Summary of Key Points
This article addresses the widespread issue of "performance anxiety" within companies and proposes the "Performance Role Hierarchy Theory" (divided into four levels: HR → Line Managers → Key Players → Top Leaders) as well as the "Performance Cognition Pyramid Model" (corresponding to four levels of understanding: Assessment = Performance → Strategic Execution Tool → Organizational Performance → Human Resource Ecosystem Solution). It argues that the increasing anxiety about company performance stems from a shallow level of performance awareness and a limited division of responsibilities. To solve this problem, companies need to move beyond the routine, transactional assessment focused on HR scoring to a higher-level performance management approach led by top leaders that emphasizes organizational ecology and long-term value.
Why Is Performance Anxiety Getting Worse? Because You Still View Performance as Simply Scoring Points
In many companies, performance management remains at its fourth level: HR is in charge of managing performance. This involves having HR specialists create templates, collect data, and calculate results, turning performance into a mere form-filling exercise. While this approach may work for factory workers on assembly lines, it is utterly ineffective for today's knowledge workers (such as programmers and designers):
- Employee Resistance: Good assessment results are seen as a reflection of their own effort, while poor results lead to the belief that the company is targeting them personally.
- Increased Costs: The time spent on communication and form filling around assessments is non-productive.
- Unmet Goals: Annual goals are frequently unachieved, and HR often becomes the scapegoat (for example, a smart driving startup changed its HR team six times in two years without resolving any issues).
Essentially, this approach treats the means as the end goal. Performance should serve to achieve objectives, but the current low-level practices deviate significantly from this purpose.
Who Should Be In Charge of Performance? The Four Levels Reveal It’s Not Just HR’s Job
Performance management involves four progressively more effective levels:
1. HR Management (Fourth Level): Transactional work that focuses on individual performance and is suitable for manual laborers but not for knowledge workers.
2. Line Managers (Third Level): Using the PDCA cycle (set goals → monitor progress → evaluate results → make improvements) to turn performance into a continuous management process. However, departments often focus only on their own tasks (for example, an administrative department may assess the number of documents printed), ignoring the company’s overall strategy, resulting in wasted effort with no value created.
3. Key Players (Second Level): Led by senior executives such as strategic and operational directors, this level focuses on implementing the company’s strategy—breaking down goals into departmental targets, holding management meetings to coordinate resources, and evaluating long-term contributions (not just short-term sales figures).
4. Top Leaders (First Level): The boss takes personal charge of building an organizational ecosystem: recruiting talent, setting strategies, driving change, allocating resources, and fostering a culture that aligns everyone’s efforts towards common goals. This represents the highest level of performance management.
The Four Levels of Performance Cognition: From Mistakes to Correct Understanding
Corresponding to these roles, companies’ understanding of performance also evolves in four stages:
1. Fourth Level: Performance = Assessment (a misconception): In the past, using assessments to break the equalitarian mentality was effective, but with the decline of the labor surplus, this method is no longer effective. Generations born after 1995 and 2000 place more value on the meaning of their work than just money.
2. Third Level: Performance = Strategic Execution Tool (a step forward but limited): While PDCA cycles can lead to improvements, they only result in minor optimizations and cannot foster breakthrough innovations (for example, phone manufacturers may optimize battery capacity but not develop foldable screens).
3. Second Level: Performance = Organizational Performance (a breakthrough): This level focuses on the company’s overall goals, recognizing that organizational performance is more important than the sum of individual achievements. For instance, a Chinese company that replaced imported products successfully changed its executive assessments from quarterly sales to annual and three-year targets, including indicators for product innovation and talent development, which significantly improved results.
4. First Level: Performance = Human Resource Ecosystem Solution (the highest level): Top leaders create a systematic approach that includes selecting the right people, setting the right strategy, allocating resources effectively, and building a culture that enables the organization to grow and continuously generate value.
Real-World Examples: Low-Level Performance Management Fails, High-Level Performance Management Succeeds
- Negative Example: A smart driving startup (fourth level) struggled with recruitment despite having HR handle assessments. Changing six HR team members did not solve the problem because the core issue—recruiting talent—is overlooked by management.
- Positive Example: A Chinese company that replaced imported products (second and first levels) adjusted its executive evaluations, shifting from short-term financial indicators to long-term value. The general manager viewed this as the greatest contribution to the company’s success.
These examples show that the effectiveness of performance management depends on who is in charge and how it is understood. Low-level approaches lead to internal strife, while high-level approaches solve problems.
The Right Approach to Performance Management: From Scapegoating to Building an Ecosystem
For performance management to be effective, companies need to:
1. Upgrade Management Roles: Shift the responsibility from HR to line managers and key players, with top leaders taking the lead.
2. Change Cognition: Move from assessing employees to building an organizational ecosystem that focuses on long-term value rather than short-term numbers.
3. Focus on Core Areas: Allocate resources to implementing strategies, developing talent, and fostering a culture, rather than simply filling out forms.
In summary, performance management is not about controlling employees; it’s about creating a system where everyone works towards a common goal. This is the true purpose of performance management.