable business environment.

“That has to do with fairness—if we have two salespeople in two contexts, one favorable and the other one less favorable, and you just look at results, then you will be fooled, believing that one person is doing better than the other,” Aguinis said. “It’s really important to have ongoing conversations about performance because managers are responsible for the performance of the people on their team, and if they do well, then the company does well.”

Author

  • Daniel Butcher is a writer and the Managing Editor of AOM Today at the Academy of Management (AOM). Previously, he was a writer and the Finance Editor for Strategic Finance magazine and Management Accounting Quarterly, a scholarly journal, at the Institute of Management Accountants (IMA). Prior to that, he worked as a writer/editor at The Financial Times, including daily FT sister publications Ignites and FundFire, as well as Crain Communications’s InvestmentNews and Crain’s Wealth, eFinancialCareers, and Arizent’s Financial Planning, Re:Invent|Wealth, On Wall Street, Bank Investment Consultant, and Money Management Executive. He earned his bachelor’s degree from the University of Colorado Boulder and his master’s degree from New York University. You can reach him at dbutcher@aom.org or via LinkedIn.

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