In an evolving workplace, there is a growing trend suggesting end-of-year performance reviews are no longer effective. To remedy this, some companies have decided to utilize software to improve their process. Other companies have elected to eliminate reviews altogether. What is the most effective performance management approach?
Performance reviews are often the subject of much scorn and mockery in the corporate world. In my 15 years of consulting with dozens of clients, I’ve only encountered ONE that actually considered their performance management process to be integral to employee development, and truly valuable to their company. For the rest, it was a forced exercise that did not appear to be linked to results, aside from bitterness and regret. According to a Deloitte Insights survey, 58% of the companies polled reported that they view their current performance management process as not being an effective use of time and only 8% reported that their process drives high levels of value. Why is this?
Performance reviews are almost always linked to compensation.
Reviewees are motivated to score themselves as highly as possible in order to secure the best possible raise for themselves. Reviewers (the managers) are pushed by the company to average out the performance rating across all individuals in a given cost center. So, for every employee considered “exceptional”, there must be one considered “underperforming”. It’s a terrible trade-off, and one that often pits managers against staff. I’ve actually had a boss ask me if I’d be OK with a sub-par rating, because he really needed to give a large raise to my co-worker in order to keep him from quitting.
In order to make performance reviews effective, the direct link between reviews and compensation must be broken. This is the only way to create an environment for an honest conversation, where employees do not have to feel like they’re fighting for dollars and cents. Secondly, managers should be coached on how to provide effective feedback to employees. It’s not easy, and many managers will do anything to avoid an awkward conversation. Lastly, performance feedback should be provided on a regular basis, at least once per quarter. If you wait until the end of year to provide feedback on annual objectives, it’s way too late to correct course.
Only one of my bosses throughout my career actually cared enough to provide me with constructive feedback, during performance reviews, that I could use to improve my performance. I truly valued the insightful feedback he provided. Of the others, some were not involved enough with my work to be able to provide feedback, and the rest – well, I guess they just didn’t want to get into it. I know I would have appreciated it and felt more valued as an employee, if they had.
Fortunately, I am a deeply experienced manager with a track record of motivating and developing difficult employees. I know exactly how to create a team of world-class employees with outstanding engagement scores. So learning from the workplace I have put in place an annual performance review at home.
I love my wife very much, she is funny, clever, tolerant and — if I say so myself — very pretty. But when it comes down to domestic chores there are a few things she really could do better at, things that would dramatically improve her output and also increase her sense of work life balance.
It was important that I did this properly, I spent many hours researching my wife’s performance and crafting a review. My relationship is important to me, so I have done it by the book, I:
- Sought out 360 degree feedback, consulting neighbours and children
- Made sure the evidence I used was specific and to the point
- Catalogued her strengths (of which there are many) first
- Captured a few clear weaknesses development areas for her to work on
Her review reads like this:
Annual Performance Appraisal Manager: James Lawther Employee: Christine Lawther Role: Wife Key Skills and Competencies 1. Focus on Results: Below Average Strength – Action focus: Proven capability to cook amazing meals during visits from your parents. B. this strength could be leveraged by cooking amazing meals when your parents are not visiting. Development – Attention to Detail: On 3 separate occasions in the last week I have had to empty the washing machine and load the tumble dryer. This is a task for which I am not responsible as it is contained within your job description (wife). Development – Completing and Finishing: Constantly distracted by fighting children whilst trying to complete simple jobs e.g. ironing. You need to develop your multitasking ability. 2. Influencing Ability: Good Strength – Presentation: Very good at assuring me of the business case behind an investment in an expensive skiing holiday Development – Influencing Junior Staff: Repeatedly have to shout at children in an effort to get them out of the house in time to get to school. This is a particular problem with the 15-year-old daughter. 3. Communication Skills: Below Average Strength – Feedback: Ability to provide strong and timely feedback to me about my personal habits, specifically in relation to nocturnal activity and time keeping. N.B. there is a risk that this strength could become overplayed. Development – Instruction: Your map reading ability is less than perfect. We have repeatedly found ourselves lost in large cities because of your inability to communicate clearly and concisely. Unfortunately last year’s investment in satellite navigation technology this has not improved performance. Overall Rating: Below Standard The Performance Conversation The meeting I arranged with my wife to discuss her performance didn’t go nearly as well as I had hoped. My wife was withdrawn and I don’t believe she was really listening. She was very focused on the overall rating and we didn’t have a value adding conversation about the developmental feedback I had collated. My “active listening techniques” fell on deaf ears. Her demeanor was downright chilly until we discussed her annual pay rise. Then she warmed up quite dramatically. Pay for Performance I’m a big believer in linking performance appraisals to performance pay, nothing focuses attention in quite the same way as money. As I want my wife to be motivated to improve she needs to understand the consequences of poor performance. As evidenced in her appraisal her performance was below standard, so I had little choice but to hold her house keeping money at a constant level. If I had increased it I would have been accused of favoritism. When I explained this to her, my wife had the audacity to suggest that many of the things I discussed were outside of her control. She then become quite defensive and told me that I was equally accountable for household performance. A Waste of Time I won’t try another appraisal round next year. My wife wasn’t remotely grateful for all the time and effort I put into it. Instead I think we might just have a chat every now and then about the children. It might be more productive.
A Simple Question
If performance appraisals go badly at home, why on earth do we think they will go well at work?
Ted Hessing
The Science of Encouraging High Performance
We humans are funny creatures. We don’t always act in our own best self-interest. And when we get into groups we don’t always make better decisions. Sometimes we build entire organizational practices that are nonsensical, counterproductive, anachronistic, and/or that we ourselves would not want to be subject to. Case in Point; Performance Management.
let’s take a user perspective rather than a managerial perspective. After all, they should be the same thing, right? It’s always a good idea to start with the client in mind and, under this perspective, the contributors we are seeking to encourage to high performance would be our clients. This perspective can be best understood by the concepts of Servant Leadership. Here’s an overview of servant leadership if this term is new to you.
What’s My Motivation?
Most performance management techniques revolve around 2 axis; rewards or penalties. On the rewards side we can call it salary, bonus, compensation, or whatever. But generally people are incentivized to high productivity via rewards. The flip side are penalties which could range from reduction or absence of rewards to reduced or eliminated security, status, and stability.
But is that carrot and stick approach the best system to use? Turns out the science says ‘no.’
Autonomy, Mastery, and Purpose
In Daniel Pinks excellent book Drive: the Surprising Truth About What Motivates Us (and eponymous TED Talks), he reveals that the research say unequivocally no. Rather than re-state Pink’s message (see above 10 min video for a great overview); Rewards don’t work the way you’d expect them to.
It turns out that after a certain amount of compensation, rewards are actually counter-productive in terms of increasing performance in any endeavor requiring a modicum of cognitive skill. After that magic level of compensation, people require other attributes to be present in order to Got that?
In other words, if you want higher performance, you have to pay people enough where they aren’t worried about money but then you have to enable 3 other key attributes; autonomy, mastery, and purpose.
Thus,the overwhelmingly most popular way of incentivizing performance, reward vs penalty, is wrong. if you want to maximize performance, it turns out that you must optimize for motivation.
So, how does one do that? What’s the right way to handle performance management? If rewards are wrong (or at least only part of the story), then it seems we’d best change our performance management process to the other key factors Pink identifies; Autonomy, Mastery, and Purpose.
Let’s take each one step by step.
Purpose
Per Pink, Purpose is each team member being able to say “I know why I am here and what I contribute with (as an individual or as a team)” How do we maximize a sense of purpose? So, as managers with a strong background in quality and strategic deployment techniques seeking to maximize performance, how do we maximize a sense of purpose?
I like Simon Sinek’s approach of ‘Start with the Why. Again, if you haven’t seen this Ted talk, you’re missing out.
To my mind, conveying Why is all about alignment. Alignment between the strategic direction of the company and the front-line personnel executing the vision. Some techniques quality leaders can use that we can use to achieve, communicate and measure that alignment are:
If we want to maximize performance management, it behooves us to make the alignment of why behind what people are being asked to do explicitly clear.
Often, when we make that alignment clear we find that much of the resources of time, talent, and energy that people are currently expending
are in pursuit of things that don’t matter or don’t matter as much as other goals they could be working towards. And that is clearly a waste.
Mastery
If the next attribute in results is Mastery, then it makes sense to incorporate this into our performance management techniques. How can we best help people pursue and achieve mastery of their professions?
Some tools we can use to monitor and maximize mastery are visual management principles and gauge R&R techniques. Perhaps the two that I like best are Skill Matrix boards – an excellent
visual management of team skill mastery and credibility as described by Ray Dalio in Principles. However, there are countless adaptations of each that we can apply to skill acquisition.
Also, it is helpful to recognize that every member of a company has a profession (what they do) and an industry they perform it in (where they do it.) It makes sense from a performance management standpoint to help contributors to develop a strong understanding of both the skills and context for their role and their industry at large. T shaped employee management is an excellent framework for this/
Autonomy
Now that we’ve addressed how to manage clear alignment and skill acquisition – the why’s and what’s of a role – let’s move on the how’s.
Again Pink helped us by illustrating how autonomy and empowerment are crucial pieces of the performance management puzzle. And we helped ourselves by showing the alignment of the highest strategic goals of the company
Now, autonomy is scary for many managers. To overcome this hurdle we could use a ‘trust but verify’ model of cascading dashboards and assigning responsible parties for work streams. And the autocratic manager will be happy with this. But autocratic leadership has it’s limits.
Sources: Business Case Studies and Cleverism
Perhaps the best way to encourage autonomy to meet our desired performance management goals is to favor the empowerment of a Team of Teams model such as the ones favored by General Stanley McChrystal (and others) in his book Team of Teams.
Autonomy is best served by employee empowerment. There is a link between employee desire to participate on autonomous teams and having a significant sense of ownership in team outcomes. Simply put, members of autonomous teams desire the ability to make decisions in an entrepreneurial climate without too much managerial interference. And arguably employee empowerment is best achieved through managers leading by illustrating a clear vision and then getting out of their way.
Bringing it All Together
As leaders it is important for us to recognize that performance management is itself a process. It’s subject to an equation Y=f(x) where f(x) is often more complex than we think. But fortunately, like any other process, it can be measured, faults found, and hypotheses tried, tested, and improved upon.
As a Baldrige Examiner, I like to begin my roundtable discussions with a review of the Baldrige Criteria. Category 5 of the Criteria focuses on the Workforce. The Workforce category asks how the organization assesses Workforce Capability and Capacity needs and builds a workforce environment conducive to Engagement and High Performance. The Baldrige Criteria defines High Performance as ever-higher levels of overall organizational and individual performance, including quality, productivity, innovation rate and cycle time.
High performance results in improved service and value for customers and other stakeholders. High performance stems from and enhances workforce engagement. Some characteristics about workforce high performance:
- It involves cooperation between management and the workforce; cooperation among work groups and teams; empowerment of employees and building personal accountability.
- It may involve learning to build individual and organizational skills; creating flexible job design; decentralized decision making and making decisions closest to the front line.
My career experience, and observations of applicants to state and national quality programs using the Baldrige Criteria has revealed six key processes necessary to effectively encourage high performance:
- A Formal on-boarding as part of the New Employee Orientation process
- Providing immediate, open and honest feedback
- Regular, periodic “pulse” surveys to measure employee satisfaction and engagement
- Frank, two-way skip-level meetings between management and its people
- A Career Pathing process to manage employee progression
- A Learning & Development System that supports organizational needs and employee development
- Systems & Structures supporting compensation, benefits and policies, rewards, recognition, as well as incentives to encourage continuous improvement, intelligent risk-taking, innovation and customer focus.
For more information about these key business and workforce processes, I highly recommend learning about the Baldrige Excellence Framework and attending Baldrige Evaluator training.
The post What is the Most Effective Performance Management Approach? appeared first on Quality in Mind.
Also appeared on Quality in Mind http://asq.org/blog/2018/12/what-is-the-most-effective-performance-management-approach/
Compilation Services 