Decentralized Leadership: Performance management a pre-requisite to success

Performance management is a strong foundation

For decentralized leadership to be effective, good performance management is non-negotiable. If people don’t have a clear structure to evaluate what “good” performance looks like, and a mechanism to learn and adapt, they will fail. Without defining what “good” and “excellent” outcomes are, work will also seem to be missing the mark.

That’s not to say every performance management framework looks the same, it must be customized and flexible for different teams and organizations. It needs to set the priorities, have clear measures of success, while providing people with autonomy to use their knowledge, experience a

A good performance management framework is a system that clearly outlines what needs to be achieved by an organization, its teams, and every person within it. It's designed to guide everyone toward a common purpose while allowing flexibility in how these goals are reached.

Here's what effective performance management requires in terms of process:

• Clearly Defined Goals: The framework sets specific objectives for employees, teams, and the organization as a whole. These goals are detailed, with clear timeframes for achievement. They align with the broader mission of the company, ensuring everyone is working towards the same purpose. When something goes wrong, people can make decisions about how to proceed because they understand what they’re trying to achieve.  With a clear framework and exceptionally communicated mission, people can work with high degrees of autonomy.
• Continuous Process: Rather than relying on an annual review, a combination of informal and formal processes happen throughout the year. Regular check-ins and discussions happen between teams and managers. Minor issues can be resolved over telephone conversations, Zoom calls or text-based chats. The communication medium will match the importance and urgency of the issue. Objectives can be adjusted as needed throughout the year to respond to changes within the company or the market, ensuring the framework remains relevant and targets are broadly achievable within specified timeframes.
• Defined Success Criteria: While goals are specific, the framework is flexible in how these objectives are met. Success criteria are clearly laid out, but individuals and teams have the autonomy to decide how best to achieve their targets. Even when teams are highly distributed, there must be clearly scheduled and structured times set out for teams to meet, review progress and to understand what others and the team are trying to achieve.
• Individual-Driven with Managerial Oversight: Employees take the lead in driving their performance within the framework, setting personal targets and identifying paths to success. Line managers provide oversight, support, and input, ensuring goals align with overall business objectives and helping overcome any barriers or connecting people with others across the organization.

Ultimately, the success of the entire system relies on trust and respect for people’s work and contribution across different areas and teams. Trust takes time and deliberate effort to build. Poor communication, misunderstandings and lack of clarity can destroy trust across teams remarkably quickly: sometimes people undermine others’ efforts or create problems simply because they don’t know or understand what their co-workers are trying to achieve.

It's important to respect others’ contributions and efforts, but it’s also essential to understand what they’re trying to do and why. In environments where individuals are trusted to make decisions and are respected for their contributions, there is typically higher motivation, greater innovation, and more effective collaboration. These conditions lead to improved outcomes, as employees have the practical, social and motivational support to get their work done effectively, using their expertise and autonomy.

The results are of decentralized leadership, done well, should be to give people the support to their job well, without being micromanaged or coddled into learned helplessness.

1. Reducing of Micromanagement: The distribution of decision-making authority under decentralized leadership discourages micromanagement. All employees should have key points of contact, and support when needed, alongside the autonomy and trust to get their work done in the way that is most productive for them. This requires respect for the competence and contributions of each individual.
2. Accountability at All Levels: Decentralization means distributing decision-making power and accountability across all levels and roles within an organization. The clear definition of responsibilities and expectations maintains accountability but does not remove responsibility from those in a leadership position.
3. Bilateral Feedback Mechanisms: Encouraging open feedback across all levels can enhance learning opportunities and innovation. But it should not be a free-for-all. Feedback still needs to be structured and managed, provided at the right time, in the right environment for constructive reasons. Blame and scapegoating is not an effective feedback mechanism. Conflict will always arise, and in high-functioning teams there will be different ideas about the best methods and courses of action. The challenge is finding ways to discuss different options, learn from mistakes and take collective responsibility for decision-making and its’ outcomes.

A well-structured performance management system is essential to effective decentralized leadership, especially in distributed teams. Decentralizing decision-making power requires a higher degree of accountability alongside autonomy. It requires a common performance framework that is used by everyone, but flexible enough to be used by people in vastly different roles trying to accomplish very different (but complementary) objectives.

A culture of active, honest and timely communication is vital for the success of decentralized leadership. Autonomy should not lead to isolation, but an understanding of which tasks can be completed independently and what objectives are best achieved through teamwork. An excellent performance management system is a pre-requisite for that success.

References

Scheuer, C. Voltan, A., Kumanan, K., & Chakraborty S. (2023). Exploring the impact of decentralised leadership on knowledge sharing and work hindrance networks in healthcare teams. Journal of Management & Organisation, 29, 139-158.

MacRae, I., & Sawatzky, R. (2020). What makes a high-potential remote worker? HR Magazine. https://www.hrmagazine.co.uk/content/features/what-makes-a-high-potential-remote-worker/