Lloyds announced a performance management overhaul yesterday. Around 3,000 employees have been identified as ‘underperformers’ and face performance improvement plans. Not surprisingly, this is something that firms and regulators will be watching closely.
As someone who works with regulated firms on SMCR, culture and governance, I’ve seen a range of frameworks when it comes to ‘performance’, from ‘barely there’ to ‘brilliant’ and anywhere in between. For many firms, there are improvements to be made. I don’t personally have the details about the Lloyds’ framework but as I see it, this could go one of two ways. Lloyds could strengthen accountability and trust or risk employee disengagement.
Assessing a performance management framework means asking the right questions, so here are a few that you can use as a sense check to kick-off your own review:
What’s the definition of ‘high performance’ in our firm?
What are our key drivers and root causes of underperformance?
Are performance measures applied consistently across all roles and teams, at every level?
Are the KPIs being used to measure performance in line with regulatory expectations (consider the Consumer Duty for example)?
Is it clear to everyone, at every level, what they need to do to achieve high performance?
How are employees supported before being placed in the ‘underperforming’ cohort?
We know that ‘performance’ and ‘incentives’ are on the regulatory radar, with incentives being one of the FCA’s 4 Drivers of Culture. Performance management can be a positive tool to support culture change but it’s key to remember that it tends to work best when it’s focused on behaviours and outcomes rather than short-term outputs.
It’ll be interesting to hear how other firms are thinking about “high performance” within the regulatory space as this story pans out.