A certain type of employee seems to appear in every company. These are the people who never seem to meet deadlines, who always have to be pushed to get their work done, who make the same mistakes over and over again, who don’t seem to do much on their own, and who never seem to try very hard.
At some point, it seems, every manager has decided, “Well, this employee just isn’t performing,” and sometimes, they may well be right. This begs the question, though: How much of this poor performance was actually caused by the manager?
This has the potential to be a wildly uncomfortable question, since managers are, by definition, responsible for judging performance. They set standards, determine who is doing the best and worst jobs, decide who gets promoted and who gets fired. They evaluate and judge. They decide what’s acceptable and what isn’t.
Yet here’s the thing: management comes before performance.
Managers decide what’s important, what gets done and what doesn’t, what gets approved and what gets dismissed, what gets rewarded and what gets punished. Managers decide how much autonomy employees have, how much freedom they have, how much leeway is allowed, how quickly problems are solved, and how much employees understand what they’re supposed to be doing.
In short, managers don’t just evaluate performance; they have tremendous influence over it. They may be standing in the control room, but they’re also often the ones pushing all the buttons.
The Employee & Manager Slices of the Problem Pie
A 2024 NBER study sought to identify the causal effect of managers on their teams’ performance.
The paper’s authors experimented with repeated reallocations of managers, controlling for differences in the skill sets of the teams. The purpose of the experiment was to quantify the effect of a simple managerial change, and the results were astounding.
The study found that good managers improved their teams’ performance by approximately double the number of “good workers” would have. The paper uses the phrase “good manager” to denote someone who consistently drove better-than-expected results from their team.
N.B.: The cited results do not mean managers are twice as productive as employees. Far from it – both the phrasing and the findings suggest the opposite.
The findings suggest that if you hire a good manager, you cannot simply lay off half your staff in favour of the manager and expect double the performance. Neither do they suggest that employees are fungible or that an outstanding manager would be able to extract twice the performance from any arbitrary set of subordinates.
What the study does suggest is that the people managing your team can affect your team’s performance by a surprisingly wide margin. It suggests that both your employees and your managers matter, and that the combination of the two matters even more.
Another NBER study of transfers between stores in two large retail chains found that, given the consistency of management practices across the businesses, studying how individual managers affected the performance of their new teams gave a less distorted view of the contribution to productivity that a manager can reasonably be expected to provide.
Both these studies suggest not that employees are unimportant, but that “the team is underperforming” is a dangerously incomplete diagnosis. Your team may be underperforming because your employees lack the experience, skill, or commitment to do the job well. It may be that your employees are entirely appropriate for the task, but they are, in fact, being managed poorly – either at the level of individual contributors or individual executives. It may also be that your employees are being managed by an ineffective manager, an ineffective system, or a combination of the two.
Consider the following scenario:
Your manager changed your team’s priorities on Monday.
You spent all of Tuesday prioritizing the newly prioritized project.
On Wednesday, an emergency cropped up, and you had to change priorities again.
On Thursday, your manager asked you why the first project wasn’t getting done.
On Friday, you found out the delivery date for the first project had slipped because of something that happened in another department.
When you go into your performance review, your manager tells you that you need to be more organized, take more ownership, and all the usuals. Maybe you do need to be more organized, but have you considered that it may not be your responsibility to rearrange your entire workload when priorities change?
This is why management should not be considered an optional part of the performance system – because it is an integral part of the performance system. It has to be. Research on role ambiguity shows that when there is insufficient clarity about what’s expected of you, your performance tends to suffer.
This does not mean that every underperforming employee is necessarily being managed badly. However, it does mean that we can no longer think of clarity of expectations as an employee competency. That kind of clarity is frequently the responsibility of managers, which, again, puts it squarely in the realm of managerial responsibility. Using this framework to understand performance issues can help you recognize some “bad” behaviours as the result of years of poor management.
An employee who is afraid to make decisions may have learned that decisions are rarely wrong.
An employee who asks permission constantly may have learned that acting without permission makes them look foolish.
An employee who is disengaged and cynical may have learned that no matter how hard they try, nothing changes.
An employee who misses priorities may have been given too many changing priorities.
An employee who always works right up to a deadline may have learned that nothing gets done before one.
An employee who can’t do anything without their manager may, in fact, have been taught that by their manager.
This brings us to one of the most damaging management practices: managerial interference.
When managers interfere with the day-to-day responsibilities of their direct reports, they train those direct reports to deal with everything at a level two steps below their actual level of responsibility. It doesn’t matter whether they are “helping,” “teaching,” “managing,” or “holdingaccountable.” Interference creates inconsistency, confusion, and the impression that the manager can’t handle anything without stepping in. Employees managed this way may always present problems at the executive level.
They may be unable to own problems or solutions.
They may always need their manager’s help or approval.
They may fear making mistakes without knowing their manager’s input.
They may have become unreasonably rigid in their approach to their responsibilities.
Micromanagement Can Manufacture the Dependence It Complains About
Micromanagement is typically defined as a practice that is detrimental to employees because it limits their freedom of action. This is partially true, but it is also a consequence of a much larger effect. Micromanagement can actually cause behavioural changes in people.
🔄 For example, suppose that you have hired a competent person to do a competent job. They make a decision you wouldn’t have made. You tell them they’re wrong. The next time they’re faced with a similar decision, they ask you what to do. You tell them, they do it, and you correct them again. The next time they’re faced with a similar decision, they ask you what to do. You tell them, they do it, and you correct them again. The next time they’re faced with a similar decision, they ask you what to do. You tell them, they do it, and you correct them again. 🔄
See where this loop is going? Eventually, they stop making decisions and simply ask you for instructions. You give them more detailed instructions. They ask you for more detailed instructions. You decide that they simply don’t have the initiative to do their job, and you start watching them more carefully.
🎉 Congratulations! You’ve just created the employee you were originally complaining about! 🎉
For those scoffing at this example, this is not just theory. A meta-study of 72 studies, 83 samples, and more than 32000 people found that employees who perceived their leaders as acting in an autonomy-supportive manner had more positive work outcomes. This includes positive associations with work performance, engagement and proactive work behaviours, and negative associations with turnover intentions.
Autonomy-supportive leadership is not being completely uninvolved. It provides freedom in action and decision-making, takes their input into account, and encourages self-initiative without hindering them, which is an extremely important difference.
Good management is not telling people to do whatever they want, or to do exactly what you would do; rather, it is telling them what you want them to accomplish and letting them do it, while intervening when they cannot accomplish their goals without assistance and helping them when they can. This results in much more competent employees, who are much less reliant on their managers.
This is especially important because a manager’s job is not to process every single decision that their employees make. If you have to answer every question they have, you’re not managing effectively, and you’ll likely end up with a queue of people waiting to hear from you, rather than competent employees who can handle most things on their own.
The irony is that managers often fall into this trap precisely because they want to be effective. They feel like they are doing their job by answering every question, but they are actually defeating their purpose.
Managers are accountable for their team’s performance, so it can be tempting to take responsibility for everything they do, but it is far more effective to let them handle things on their own and intervene only when absolutely necessary.
This is the difference between a manager who is simply a bottleneck for decision-making, and a manager who actually manages.
This is also where the myth of the manager as a performance evaluator falls apart: a manager does not simply determine whether someone can perform; they determine how much opportunity they have to perform.
That is not to say that a manager is not accountable for performance; it means that they have much less opportunity to affect performance, and much more opportunity to create poor performance by failing to provide the resources, freedom, and feedback necessary to actually perform.
If someone is consistently underperforming, even when given the resources, freedom, opportunities, and feedback they need, then they are likely to be a poor performer, but if they are not, then they may not be the problem, and it may be the system that is failing them.
Right now, ten thousand manager voices cried out in agony, objecting virulently because they are often expected to be the ones who determine whether or not someone can perform, and therefore they feel like they need to control everything in order to make that determination.
The Meaning of Management
A manager should not try to determine whether someone can perform; they should create an environment in which they can perform, then evaluate whether they are performing, rather than trying to determine whether they can perform.
This is also the point where many managers will start to see the flaws in their own management practices. The manager who is constantly changing priorities, rewarding the wrong people, avoiding difficult conversations, and putting out fires is not doing so out of malice or incompetence, but rather out of a desire to manage effectively.
They are trying to create an environment in which their employees can perform, but they are failing to do so; as a result, they constantly have to intervene to prevent employees from failing. Such a method is not an effective way to manage, and it is a sign that the manager is not administering matters effectively.
It is important to remember that management is a process, and that there are many different ways to achieve its goals. Some managers are better at it than others, and some managers are simply better at certain aspects of it than others.
However, there are some fundamental principles that all managers should follow, and one of them is providing their employees with the freedom of action and decision-making, taking their input into account, and encouraging self-initiative, while not hindering them.
The Behaviours You Reward Become the Behaviours You Get
One of the easiest ways for a manager to destroy performance is to reward the wrong thing, and this is rarely because they are evil. They are usually just rewarding the most obvious things.
Someone stayed up late to finish a project – that’s dedication. 10 points for Gryffindor!
Someone dropped everything at 7 pm to help out with an urgent customer problem – that’s heroism. 20 points for Gryffindor!
Someone responds to my Slack messages within 30 seconds – they are committed. 30 points for Gryffindor!
Someone worked over the weekend to meet a deadline – let’s give them a round of applause. 40 points for Gryffindor!
Meanwhile, someone quietly fixed the processes that would have stopped the weekend crisis from happening in the first place, but they have gone unnoticed. No points for Ravenclaw!
Alas, that is how companies end up rewarding people for making fires rather than putting them out.
One of the most interesting things about organizational performance is that the market value of various workplace behaviours often bears little relation to what the company says it values.
A company can say that it values planning, quality and sustainable performance, but if the people being promoted are the ones who work the longest hours and save the day at the last minute, the rest of the company will quickly learn that last-minute heroics are the most important thing. They are not dim in any way whatsoever; they simply observe their colleagues’ behaviours and learn from them.
A manager’s actions are effectively a set of behavioural coaching cues for the whole team.
If you reward people for being available to your team at all times, you can expect availability to become a key performance indicator.
If you reward speed of response regardless of errors, you’ll get speed of response.
If you reward people for taking all decisions up the chain of command, you’ll get a company that cannot make decisions.
If you reward people for preventing problems, you’ll get people who prevent problems.
If you reward people for being “a bit of a pain but getting things done”, you’ll get people who get things done but are “a bit of a pain”.
That is why recognition is such a powerful tool. Beyond making people feel good, it sends market-value signals to the team about what is and isn’t important.
Studies on management practices have found that goals, monitoring and feedback can have a major impact on productivity. In field experiments on airline captains, management practices such as performance monitoring, feedback, target-setting and prosocial incentives all led to significant improvements in targeted fuel-saving behaviours and, in some cases, increases in overall job satisfaction.
Now, this does not mean that managers should monitor everything. That would simply proliferate the very thing we want to see less of. What it does mean is that monitoring is part of the feedback loop. What you measure, discuss, and reward affects performance. So does what you allow to continue without correction, and most importantly, what you repeatedly rescue.
If a manager has a team that misses every deadline and responds to every problem by throwing the manager into the fray to “sort it out”, they should ask themselves what they have taught the team. They may believe they have taught the team to do better, but the team has actually learned that the manager will always rescue them when things go wrong. They learn to avoid responsibility and expect the manager to take over when things get tough. Meanwhile, the manager learns that the best way to deal with recurring problems is to rescue people rather than fix systems.
They have all been conditioned to act that way, without anyone intending to, and that is one of the fundamental problems with management.
Managers are powerful role models, and everything they do sends behavioural signals to the team. When it comes to busyness, managers don’t have to tell people to work long hours; they model it.
If they work 12-hour days, people will notice.
They will also notice if someone leaves at 5 pm every day and quietly works from home in the evenings.
They will notice if someone is praised for working 80-hour weeks and taking no breaks.
They will notice if working from home is seen as a perk and taking holidays is presented as selfish.
They will all learn different lessons about busyness and productivity, adjusting their actions and becoming incredibly busy without actually doing much useful work.
The difference between busyness and productivity is often invisible to the people involved.
Preventing problems before they occur rarely seems as important as putting out fires.
Processes and procedures are often seen as less exciting than dramatic actions.
Careful decision-making seems less impressive than “thinking on your feet”.
A team that learns to solve its own problems without constantly escalating them to the manager will make the manager feel less important.
It can make the manager feel redundant, which is why effective managers often feel their contributions are less valued by executives than they should be. They are busy people, making important decisions, solving problems, and rescuing the company from disasters, but those actions do not have the same impact on the bottom line as preventing those disasters from happening in the first place.
That is the real value of a good manager: they make the company less reliant on them, which makes the company more successful. It also makes the manager less valued by the people at the top.
Avoiding Problems Doesn’t Keep the Peace – It Changes the Team
There is a certain kind of management mistake that feels reasonable in the moment:
There is a certain employee who doesn’t perform.
You think to yourself, “Well, I’ll give them a little time. Maybe they are just having a rough week. I’ll bring it up at their next review. It’s probably not worth creating a scene over.“
A year later, everyone except the person in charge understands that the employee isn’t performing, but no one has addressed it because, really…who has the time?
This mistake is often called avoidance, but it can also be seen as a type of management decision. You’re deciding that this behavior is acceptable, and the rest of your team sees it. You should care because if they are not performing, it impacts the performance of others. It affects your own performance and your team’s culture.
A team’s culture is not defined by the individuals that make it up, but by the standards they share. People look around and think about what it means to be a good member of their team. What does it mean to miss a deadline, to be rude to a coworker, to be chronically underperforming, to do consistently incredible work?
Answers to these questions aren’t written anywhere, but they can be found in managers’ actions. If you tolerate one employee who routinely misses deadlines, conscientious employees will start to ask themselves why they are putting in extra effort. They might not think, “Oh, I’m so glad that [slacker] has more flexibility with their schedule,” but they might think, “Maybe I’m working too hard.” This is an example of a single performance issue affecting others’ performance.
Such instances are why it’s not that difficult actually to have a good conversation and why such conversations should be actively encouraged. A good manager does not have to enjoy difficult conversations, but they should be willing to have them. You don’t have to shame employees or turn every minor performance issue into a morality play, but you should be willing to address issues clearly and directly. You should hold people to standards, because they hold you to standards.
The research on manager-employee relationships also points to the importance of strong working relationships. In particular, a huge meta-analysis on Leader-Member Exchange Theory highlights the value of positive, supportive relationships between managers and employees. Trust, empowerment, and motivation all lead to positive behaviours like increased performance and citizenship behaviours.
This isn’t suggesting that managers should be best friends with their reports, but it does highlight the importance of working relationships. You can’t have trust without mutual respect and the feeling that each party is acting in good faith. That applies to both sides of the relationship. Employees have to trust that their manager will support them, but managers also have to trust that their employee will deliver. Neither side gets to demand loyalty or goodwill from the other. They have to earn it by showing up reliably and doing the right thing.
That’s why inconsistent standards from one employee to the next are so corrosive.
If you promise flexibility to one person because you like them, but deny the same flexibility to another employee who asked, you create distrust on your team.
If you hold one person to consistently lower standards than everyone else, you’re creating similar distrust.
If you tell people that the priorities are one thing, but you change them when it’s convenient for whoever is asking, you’re creating a toxic workplace.
It’s easy to dismiss these issues as unfair, but they shouldn’t be dismissed as unimportant. They effectively erode the trust between manager and employee, and once that trust is gone, you can lose your ability to manage effectively.
Management has a responsibility to set standards. If you’re not enforcing standards, it becomes much harder to enforce standards later. It’s one reason why management is so much harder than employees think.
You aren’t walking into a clean slate each morning. You are always working with an existing culture that you help shape, and that helps shape you.
You can make it easier or harder depending on the decisions you make.
You can make problems more visible or more hidden.
You can make employees self-thinking or dependent on you.
You can make excellent performance commonplace, or you can make extraordinary acts the norm.
Then, after all is done, when you get caught in the middle of it all, you can think, “Why is my team underperforming?“
Who knows, maybe you’re right, but maybe you’re not. They might be underperforming, but it might stem from a source or reason where they are giving you honest feedback on your management system.
So, if you’re thinking about firing them, consider whether firing them would actually solve the problem.
Final Thoughts
Sometimes the issue really is the person. Some people are just slovenly, consistently underperforming, and then failing to meet expectations despite your help, guidance, opportunity, and clear communication.
Managers aren’t superheroes, and your employees are adults. However, managers bear responsibility for the conditions in which their people work.
Before moving on to judgment, consider asking yourself a few tough questions:
Were expectations clear?
Did your reports have the information, authority, and resources they needed to fulfill the requirements of the position?
Did you address issues before they became problems?
Did you allow failures to dominate conversations, or withhold feedback and opportunities for advancement?
Did you fail to delegate, and take over tasks that were rightfully the responsibility of your people?
Would this person be a different performer under a different manager?
This is not an indictment, but an assessment, since research on managerial impact shows a clear conclusion: managers are often powerful predictors of the performance of the people they lead.
So when we find ourselves thinking about firing one of our reports, it’s worth remembering that we may not have maximized the conditions for their success to begin with.
This is not to suggest that we can turn poor performers into strong ones by simply changing their managers or through sheer willpower. Nor is anyone arguing that the solution to every personnel problem is to replace the manager. What matters for memory is that people are often products of their circumstances.
This reframes the conversation from “how do I get more out of these people?” to “what is getting in the way of their success?“
Maybe the issue is unclear priorities.
Perchance the real root problem is an unhealthy dependency on approvals.
Perhaps your people have been rewarded for putting out fires, and are consequently avoiding the larger issues.
Mayhaps conversations are consistently put off until after months of mounting tension.
Possibly you’re not delegating enough and are always solving problems for people who need to learn how to handle them on their own.
These are the sorts of things good management can address: removing roadblocks and creating conditions for success.
The most effective managers aren’t the ones who provide the most resources or information, but the ones who create an environment where their people feel empowered and supported. They promote autonomy, mastery, a sense of purpose, and belonging.
To the untrained eye, the result may often look like the manager isn’t doing much of anything at all. When done well, management is a gruelingly difficult job that is completely invisible, because their role is to ensure everyone else’s role runs smoothly. When done correctly, management creates the conditions for performance rather than extracting performance through brute force of will.
Often the most important questions aren’t about who is to blame for poor performance, but about who is most responsible for improvement. That doesn’t always make it the manager’s fault, but it does mean there’s always a right answer.
Perhaps a customer service associate started making mistakes.
Mayhaps a project that seemed like it was a winner suddenly tanked.
Perchance a government department that consistently hit its KPIs suddenly started missing them.
Possibly a construction site that was on track suddenly started falling behind schedule.
Presumably a real estate project that looked like a sure success suddenly stopped attracting buyers.
What’s the first question that pops into most organizations’ minds at that very instant?
“What’s wrong with the employee?!”
It can be a myriad of matters, ranging from motivation, discipline, lack of care, or just a rough attitude. It’s an easy question to ask. When things aren’t going well, after all, our first inclination is to examine the person at the center of the work. It feels equally easy to answer, too. Unfortunately, it’s often the wrong question to ask. In our last piece, we examined the oldest myth in performance management – the one about great performers simply being born with more talent. While talent plays a role, it’s not the full picture. You can develop skills, acquire knowledge, improve abilities, and gain experience nowadays more than ever before in the history of humanity. So, if performance isn’t just about raw talent, though, what is it about? The answer is a bit more intricate and poses several interesting questions, more than many people like to admit, because often, questions don’t give answers, but open up more of the same. Performance isn’t created in a vacuum. It’s not the sum total of how smart, hard-working, or driven someone is. Performance is moreso the result of dozens of forces (seen and unseen) acting upon a person on a daily basis. This has been repeated thousands of times, but it’s valuable to look at it from different angles.
For example, think about growing a plant. If a plant isn’t growing well, we don’t assume it’s a “bad plant,” with a “bad attitude” or a “lack of drive.” We examine everything that has to do with the plant: the soil, sunlight, water intake, temperature exposure, and whether anything is getting in its way. However, when an employee isn’t performing well, we tend to examine the person first. Sometimes that’s appropriate; that much is true. Other times, more often than not, the environment has already created the conditions for poor performance, and this is the myth that we aim to bust in this article: employee performance isn’t primarily determined by attitude. All of the internal elements matter: attitude, effort, accountability, and resilience. Yet, in addition to all these, we also have external elements: bosses, peers, organizational systems, cultures, and outside influences. Understanding the role these external forces play doesn’t mean absolving employees of their responsibility, but rather explaining their performance in relation to all of them. Once we can explain performance by taking into account every layer that can sway it one way or another, we can finally do something about improving it.
Layer 1: The Individual – Capability Is Only the Starting Point
You can’t talk about employee performance without talking about the employee (duh). Each employee comes into a workplace with a unique set of knowledge, technical skills, experience, personality, motivation, and natural talents that undoubtedly play a role in how well they perform. To ignore that fact would be as foolish as saying talent doesn’t matter at all…which is where something breaks in a lot of organizations, and the collective thought bubble pops. If someone isn’t performing, the quick assumption becomes the person lacks something, and they need MORE of something else: more motivation, more discipline, more commitment, more resilience, more passion, more energy, more footwork, like the workout videos of old. Now the environment has become a weird gymnastics exercise of jumping through mental hoops to reason something that might be true, but may not, into a definitive state of truth. One of the most surprising findings from recent research on workplace wellbeing is how much of an employee’s performance is affected by things that their manager may never see. Research from Humankind found nearly 73% of employees felt personal stress was hurting their ability to focus, engage, be motivated, make good decisions, and perform well at their job. Whether it was finances, poor sleep, childcare duties, health concerns, or emotional burdens, these personal factors were quietly depleting the cognitive bandwidth individuals have to deploy at work. None of these struggles will ever show up on a performance review.
A manager doesn’t see the parent who spent the night up with a sick child.
A manager doesn’t see the employee who’s losing sleep over bills.
A manager doesn’t see the hours spent in transit to a job, taking care of aging parents, managing relationship drama, or coping with illness.
What a manager does see is work that’s slowing down, deadlines being missed, less enthusiasm, and lower productivity. By the time that these performance indicators appear, the underlying causes may have been developing for weeks or months.
This is not to say organizations should be tasked with fixing every one of a person’s personal challenges (that’s neither realistic nor appropriate), but it does mean that we must stop deluding ourselves into thinking that individuals somehow become different human beings the moment they enter our buildings. Employees don’t leave their lives at the door; they merely get better or worse at hiding them. Even if there’s nothing overtly going on in a person’s life, we fall into another trap when discussing performance. We often assume that if someone has enough talent, performance will automatically follow, but that’s not how real, everyday life functions. We’ve covered previously how Gallup has long pushed for the argument that while natural talent is a relatively stable proclivity, knowledge and skills can be acquired over time, rendering talent-only advantages null.
Thus, while hiring individuals with a high natural ability does increase your chances of having a top performer, it’s far from a guarantee. Likewise, a person with only average natural abilities may exceed expectations if they’re placed in the right role, have the right skills, and work within the right environment. The same principle is emphasized by management professor Morten Hansen in his research of thousands of professionals. Hansen discovered that how people work accounted for more of the difference in performance than almost anything else. While talent mattered, it was far from the single largest differentiator. High performers didn’t simply outwork the competition; often, they were outworking their competitors more strategically, since capability only sets potential; it doesn’t guarantee performance. Two people with very similar backgrounds and intellectual capabilities can perform in vastly different ways. If we’re only focusing on the person, those discrepancies can seem baffling, yet in truth they are being influenced by forces that we have yet to examine. This is because, after the person, perhaps the single biggest factor affecting performance is their manager.
Layer 2: The Manager – The Greatest Performance Multiplier or Subtracter
If you ask someone why they love working for their company, they’re likely to mention their team or their opportunity to learn & grow. If you ask someone why they left, you’ll notice that a very consistent answer emerges: “my manager.“
Oh, the age-old truism that people don’t leave companies, they leave managers. It’s not universally true, of course, but there’s a reason this saying endures. Managers are our window onto the company. They are responsible for our expectations, the feedback we receive, our access to opportunities, the obstacles we must overcome, and the emotional temperature of the place we work each day.
Two employees can be in the same company, earn the same salary, work with the same policies, have the same benefits, and yet have drastically different experiences because they have different managers.
Psychologist Amy Edmondson has devoted decades of research to identifying a critical ingredient of high-performing teams: psychological safety. In a nutshell, it’s the belief that people can be their genuine selves at work without fear of embarrassment or punishment, can take risks without fear of repercussion, and can challenge one another without damaging personal relationships.
Notice what psychological safety is not: it’s not a lowering of standards. It’s not about avoiding accountability. It’s not about making people comfortable all of the time. Instead, it is about enabling them to contribute without fear of appearing incompetent, even if it feels inherently risky. This is a crucial distinction, because fear changes our behaviour. When we’re afraid of appearing incompetent, we stop asking questions. When we’re afraid of being criticized, we stop pitching new ideas. Eventually, our performance begins to dip because fear has begun to eclipse curiosity.
In fact, a well-known Google study called Project Aristotle, which investigated the reason behind their consistently high-performing teams, came to a strikingly similar conclusion. After scrutinizing hundreds of teams, Google’s researchers found that the most important factor in success, more so than any other, was the degree to which teams were psychologically safe. The other factors (dependability, role clarity, meaning, and impact) were all secondary, built on the foundation of safety.
We invest considerable money and effort trying to find and hire exceptional individuals. Yet, very few of us invest the same resources in creating conditions that allow those individuals to actually achieve their exceptional potential. Moreover, psychological safety is just one factor. There are many others, such as recognition, constructive feedback, trust, autonomy, and role clarity, just to name a few.
Employees who have to second-guess priorities, wait days for simple approvals, or are terrified of making small errors spend the bulk of their mental energy protecting themselves rather than doing meaningful work. Good managers work hard to minimize that friction, while bad managers create it.
In short, the management of performance doesn’t just happen in annual performance reviews. It’s influenced every day by the culmination of dozens of seemingly small interactions between a manager and their reports. Eventually, those interactions ripple out beyond individual relationships and shape the team itself.
Layer 3: The Team – Why Great Individuals Can Still Become Average Teams
Consider five of the most exceptionally gifted individuals and gather them together in one room. Common sense would suggest this would inevitably result in an exceptional team. In reality, things get complicated.
We’ve all experienced teams that, while absolutely flush with talented, experienced professionals, somehow stumble from one deadline to the next. Their meetings become an exercise in repetition and good ideas fester in the far corners of their minds, never shared, never discussed. Elsewhere, teams comprised of average employees somehow manage to turn out exceptional results like high-speed conveyor belts.
When the environment that a tight-knit group builds together starts to shape their work experience, performance starts shifting from individual to collective. By the very nature of work in an organization, no team can avoid this, and every one nurtures its culture, willingly or unconsciously. Over time, everyone learns what gets rewarded, what gets ignored, and what gets punished. Most of these lessons don’t make their way into employee handbooks, but they often exert a far stronger influence on behaviour than any formal policies.
Every team has rules, but what’s more interesting is how many were never written down.
Maybe it quickly becomes apparent that it’s not worth disagreeing with the boss.
Perhaps people learn that asking for help is interpreted as a sign of weakness.
Possibly they notice the loudest voice in the room always wins the discussion, regardless of the actual quality of the ideas presented.
Mayhaps people learn that taking risks is celebrated only when they succeed, but punished harshly when they fail.
Perchance it becomes obvious that keeping your head down and avoiding difficult conversations is the safest way to get ahead.
None of this has to be codified in an internal policy. People simply observe it, adapt to it, and then, over time, pass it along to new team members. This is why culture can spread like wildfire. Almost nobody changes because someone announced new values at an all-hands meeting, but everyone changes when they watch how behaviour is rewarded or punished.
Psychologists call this social proof.
People look to those around them to signal how to behave, particularly in times of uncertainty. In workplace settings, that means employees often adopt the norms of their colleagues long before they consider their company’s stated policies.
If everyone in a team talks freely in meetings, then new team members are usually inclined to speak freely as well. If everyone in a team falls silent when something goes wrong, new team members learn that silence is golden.
Another invisible force comes in what researchers call emotional contagion.
Emotions spread, and that affects team performance. If you’ve ever worked in a team environment, you’ve undoubtedly seen it. A perpetually pessimistic person can single-handedly drain the energy of an entire department. Conversely, an optimistically positive and solution-oriented teammate can boost everyone’s motivation during challenging times.
Managers certainly affect the emotional climate of their teams, but the teammates amplify it day by day. A culture of trust or fear becomes a self-reinforcing loop. This leads into another point taken from Project Aristotle.
Google’s Project Aristotle identified dependability right after psychological safety in their findings.
Trusting your teammates goes beyond their ability to emotionally support you; it involves relying on their execution. Few things sink a team’s performance faster than unpredictability. When employees are unsure about whether their teammates will come through on their assignments, they start to contingency plan or hoard information just in case. Self-protection, rather than collaboration, becomes the default.
The reverse is also true: when employees are confident their teammates will come through, coordination is smoother, and meetings are more efficient as trust replaces excessive oversight.
This is perhaps the least understood ingredient in the recipe for high-performance teams: they don’t eliminate conflict – they eliminate unhealthy conflict.
High-performing teams do disagree. They do question assumptions, debate ideas, ask uncomfortable questions, and clash in their value systems. However, they do so in a way where disagreement isn’t a personal affront. Disagreement becomes a function of the problem-solving process.
That’s what psychologist Amy Edmondson found over and over again in her studies as well: teams that had a high level of psychological safety didn’t necessarily commit fewer errors than others; they actually reported more errors because they were way more willing to admit they had made a mistake. The result wasn’t decreased performance; it was faster learning.
Ironically, cultures that punish mistakes foster conditions where mistakes grow costly and become harder to fix. Hidden problems are invariably more dangerous than problems in plain sight.
As you might have noticed, by this point, a pattern is emerging.
So, what does all of this lead to?
Individuals matter. ✔️ Managers matter. ✔️ Teams matter. ✔️
Yet there is something bigger. They all exist within something larger – the organization.
Layer 4: The Organization – The Structures Behind the Results
Companies love to measure outcomes: sales, revenue, productivity, customer satisfaction, profit margins. What companies don’t really love to measure is the systems that drive those outcomes.
Systems
This is an issue because employees don’t operate in isolated moments; they operate within systems, and those are the quiet forces that make succeeding easy or painfully hard.
Think about how many performance issues are actually system issues hiding in plain sight:
An employee misses deadlines.
Is it poor time management?
Or was that employee’s priorities changed three times in a single week?
A project is dragging.
Is the team unmotivated?
Or does every single decision need to go through a four-department approval process?
Innovation has disappeared.
Are your people less creative?
Or have they learned that challenging the status quo is more risky than rewarding?
It’s all too easy to chalk performance problems up to individual accountability because individual behaviour is visible. Systems are much harder to see, but they often exert much more influence.
Management pioneer W. Edwards Deming famously asserted that 95% of organizational problems are systemic in origin. Accountability matters, yes, but he insisted that people cannot perform better than the systems they are asked to work within.
Just think about your local governmental bureaucracy.
It functions chiefly by rulesets. We need rules. Rules are good – they provide consistency, mitigate risk, offer direct A-to-B avenues for solutions, and enable scalability.
However, we reach a tipping point for every added approval, every unnecessary report, every meeting, every administrative layer, every conflicting process. When rules outweigh the necessity for which they exist, they begin creating friction. They shift focus away from delivering value and toward navigating the organization itself. Eventually, the process itself becomes the focus, not the work.
Role Clarity
Very few things sap performance faster than confusion around what’s expected.
Who’s making this decision?
What does successful work look like here?
Which of the two conflicting priorities should I tackle first?
When expectations are unclear, even talented employees will pause before acting for they fear doing the wrong thing. Studies have shown that clear roles correlate strongly with employee engagement, confidence, and overall performance. Role clarity frees employees to focus energy on solving problems instead of figuring out the answers.
Politics & Culture
Life is a series of politics at play, and organizations are part of daily life.
With that in mind, however, issues arise when politically motivated behaviour are more rewarded than productive behaviour.
If a promotion system reliably favors visibility over contribution
If challenging colleagues’ ideas is riskier than agreeing
If employees are incentivized to compete with one another instead of solving problems collaboratively
If protecting your own department is rewarded more than helping the organization as a whole
The organization trains people that success is a result of politics, not formal policy.
This leads to a distortion of culture.
Culture, much like politics and behaviour, is learned. Despite an army of mission statements, posters, core value initiatives, and well-wishing sticky notes, organizational culture isn’t created by what organizations say they are, but what they do.
Culture is built on what organizations repeatedly tolerate, reward, punish, or ignore. That’s why two companies can claim the exact same values, but have wildly different experiences for their employees. Organizational culture isn’t the motto on the wall; it’s what happens when no one’s watching. These hidden structures influence performance daily, often without managers’ awareness, since they are felt & lived, rather than examined in a performance sheet.
Yet, even organizations with excellent managers, healthy cultures, and efficient systems have one final, insurmountable challenge: people are, at heart, human beings who exist long after clocking out.
Layer 5: The World Outside Work – The Part Performance Reviews Never Measure
There is one last layer to performance, which organizations know conceptually, but often fail to account for realistically: life. It almost seems self-evident, yet, a pervasive, almost subconscious bias exists in the workplace that assumes employees somehow leave their personal lives at the door.
They didn’t – your employees didn’t stop being parents the moment they logged onto Microsoft Teams. They didn’t stop worrying about a sick loved one just because it was Monday morning. Financial worries don’t cease at 9 AM. Anxiety, grief, burnout, sleep deprivation, relationship troubles, and the many other stresses of being human don’t simply fade away as business hours commence.
The point is that people don’t perform in a vacuum; they perform as people. Recent research from places like the Harvard Business Review underscores the impact of external stresses. Studies have demonstrated a direct link between personal stress and difficulties with focus, decision-making, motivation, and engagement.
By the time an employee’s performance visibly dips, mental energy needed for problem-solving, collaboration, and creative thinking may have already been diverted to managing these personal issues for weeks or months. Of course, this doesn’t mean employers need to become therapists or feel personally responsible for their employees’ personal problems. Boundaries are important, and so is recognizing that between 9 and 5, we don’t automatically morph into machines.
Organizations that understand this do a better job of not trying to manage people’s lives, and a much better job of not creating undue stress in the workplace.
Flexible work schedules.
Employee assistance programs.
Access to mental health resources.
Realistic workloads.
Predictable schedules.
Empathetic managers.
These aren’t magic cures or arcane sorceries. They simply remove a potential unnecessary source of pressure at work, and they are incredibly important for one specific reason: performance isn’t a flat line.
No one, not even the highest performer, is running at peak capacity every moment of every day for every year. People have seasons, and there are periods where they have tremendous energy, creativity, and focus. Then there are periods where life’s demands briefly require a greater portion of their attention.
High-performing organizations recognize the difference between a temporary dip in performance and a systemic problem. They don’t treat every deviation as a failure; they ask a much more helpful question: “What has changed?”
Sometimes the change is skills or motivation. Other times, it’s work overload. Lastly, on other occasions, it’s just life, and because each of these changes requires a different solution, differentiating is critical.
Treat every issue as an attitude problem, and you won’t fix very many things. Treat every issue as a systems problem, and you’ll neglect individual responsibility. Effective performance management sits somewhere in between. It acknowledges accountability for an employee’s work, while simultaneously recognizing that no work exists in a void because when you zoom out, you see that every layer impacts the other.
A talented employee will be limited by poor management.
A brilliant manager will be hampered by a dysfunctional system.
A great system will see reduced productivity when the people within it are struggling with overwhelming personal challenges.
No one element creates performance alone, rather it’s the interplay of an entire ecosystem that creates it.
Final Thoughts
Organizations have sought the silver bullet for performance for decades: hire better people, pay more, set big goals, measure everything, and reward the top performers.
All of those things count, but they’re only one part of the picture. Performance isn’t a function of talent alone, nor is it just a product of attitude or effort. Performance emerges from the interaction between an individual and their environment.
The individual
The manager
The team
The organization
The outside world
Every one of these levels either builds on an individual’s potential or subtly works to undermine it. This is why explaining poor performance simply as employee error is so incomplete. If a garden doesn’t grow, we don’t just blame the seeds. We look at the soil, the light, the water, the environment.
Organizations should be willing to ask the same questions not because employees shouldn’t be held accountable (they most certainly should be) but because blame without understanding never results in sustained change. The most effective leaders don’t ask, “Who caused this?” They ask, “What conditions created this result?”
Changing your perspective from who did it to what created it changes everything. It shifts performance management from blame to removal of obstacles and turns the manager from an evaluator to a coach. Moreover, it prompts organizations to build systems for employee success instead of relying on individual grit to overcome the odds, and most important of all, it reminds us that performance isn’t usually an individual effort but a collective one at that.
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Performance problems rarely have a single cause. Learn to examine the people, managers, teams, and systems behind the results. Build a more complete approach to performance management with Certified Employee Performance Management.
There’s one at every workplace. That employee everyone describes as a “natural.”
“They just have it,” “They’re born for this,” “They’ve always been a high performer.”
The John XBox or Jane Hollywood of a company. Somehow, they never falter nor waver. When someone is landing everything perfectly, it’s natural to focus on an inherent quality like talent, intelligence, discipline, a strong work ethic, or an ineffable X factor the rest of us apparently weren’t born with. Just as it’s natural to attribute struggle to a lack of those qualities, such as “They’re just not cut out for the job” or “They don’t have what it takes.”
It sounds like it makes sense. Oftentimes, too much sense, and in this case, that is right on the money, for this is one of the most prevalent myths of performance management.
Talent exists, undeniably, but performance alone seldom comes close to telling the full story. Consider this – have you ever seen an incredibly strong performer jump teams and inexplicably become mediocre? Or someone who struggled under a manager excel under a different one? To go even further, maybe an entire department magically improved after the head of the department changed, yet all of the people in that department were the same?
Those kinds of scenarios simply shouldn’t happen if performance were just an inherent personality trait. Yet they do, and they happen in almost every single company there is.
Why?
Well, because performance doesn’t travel with employees inside their briefcases. It’s a consequence of continuous interplay between an individual and the ecosystem in which they work, and in this, too, too many companies get it wrong.
The Dangerous Habit of Labeling People as “High Performers”
We love our labels. We stick them on people as if they’re goods on a shelf:
High performer.
Low performer.
Top talent.
Underachiever.
They’re very handy mental shortcuts which allow us to compartmentalize humans into well-defined categories. The difficulty is that humans aren’t quite as easy to define as rows on a spreadsheet. To say someone is a high performer is to implicitly attribute performance to their stable characteristics, akin to eye color. However, performance isn’t a static characteristic but a dynamic and conditional one.
A software engineer who is performing wonderfully in a dynamic startup may be flailing in a large, monolithic organization where there are six layers of approval for any change.
A world-class salesperson may be a dismal failure when asked to sell a product they don’t believe in.
A competent project manager can completely underperform in an environment where they are constantly being micromanaged.
A highly creative designer may seem average in an organization that values strict adherence to templates over original thinking.
An experienced leader can look surprisingly ineffective when placed in a team that lacks trust and psychological safety, making honest communication impossible.
Did all of these people suddenly lose their abilities just like that? Were their skills Thanos-snapped?
Absolutely not, but their environments definitely were, and herein lies an extremely expensive error on the part of organizations: they consistently seek to fix underperformance by replacing people rather than fixing the environment people work in. Now, this is not to say that any person can be made to perform well in any job. Certain jobs will require certain interests or native abilities; therefore, hiring the right person still matters. With that said, once a person has been hired well, we are still very much left with the task of setting up the right environment to let them succeed. Now, these aspects are two very different issues.
Talent Matters, But Not in the Way We Usually Think
Perhaps one of the more thought-provoking differences comes from Gallup’s work in talent. According to them, talent is “any relatively natural pattern of thinking, feeling, or behaving.” Skills and knowledge can be developed or trained.
Often, we bundle it all together into one word: “talent”
Someone is great at giving speeches? “They’re talented.”
Someone effortlessly builds strong relationships wherever they go? “People person.”
Yet that doesn’t seem to answer the actual questions that arise regarding talented people:
What % of that is actually talent?
What % is built through years of experience?
What % is deliberate practice?
What % is confidence through success and repetition?
What % is working in the right kind of environment to allow those things to flourish?
When you begin to ask those questions, the cause of high performance is far less simplistic and turns out to be a multi-faceted phenomenon. Talent clearly affects potential, can make some tasks seem easier, speeds learning, allows faster progress compared to peers, etc, but potential isn’t performance. Potential still requires a certain amount of opportunity, environment, instruction, and practice to consistently lead to excellent performance.
Words Shape the Way We Manage People
Here’s an interesting tidbit: a 2023 study published in the Journal of Organizational Behavior and Human Decision Processes found that just labeling an attribute as “talent” rather than “skill” caused people to frame that attribute differently. Namely, when managers and HR personnel referred to a trait as talent, it seemed more fixed and less malleable. This made them more skeptical about whether an employee would improve over time and more prone to hire someone else than develop their existing employee.
Let us ponder these findings for a moment: if we believe top performance is largely something that you either have or you don’t, coaching feels futile, does it not? Training feels like an expense rather than an investment. Development feels like a nice-to-have, an optional extra. After all, why work with someone who “just doesn’t have it”?
This is little more than a small tweak to language, but a large tweak with significant effects on the management systems we build, and maybe that’s the problem with the “natural” performer story: not that it recognizes great performance, but that it silently suggests it cannot be built.
Employee Performance Is an Outcome, Not a Personality Trait
Here’s a thought experiment that feels relevant for our subject. Suppose two companies hire exactly the same employee: same background and education, same amount of experience, same personality profile, same motivation to succeed, and same range of abilities and aptitudes. For all intents and purposes, the employees feel the same. Six months later, one company believes he has leadership potential and expects a great deal more. The other company has already put him on a performance improvement plan.
So what has changed? What has led us to this particular conclusion? ➡️ The environment around the employee. ⬅️
This is not a hypothetical scenario either, since organizations experience it every day. Employees move to other companies, and suddenly they flounder, or flourish if the environment is right. A team that was failing under one leader suddenly soars under another. Organizations undergo reorganizations, and productivity simultaneously improves, or gets worse, when it’s pretty much the same set of people doing the same set of jobs. There would be no way to account for such phenomena if performance was wholly inherent in the individual. Once we recognize performance as a resulting variable, however, these phenomena become easily understandable. We are tempted to look for performance within the individual as though it were a stable attribute or personality characteristic. That’s not really how this works, since performance is more like the solution to an equation, while the individual is one element of the equation. An individual’s skills, knowledge, experience, and desire contribute an element that can be measured and can fluctuate or grow or shrink over time. The individual’s “potential” contributes an element, too, but the conditions within the environment contribute other elements.
Removing these external obstacles to performance, you can watch even ordinary people exceed all your expectations. Adding them, you can watch even outstanding individuals fail miserably. This is not to suggest that everyone can perform optimally in any role, nor that organizations are responsible for every failure of an individual’s performance. However, this mindset suggests that looking only at the individual rarely tells the full story. Unfortunately, that’s all many organizations bother with.
The Best Employees Don’t Just Work Hard: They Work in Better Conditions One of the most enduring myths about high-performing businesses is that they’re just full of talented people. Their hiring departments simply don’t miss. Somehow, they manage to fish the best possible recruits out of the entire hiring pool every single time, without fail.
Obviously, hiring is important; in many ways, it’s the most crucial decision a business can make. That’s where the similarities end, though, between all these companies.
Here’s a practical example: think of a Formula 1 racing team.
Even if they have the best driver in the world behind the wheel, that team isn’t winning races with a faulty engine, slow pit stop crew, worn-out tires, and an uncertain strategy. The fastest car alone won’t make an average driver a winner because performance arises from the interaction between the individual and the environment they work in.
Work in any company, SMEs or large corporations, is no different. An exceptional employee with uncertain goals, conflicting objectives, out-of-date processes, and frequent interruptions will not perform at their highest potential.
However, an employee who may not be as extraordinarily skilled could nonetheless excel when clarity of expectations, quick decisions, and mutual trust prevail. This also explains some of the misunderstandings surrounding high-performance teams: at first glance, these groups operate effortlessly; projects move quickly, people naturally collaborate, problems get sorted out before they snowball into full-blown crises. It is understandable, thus, to conclude that these teams are simply packed with more talented individuals than other groups.
In the majority of cases, this is simply not true. Rather, these groups have something else going for them: trust.
Information flows faster, errors are caught earlier, knowledge is shared, conflicts are resolved, and the team progresses quicker not due to rash behaviour, but rather because they spend less time questioning each other’s work.
Talent drives individual contributions, but trust determines the overall performance of those contributions as a team.
The Talent Trap: Why We Love Simple Explanations
Humans are great storytellers and even better simplifiers.
Does someone succeed? OH, they’re talented.
Does someone falter? Oh, they’re lazy.
Such bare-bones reasoning takes the pressure off of having to tackle more complex motives.
Yet simple stories don’t often describe how the workplace operates.
Meet Bill, an individual sales representative whose quarterly sales goals have started to consistently fall short. Now why is that? What is the real reason that Bill went from hero to zero?
Maybe it’s poor performance, but then again, the organization DID implement a new CRM and no one knows how to operate it.
Maybe it’s due to marketing changing their process for qualifying leads.
Maybe it’s a shift in pricing that made their products less competitive.
Maybe their sales territory was reconfigured, and that caused it.
Maybe they have a new manager.
Maybe the demands of their customers have changed.
Maybe it’s everything, everywhere, all at once.
Performance is often the outcome of numerous causes all working on each other simultaneously. Labeling a person as a good or bad employee can hardly ever capture a realistic, useful picture.
Research that Morten Hansen has conducted over several years examined the variables of individual employee performance and led to the same conclusions. He found that an individual’s performance has much more to do with how they perform – their habits, practices, and attitude toward the work – than with any other variable, like demographics, job tenure, or merely working more hours. This suggests performance is neither haphazard nor fixed; instead, performance is the result of countless decisions, many of which an organization is making all the time.
What Great Managers Understand That Others Don’t
One of the largest differentiating factors between average and high-performing managers is not necessarily the way they measure performance, but the way they conceptualize it. When an employee is performing poorly, average managers may jump to, “What’s wrong with this employee?” Great managers are likely to ask something else first: “What’s getting in the way of this employee performing well?”
One assumes that the problem lies in the employee, while the second assumes that there might be something to explore before concluding that. This “something else” could be capability, motivation, fit for the role, training, lack of clear expectations, the leader assigned to them, or any of a multitude of factors. It may be that someone is put in a position in which their talents rarely get a chance to make a difference. High-performing managers know that those other factors aren’t excuses; they are variables.
Ignoring them will never solve them.
In fact, if the purpose of performance management is indeed better performance (rather than simply better documentation), a manager would be wise to learn the impact of all the variables.
Stop Looking for Perfect Employees. Start Building Better Performance.
Organizations grow performance; they don’t just hire it. Talent, experience, and skill are all equally important for different facets of a job or task.
However, they all matter within a larger ecosystem. Brilliant hires can lose motivation just as easily as unexceptional people can rise to exceed all expectations. A great team working cohesively will often eclipse a collection of equally brilliant individual players. This situation has been witnessed time and time again, and proven through decades of research into organizational behaviour, yet somehow, organizations almost always resort to the same diagnosis when perceiving any shortfall in performance: “We need to hire better people.”
On the one hand, sometimes, this is true. There is no denying that on more than one occasion, you simply need a better person for that job. On the other hand, every now and then, the truly right person has been put in the wrong job, and no amount of mentoring or coaching can compensate for fundamental misalignment.
If hiring the “right people” becomes the standard operating procedure for addressing performance gaps, organizations risk skipping over a much more complex (and, truthfully, a much less convenient) question:
“Have we actually created an environment in which talented individuals have the chance to flourish?”
Performance Management Starts Long Before the Performance Review
One of the supreme ironies in the business world is that we approach performance management as a process that starts when an employee receives their annual performance appraisal. By then, the decision has already been made.
Performance management starts when you hire the employee, then continues through onboarding, expectations, communications, coaching, trust, leadership, learning, rewards, and all the microinteractions that never make it to the appraisal form. Simply put, the review doesn’t create performance; it just reports it, and that’s a crucial difference because it transforms performance management from a judgmental process into a growth one, and these are two almost completely different things.
One process asks, “How did you perform?” and the other asks, “What do we need to do to help you perform better?” The second question is almost always the more helpful one, because the primary purpose of any organization is to improve performance. Accountability is an essential part of a healthy ecosystem, but simply performing measurements in relation to it is not enough.
The companies that consistently outperform all others recognize this intuitively. They aren’t focused on identifying that mythical, perfect, Herculean employee; rather, they are focused on systems that can help average employees excel, and excellent employees stay excited.
The Biggest Myth Was Never About Talent
We began our foray into this article’s main topic with a counterintuitive notion:
“High performers are born, not made.“
As a collective, humanity has had the Maybelline “Maybe she’s born with it” mentality since we could pick ourselves up from the ground. There are, of course, natural strengths people bring that help them succeed in certain roles, and it would be a disservice to ignore those as much as it would be to discount the importance of talent altogether. Yet, in the grand scheme of things, talent is but a sliver of a larger system. Performance is an intersection of people and the context in which they perform. It depends on leadership, trust, learning opportunities, quality feedback, role clarity, and systems that clear a path versus those that silently raise obstacles.
It’s no surprise, then, that the term “high performer” is somewhat of a red herring. The label invites us to view performance as an identity instead of an output. As soon as we typecast somebody, we ask questions less about what led to that result and more about whether that person is indeed a high performer.
Was it a great insight?
Great leadership?
Decades of training?
An inspiring colleague?
A set of clear objectives?
All of these combined?
Organizations that continue to pose the question invariably get better; organizations that have stopped get better at chasing talent.
Final Thoughts
If performance isn’t simply a matter of talent, then the obvious question follows: what determines employee performance?
The leaders in our organizations? The company culture? Trust? Motivation? Training? Workload? Autonomy?
In reality, as we’ll discuss in the next installment of this series, many “unknown forces, often self-inflicted by the organizations that employees inhabit,” play an enormous role.
Identifying and understanding those forces is the initial stage for creating the conditions for superior performance, rather than something that occasionally appears for high performers. Once organizations stop asking “who are our highest performers,” they can then turn their attention to a more pressing and important question: “What kind of organization helps average people do excellent work?”
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Move beyond labeling employees as high or low performers and learn how to build the conditions for better performance. Explore the systems and practices behind effective employee performance management with Certified Employee Performance Management.
Employee Performance Management (EPM) is the structured, ongoing process of setting expectations, tracking results, and developing people so that individual effort connects to organizational goals. It is not the annual review form. The review is one meeting inside a much longer cycle that runs from goal-setting through coaching, measurement, evaluation, and reward.
This guide covers:
What Employee Performance Management is, and how it differs from a performance appraisal
How EPM operates across organizational, departmental, individual, and personal levels
Why organizations invest in EPM, and what happens when they don’t
The EPM architecture: the building blocks that connect strategy to a single employee’s daily work
How to run an effective appraisal meeting, including feedback techniques
How EPM connects to talent management, career planning, and succession
Common mistakes organizations make when implementing EPM
What Is Employee Performance Management?
Employee Performance Management is a structured process of planning, measuring, and improving how an individual employee contributes to organizational results. It typically involves setting objectives and KPIs, tracking progress, evaluating results against standards, giving feedback, and using what’s learned to guide development, pay, and career decisions.
Ask a room of employees what “performance” means to them and the answers tend to split down the middle. Some see it as a way to earn a bonus or a promotion. Others describe it as a bureaucratic, time-consuming exercise. In between sit people who say it clarifies their objectives, motivates better work, or builds their competencies. All of these reactions are valid, and they usually reflect how well — or how badly — an organization has built its EPM system. A well-designed system produces the motivating, clarifying version. A poorly designed one produces the bureaucratic, box-ticking version.
That gap is the entire reason EPM exists as a discipline: the same underlying idea — measuring and improving people’s work — can land as either a genuine driver of performance or a resented compliance exercise, depending entirely on how it’s structured.
Performance Management Operates at Multiple Levels
Performance management isn’t a single activity; it operates at different altitudes, each with its own focus and its own tools.
Strategic (organizational) level. Deals with the achievement of overall organizational objectives. This is where mission, vision, values, and 3-to-5-year goals get set, and it’s sometimes called corporate, business, or enterprise performance management.
Operational (departmental) level. Puts the accent on achieving departmental objectives inside the organization, translating strategy into functional plans. Dashboards are the tool of choice here.
Individual level. An integrated system meant to improve the performance of each employee, with responsibilities aligned toward the achievement of shared goals. This is the level most people mean when they say “performance management.”
Personal level. Full self-management across life areas — a structured approach an individual applies to their own balance and development, separate from any organizational system.
A useful test: an executive board meeting to review strategy is strategic; monitoring overtime or deploying work activities toward individual objectives is individual; department restructuring based on established goals is operational; tracking your own steps per day is personal. Confusing these levels — running individual-level conversations with strategic-level tools, for example — is one of the fastest ways to make an EPM system feel disconnected from real work.
Why Employee Performance Management Matters
EPM earns its place in an organization when it changes behavior, not just when it produces a score. Done well, it:
Improves quality of work by defining clear expectations for each role
Brings better understanding of work processes, so employees know not just what to do but why
Aligns the efforts of each employee to corporate strategy, closing the gap between the boardroom and the desk
Reduces subjectivity in decision-making around pay, promotion, and development
Assures continuous learning and improvement of individual performance over time
That last point matters more than it looks. The same measurement activity can serve very different purposes: measurement for improvement and measurement for understanding your role build trust; measurement mania, measurement for control, and measurement for sanctioning erode it. Two organizations can run an identical KPI dashboard and get opposite results, depending on which of these purposes the dashboard actually serves.
The shift in communication style tracks the same divide. Annual evaluations built on one-way, unilateral, manager-to-employee communication tend to feel punitive. On-going performance discussions built on two-way, bilateral dialogue and feedback tend to feel developmental — even when they’re measuring the exact same KPIs.
The EPM Architecture
Employee Performance Management doesn’t function as one form or one meeting; it’s a set of connected building blocks that carry strategy down to an individual’s daily work and back up again as evidence.
At the top, the Strategic Plan at organizational level and the Operational Plan at functional level feed a Competencies Framework and a Behaviors Framework, both anchored in a formal Performance Management Policy.
Those frameworks, together with the job description, are used for establishing performance criteria — the objectives, KPIs, competencies, and behaviors an individual will be measured against — which in turn shape that person’s career plan.
Through the year, performance is tracked via an individual performance (IP) scorecard, a daily log, competencies and behaviors observations, and informal feedback — the raw material for the formal IP evaluation.
That evaluation feeds a development plan (linked to a training policy and training plan) and a set of reward-and-recognition decisions: a rewards policy, a pay-for-performance plan, succession management, and employee engagement.
Four levels sit underneath this architecture:
When this architecture is built correctly, a single employee’s daily task log can be traced all the way up to a strategic objective — and a strategic objective can be traced back down to the specific behaviors expected of the person doing the work.
The Employee Performance Management Cycle
At its core, the EPM cycle runs through five stages: planning, monitoring, developing, rating, and rewarding.
Performance setting meeting. The manager and employee set performance objectives, set development goals, and agree on the resources the employee will need. This is where standards get communicated and both assessor and assessed are prepared for what’s coming.
On-going performance evaluation. Through the year, actual performance is measured against the standards set. This isn’t a single event — it’s continuous monitoring, informal feedback, and course-correction.
Mid-year review. Results to date are discussed, formal feedback is given, and improvement opportunities are planned. Both manager and employee prepare for this meeting in advance. Its results do not influence the year-end evaluation — it exists purely to course-correct.
End-of-year appraisal. Past performance is discussed, potential is identified, and career path and development aspects are addressed.
Reward. When standards are reached, the cycle closes with recognition — tied to a rewards policy and, often, a pay-for-performance plan. When standards aren’t reached, the cycle instead produces improvement measures and feeds back into planning for the next cycle.
Underneath every step, four roles carry distinct responsibilities:
The manager discusses objectives, KPIs, and standards with the employee; aligns responsibilities; provides resources; evaluates performance and gives feedback; conducts appraisal meetings; and fills in scorecards.
The employee contributes to setting their own objectives and the methods to reach them, prepares self-evaluations, and contributes to setting their own development measures.
Senior management establishes business strategy, validates appraisal results, manages disagreements between employee and manager, and validates the decisions that come out of appraisals.
HR coordinates the administrative process and provides support and counsel to both sides.
Measuring and Rating Performance
Most EPM systems combine three inputs into a single performance score: results (KPIs), competencies, and behaviors. Two common ways to combine them:
Weighted average: KPI score × x% + Competencies score × y% + Behaviors score × z%, where x + y + z = 100% — for example, weighting results at 70%, competencies at 20%, and behaviors at 10%
Results themselves are usually scored against a target band — results meeting target (typically above roughly 95% of target), results in a tolerance interval (roughly 90–95%), and results far from target (below roughly 90%). Overall performance is then translated into a rating scale, commonly a five-point scale running from Unsatisfactory through Needs Improvement, Meets Expectations, and Exceeds Expectations, up to Exceptional. Competencies and behaviors are frequently rated on a similar five-point frequency scale (Never through Always).
These scores are also the raw material for talent-review tools like the 9-box grid, which plots current performance against future potential to guide succession and development conversations.
Running the Appraisal Meeting
The appraisal meeting is the most visible part of EPM, and also the part most likely to go wrong if it isn’t structured. A well-run meeting typically follows this shape:
Opening: create a positive climate, review the meeting’s objectives, and agree on its structure
Performance analysis: go topic by topic through results and appreciation, discuss causes and consequences, and only move to the next topic once agreement is reached — without negotiating the facts
Improvement initiatives: set concrete steps by mutual agreement, support the employee in achieving future performance, and put the agreement in writing
Useful questions to structure that discussion include how the employee reached their targets, what factors helped or hurt the results, how they assess their own performance, which competencies they used most (and least), and what they’d suggest to remove obstacles going forward.
Feedback quality inside that meeting matters as much as the structure. The research is blunt about the stakes: companies with regular employee feedback see meaningfully lower turnover, and highly engaged employees report getting feedback far more often than disengaged ones — while employees who are ignored by their manager are roughly twice as likely to disengage. Most employees say they want more feedback than they’re getting; most managers believe they’re already giving enough.
Good feedback, whether reinforcing or redirecting a behavior, tends to follow the same shape: describe the specific behavior, explain its impact, listen to the recipient’s reaction, and land on a concrete plan for what happens next. Vague praise (“you’re doing a great job, keep it up”) and personal criticism (“don’t you know anything about this?”) both fail for the same reason — neither one tells the employee which specific behavior to repeat or change.
EPM and Talent Management
Performance data doesn’t stop at the appraisal. It feeds directly into talent management: career planning, coaching and mentoring, internal talent mobility, succession management, and leadership development. An employee’s demonstrated competencies and results are the evidence base for their career plan and for whether they’re a candidate for succession into a more senior role. Succession management, in turn, protects the organization against the risk of losing critical knowledge and capability when someone leaves — building a pipeline rather than scrambling to fill a vacancy after the fact.
Common EPM Mistakes
A handful of failure patterns show up repeatedly:
Treating it as an annual event. A system built around a once-a-year form, with no on-going monitoring or mid-year check-in, turns into a post-mortem rather than a tool for real-time course correction.
One-way communication. Performance management delivered top-down, without dialogue, feels imposed rather than owned — and employees disengage from targets they had no hand in setting.
Measurement without purpose. When KPIs are tracked for control or sanction rather than improvement, the system breeds defensiveness instead of better performance.
Vague feedback. Praise or criticism that doesn’t name a specific behavior gives the employee nothing to repeat or change.
Disconnected levels. When individual objectives aren’t visibly linked to departmental and strategic goals, employees can’t see why their work matters — and the architecture that’s supposed to connect strategy to daily work breaks down.
No follow-through. An evaluation that doesn’t feed a development plan, a reward decision, or a career conversation is data collected for no purpose.
Most of these trace back to the same root problem: a system designed around administering a form, rather than around the ongoing manager–employee dialogue the form is supposed to support.
Frequently Asked Questions
What is the difference between performance management and a performance appraisal? The appraisal is a single meeting — usually the end-of-year evaluation. Performance management is the full cycle around it: planning, monitoring, developing, rating, and rewarding.
How often should performance be reviewed? Most modern EPM systems combine a formal planning meeting and a formal year-end appraisal with an interim mid-year review and continuous informal feedback in between — rather than relying on one annual conversation.
What’s the difference between a competency and a behavior in this context? Competencies are the skills and capabilities an employee brings to a role. Behaviors are how they’re expected to act day to day in pursuit of their targets, usually defined in an organization-wide behaviors framework that applies to all personnel.
Who owns the performance management process? Senior management sets strategy and validates outcomes, HR coordinates the administrative process and offers support, and the manager and employee jointly own the day-to-day objective-setting, tracking, and feedback.
How does EPM connect to pay? Through a pay-for-performance plan that’s explicitly linked to the individual performance evaluation — one of several outputs, alongside development plans, training plans, and succession decisions, that come out of a properly closed EPM cycle.
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Editor’s Note: This guide draws on the Certified Employee Performance Management Professional course curriculum (The KPI Institute, 2022) and the HR Performance Management System Toolkit (The KPI Institute, 2021).
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Whether you’re discovering these articles for the first time or revisiting them for fresh ideas, we hope this collection helps you tackle today’s performance challenges with greater clarity and confidence. If you have any questions or ideas for future articles, don’t hesitate to reach out: [email protected]
