Who Killed Performance Management
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A presentation exploring ratings in performance management, prepared for and presented at the 2015 UK Annual E-Reward Conference. Were my predictions correct and is there still a debate to be had?
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Who Killed Performance Management
- 1. WHO KILLED PERFORMANCE MANAGEMENT? David Chambers RewardTalk Ltd. Š RewardTalk Ltd. 2015
- 2. The TQM PoV Who killed Performance Management? âThe performance appraisal nourishes short-term performance, annihilates long-term planning, builds fear, demolishes teamwork, nourishes rivalry and politics ⌠it leaves people bitter, crushed, bruised, battered, desolate, despondent, dejected, feeling inferior, some even depressed, unfit for work for weeks after receipt of rating, unable to comprehend why they are inferior. It is unfair, as it ascribes to the people in a group differences that may be caused totally by the system that they work in.â The Merit System: The Annual Appraisal: Destroyer of People W. Edwards Deming Š RewardTalk Ltd. 2015
- 3. Features of Performance Management Who killed Performance Management? ⢠Positioned as a business owned and business run process, with support from HR ⢠Provides alignment and clear line of sight between individual objectives and company purpose and goals ⢠Objectives for performance results as well as development with agreed measures of success ⢠The process is continuous throughout the year ⢠The Manager Review remains an important event in the cycle â as too do self review and colleague feedback as inputs to this ⢠Performance assessment remains a feature with feedback used help control, sustain and improve performance ⢠Development of the individual is of equal importance ⢠Dialogue is at its heart. Š RewardTalk Ltd. 2015
- 4. Whoops! Who killed Performance Management? Š RewardTalk Ltd. 2015
- 5. A time of trial, error and success Who killed Performance Management? Š RewardTalk Ltd. 2015
- 6. A time of trial and significant change Who killed Performance Management? Respondentsâ plans for updating performance management systems Graphic: Deloitte University Press. Š RewardTalk Ltd. 2015
- 7. Global Human Capital Trends 2014 Who killed Performance Management? HR executivesâ assessment of performance management Graphic: Deloitte University Press. Š RewardTalk Ltd. 2015
- 8. Global Human Capital Trends 2015 Who killed Performance Management? Respondentsâ evaluation of their performance management process Graphic: Deloitte University Press. Š RewardTalk Ltd. 2015
- 9. Generation Y are unique Who killed Performance Management? ⢠By 2025 Gen Y will make up about 75% of workforce ⢠Intend to leave their employer within one or two years of joining ⢠Independent and resistant to micro-management ⢠Strong appetite for feedback and coaching ⢠Not so good at face-to-face communications, but very comfortable with technology and social networking ⢠Tendency toward over-confidence with a strong sense of entitlement Š RewardTalk Ltd. 2015
- 10. YEAR 2003 2010 2015 2020 WORLD POPULATION 6.3 billion 6.8 billion 7.2 billion 7.6 billion CONNECTED DEVICES CONNECTIVE DEVICES PER PERSON 0.08 1.84 3.47 6.58 Interconnectivity is on the rise Who killed Performance Management? 500 million 50 billion 25 billion 12.5 billion More connected devices than people Adapted from Gartner.com Š RewardTalk Ltd. 2015
- 11. Performance management defined Who killed Performance Management? âPerformance management is the term used to refer to activities, tools, processes, and programs that companies create or apply to manage the performance of individual employees, teams, departments and other organizational units within their organizational influence.â Wikipedia, 10 June 2015 âPerformance management is the continuous process of improving performance by setting individual and team goals, which are aligned to the strategic goals of the organisation, planning performance to achieve the goals, reviewing and assessing progress, and developing the knowledge, skills and abilities of people.â Michael Armstrong Armstrongâs Handbook of Performance Management, 5th Edition, 2015 Š RewardTalk Ltd. 2015
- 12. Managers â Do not forget the team Who killed Performance Management? 1 + 1 = 2 simply co-ordinating individual members of a group will never equal more than two 1 + 1 = 3 (or more) expresses the synergy of a high functioning team âA team is a small number of people with complementary skills who are committed to a common purpose, performance goals and approach for which they hold themselves mutually accountableâ Katzenbach and Smith, 1993 Š RewardTalk Ltd. 2015
- 13. Managers â Do not forget the team Who killed Performance Management? 1 + 1 = 2 simply co-ordinating individual members of a group will never equal more than two 1 + 1 = 3 (or more) expresses the synergy of a high functioning team âA team is a small number of people with complementary skills who are committed to a common purpose, performance goals and approach for which they hold themselves mutually accountableâ Katzenbach and Smith, 1993 Š RewardTalk Ltd. 2015
- 14. HRâs assumptions on PM Who killed Performance Management? 1 People like to have performance ratings 2 It is primarily the managerâs responsibility to manage for performance 3 Performance management needs to be done in the same way, at the same time, for all employees, right across the organisation 4 Performance ratings are a reasonable basis for determining pay outcomes, performance terminations, promotions and progression opportunities and for identifying our top talent Š RewardTalk Ltd. 2015
- 15. ⢠10,000 employees in 2012 â 13,000 today ⢠In 2011 Adobe estimated that Managers spend 80,000 hours on PM ⢠Had tried to realign and make incremental changes for five years and failed to satisfactorily align to needs for collaboration, creativity and innovation ⢠âGenuine, Exceptional, Innovative and Involvedâ â Adobeâs founding values ⢠Super-competitive industry Background Š RewardTalk Ltd. 2015
- 16. ⢠No ratings, no prescribed format, no forms, no PM technology âsystemâ ⢠Manager and employee âcheck insâ ⢠No annual review required ⢠Check in: Expectations, Feedback, Growth and Development agenda ⢠Frequency â whenever is sensible â frequent, and at least quarterly ⢠Employee support centre established ⢠Extensive training support for managers â role play, lectures and online ⢠Managers manage pay outcomes and allocated budgets â entirely! ⢠Regular pulse survey provides insights on decisions and impact ⢠Managers able to define their own process and HR supports ⢠2% top talent â Are they in, or are they not? The changes Š RewardTalk Ltd. 2015
- 17. ⢠Voluntary turnover down 30% in two years; managed turnover up ⢠Employee engagement up ⢠Fear of feedback â gone ⢠Frequent feedback is the new currency for employees and managers ⢠Demand for training on coaching others, difficult conversations, mentoring, career development and managing reward, up ⢠Focus on process, chasing numbers and ratings, wiped out ⢠Belief in changes being real and aligned to values, through the ceiling ⢠Regularity of âcheck-insâ, in reality â average of one a month per employee ⢠Manager knowledge of performance of an individual, value to Adobe, aspirations and intentions at point of making reward decisions â significantly greater than ever before The results Š RewardTalk Ltd. 2015
- 18. Trends Source: www.glassdoor.com. Š RewardTalk Ltd. 2015
- 19. ⢠100,000 Employees in 2013; 118,500 today ⢠Rank and yank approach was damaging morale ⢠âIf you were on a team of 10 people, you walked in the first day knowing that, no matter how good everyone was, 2 people were going to get a great review, 7 were going to get mediocre reviews, and 1 was going to get a terrible reviewâ ⢠âEvery current and former Microsoft employee I interviewed â every one â cited stack ranking as the most destructive process inside of Microsoft, something that drove out untold numbers of employees.â Background Š RewardTalk Ltd. 2015
- 20. âUnder the old guard, the review system caused competition among peers who should have been working together. Smart employees found a manager they could trust and rode that pony.â Pros and cons âWork life balance can be very badâ âThe performance review system is brokenâ âStack ranking still happens in many groups â just not âofficialââ âReview process favours those who play political gamesâ âBig company means plenty of red tapeâ Source: www.glassdoor.com. Š RewardTalk Ltd. 2015
- 21. The hangover from school days Who killed Performance Management? When we give a rating, we can easily fall into the trap of importing our school report expectations into our business lives. Š RewardTalk Ltd. 2015
- 22. ⢠Narrows the focus to a justification of the rating by the manager ⢠Biases PM to assessing and rating past performance ⢠Provides a veneer of objectivity over what is subjective ⢠Ratings are an outcome of the assumption that to make people perform better, you need to measure them and point out their weaknesses ⢠Hijacks the brain by triggering a fight or flight response ⢠People want their manager to help them improve, not judge ⢠The manager is often unable to observe work and behaviours ⢠The rating âjudgmentâ is typically yearly â recollection of performance âinstancesâ change over time ⢠The âappraise and rateâ process works against inspiring and motivating ⢠Ratings are a crutch for managers, HR, and especially reward The case against performance ratings Who killed Performance Management? Š RewardTalk Ltd. 2015
- 23. ⢠The manager provides the context, setting out the organisation and business units immediate priorities, medium term goals, strategic direction and longer term aspirations ⢠The team synthesises these inputs and identifies ways of working, team goals and priorities that effectively contribute to the attainment of business goals ⢠The individual to know and agree their contribution to the team goals and to hold team members accountable and be held to account by that team It is not the managerâs responsibility Who killed Performance Management? Š RewardTalk Ltd. 2015
- 24. Different roles require different thinking Who killed Performance Management? DEGREEOFCONTROL IMPACT ON COMPANY RESULTSLow High High Cashier IT Helpdesk Security Officer Risk Analyst Branch Manager Treasurer Procurement Manager Events Planner Resourcing Leadership Development Equities Trader Group ExCo Member Adapted from Towers Watson Spring Conference, March 2014. Š RewardTalk Ltd. 2015
- 25. Why do we hold on to ratings? Who killed Performance Management? ⢠To identify and classify our top, bottom and âalso ranâ performers ⢠To help identify future talent for progression and promotion ⢠As a basis for feedback and a common language way of describing a persons performance â the âwhatâ and the âhowâ ⢠To give visibility around performance attainment and development needs ⢠So we can differentiate on pay outcomes ⢠So we can defend terminations for low or non performance Š RewardTalk Ltd. 2015
- 26. Life without ratings Who killed Performance Management? Performance conversations and reviews conducted without the need of a rating, will do three immediate things: â˘de-clutter the conversation and allow a positive focus around goals, observed performance, feedback and pathways to performance progress â˘remove the anticipation of fight or flight responses and open up more constructive neural pathways from the right side of the brain â˘help to fuel a belief that it is always possible to grow Drop in a performance rating, and academic, management and neuro- science research will consistently tell you that this will all close down. Š RewardTalk Ltd. 2015
- 27. The nine box grid Who killed Performance Management? PERFORMANCELow High ENIGMA High potential to advance further, although underperforming May be in wrong job/wrong manager; needs intervention FUTURE LEADER Highest potential â best for senior succession Top talent â reward, recognise, promote, develop POTENTIALHigh Source: CG Consulting Group GROWTH EMPLOYEE Demonstrates high potential to advance further Valued talent â challenge, reward, recognise, develop UNDERPERFORMER Has reached job potential and is underperforming Performance manage or exit TRUSTED PROFESSIONAL Specialised or expert talent, reached career potential Retain, reward, help with developing others EFFECTIVE Specialised or expert talent, reached career potential Engage, focus, motivate DILEMMA Likely to have scope to move one level Challenge is necessary as underperforming; provide coaching HIGH IMPACT PERFORMER Strong contributor Challenge, reward, grow and motivate CORE EMPLOYEE Motivate, engage and reward Š RewardTalk Ltd. 2015
- 28. What about pay for performance? Who killed Performance Management? Š RewardTalk Ltd. 2015
- 29. What about pay for performance? Who killed Performance Management? Š RewardTalk Ltd. 2015
- 30. What does the manager intend? Who killed Performance Management? ⢠Is this person at risk of low performance, or being below expectations? ⢠Should we be looking to exit this person? ⢠If you were looking to employ this person into your team, knowing what you know now, would you still employ them; i.e. do you want them in your team? ⢠Would you see this person as a candidate for promotion or significant progression in next 12 months? ⢠Are we in danger of losing this person to a competitor? ⢠Beyond pay, what else are you, as the manager of this person, intending to do in order to build this personâs value to our organisation? Š RewardTalk Ltd. 2015
- 31. Assumptions unfounded Who killed Performance Management? Performance ratings are a good thing because people need this simplicity to understand what their employer thinks of them and what they do and how they stand as against others, or against performance standards. It is the managerâs responsibility to manage for performance Performance management needs to be done in the same way, at the same time for all employees, right across the organisation Performance ratings are a good basis for determining pay outcomes, performance terminations, promotions and progression opportunities and for identifying our top talent Š RewardTalk Ltd. 2015
- 32. Performance management choices ⌠and what do we do now? Quarterly reviewAnnual review On demand or agreed check-in, review and talk Ratings with distribution guidelines Performance ratings with forced ranking No ratings Peer feedback to manager Manager feedback and appraisal Open feedback to employee and manager Self review to manager Peer feedback direct to employee HR supports manager to run PM within policy frameworks HR specifies PM policy and process and timing HR supports manager and employee to agree process Š RewardTalk Ltd. 2015
- 33. Performance management choices (cont.) ⌠and what do we do now? Focus equally on performance and employee development Focus on performance results Focus on development and career progression Performance commentary covers all aspects of performance and highlights weaknesses I must achieve across the board Performance conversations focus in on areas of strength, learn from these and reduce opportunities for weakness The business is the perfect tableaux for me to discover and refine my strengths and make a difference Focus on performance âwhatâ and âhowâ Focus primarily on performance improvement and development Š RewardTalk Ltd. 2015
- 34. Performance management choices (cont.) ⌠and what do we do now? Performance outcomes tight wired to pay outcomes; i.e. X = Y Reward decision made based on market, value to company and manager intention â not formulaic Bespoke PM kit, configurable for the organisation, but probably not the team or individual Central technology PM system with associated locks and gates Software solutions that enable shared goal setting, social style feedback and interaction, real time communications, access to learning and collaborating, accessible from anywhere in the world ⌠without dictating process Discretionary ranges based on performance outcomes Š RewardTalk Ltd. 2015
- 35. 1 Break the distribution curve â just stop doing it 2 Reducing and ceasing of performance ratings altogether 3 Better integration of performance and talent management to arrive at âpeople managementâ built around performance partnerships 4 Managers rewarded on their ability to grow talent, rather than just utilize and use it 5 A move away from HR prescription about PM policy and process in favour of performance frameworks and guiding principles 6 A considerably stronger expectation on the employee and manager being equal partners in the process 7 Better timeliness of feedback â real time, less formal and on-going from daily performance witnesses 8 Re-emergence of the âteamâ as being core to lifting performance and inspiring people The emerging features of tomorrowâs PM ⌠and what do we do now? Š RewardTalk Ltd. 2015
- 36. 9 Less formality, less forms and better conversations, leading to deeper performance insights and stronger development focus 10 Stronger focus on training managers to improve team and individual performance and better understand how to make active reward decisions 11 A pulling back from broad-based annual bonuses based on individual performance, better use of base pay structures, reflecting market and value, and better alignment of variable pay to company profits 12 A continued broadening of reward â recognition, progression, development, projects, pay and incentives are all part of the reward mix; i.e. the mix of intrinsic and extrinsic reward considered at the same time 13 The emergence of pay approaches that do not require or rely on a performance rating 14 Experimentation with social PM feedback and breakdown of most âour way is the only wayâ PM platforms peddled today The emerging features of tomorrowâs PM ⌠and what do we do now? Š RewardTalk Ltd. 2015
- 37. References, good reads and listens! Provider or Author Online resource Comment Josh Bersin https://www.linkedin.com/pulse/corporate-talent-management-dead-josh-bersin https://www.linkedin.com/pulse/20130504141046-131079-time-to-scrap-performance-appraisals A insightful view of priorities and directions in 2015 â from integrated talent management to people management. Josh Bersin on LI â check out his blogs, this one is pretty good CIPD http://www.cipd.co.uk/hr-resources/factsheets/performance-management-overview.aspxCIPD Fact Sheet on PM Reviewsnap http://www.reviewsnap.com/documents/white_papers/Reviewsnap_-_The_Truth_About_Performance_Appraisals.pdGood article expunging the myth that companies are eliminating PM http://www.reviewsnap.com/white-papers.cfm Series of PM and Appraisal âwhite papersâ freely available to get the juices flowing Towers Watson: Angela Paul and Rich Veal http://www.towerswatson.com/en-GB/Insights/Newsletters/Europe/HR-matters/2015/02/Tomorrows-world-talent-stratConcise section on âTomorrowâs worldâ and a couple of case studies Š RewardTalk Ltd. 2015
- 38. References, good reads and listens! Provider or Author Online resource Comment JSB Online learning consultants http://www.jsbonline.com/knowledgebank/post/173/performance-management-administrative-burden-or-leadership-oReinvigorating PM HRmagazine UK Is it time to give up on performance appraisals Easy blog with easy to digest thoughts â a few years old now Business Insider http://www.businessinsider.com/stack-ranking-employees-is-a-bad-idea-2013-11?IR=TWorth a read HR Bar tender http://www.hrbartender.com/2013/recruiting/separate-merit- increases-from-performance-reviews/ Explores purpose of PM and why we link to pay 7Geese https://7geese.com/abolishing-performance-appraisals/ Insightful blog around assumptions underpinning PM Ted Talks http://www.ted.com/talks/dan_pink_on_motivation?language=en You have already seen this - 13.6 million views to date. If not watch this video, see what you think. What social science knows and what business does are two different matters. Entertaining, provocative and linked to research you can check put yourself Š RewardTalk Ltd. 2015
- 39. References, good reads and listens! Provider or Author Online resource Comment Deloitte University Press http://dupress.com/articles/hc-trends-2014-performance- management/ PM is broken with useful end notes for sources http://dupress.com/periodical/trends/human-capital-trends-2015/ Free to download latest research from Deloittes â insightful stuff that builds on the pervious years (2014) report Harvard Business Review https://hbr.org/2015/04/reinventing-performance-management Deloittes case study as reported in HBR April 2015 â useful read and references Spark the change http://2015.sparkthechange.ca/3-alternatives-to-performance- reviews/ Spark the change is a nice web site! This article is a different take on PM â worth a brief review Peter Bregman http://peterbregman.com/?s=Performance+management Peter Bregman â good, easily digestible and robust insights around PM Š RewardTalk Ltd. 2015
- 40. References, good reads and listens! Provider or Author Online resource Comment Centre for Effective Organizations http://ceo.usc.edu/pdf/G12-10.pdf âPerformance management and reward systemsâ 2012 paper from Lawler, Benson and McDermott Chartered Management Institute www.managers.org.uk/management2020 In 2013, the All-Party Parliamentary Group on Management (APPGM) decided to investigate how management and leadership in the UK will need to change by 2020 to deliver sustainable economic growthâŚ. Download the report and read cover to cover, or dip into â but have a look! Š RewardTalk Ltd. 2015
- 41. RewardTalk Ltd. REWARD PERFORMANCE COMMUNICATIONS 0781 2015076 david@rewardtalk.com Š RewardTalk Ltd. 2015
Hinweis der Redaktion
- I worry that we have collectively fallen into a rather comfortable groove in terms of reward and performance. Do you recall your very first performance appraisal? I recall mine â vividly! It was late in 1984. Alan Maine was the Senior Technical Officer and my manager. I was a year into my 1st âproper jobâ, with the New Zealand Inland Revenue Department â a technical officer. Iâd had a good year. Each week culminated in the Friday night social club; each day punctuated by the arrival of the morning and afternoon tea trolley. We even had âglide timeâ. I had goals; we all did and these centered on processing a set number of tax returns each day, toward a weekly target. Each tax return differed in complexity and to misquote Forest Gump, it really was like a chocolate box â you just never knew what you would get next. When Alan Maine finished his appraisal of me, he asked me what I thought about what he had just shared with me â âDavid, what do you think of that then?â As I said I recall it vividly â not the actual appraisal, but the rising emotions and my perhaps unwise reply â âI think itâs bull shitâ were my words â and as that is a quote, I believe it does not constitute me swearing here today ;-) A week later I found myself rotated to a different part of the IRD. I also recall with equal vividness my last appraisal, somewhat more recent back in 2011. A week later I resigned. So perhaps there is a theme, although happily I do confirm that intervening appraisals over the years in-between were far less calamitous. I know â we called it performance appraisal or review, but really it was simpler than that. It was more a personal assessment, which felt like a personal judgment! I later became a trainer in the total quality management and I was studious in the teachings of Edward Deming and Peter Scholtes. I even did the then famous 3-day Deming seminar. Yes, my name is David Chambers and I am a Demmingite! So a good place to start then in memory of Edward DemingâŚ.
- For a statistician, he sure knew how to use words! Â We moved through âAppraisalâ to Performance Management â in my view a distinct process we are still morphing and shaping and in most cases we are changing or resuscitating it today. Performance management today has all sorts of practices, all of which are admirable and of value to organisations, managers and all employees. Typically PM has the following features to it:
- Positioned as a business owned and business run process, with support from HR Provides alignment and clear line of sight between individual objectives and company purpose and goals Objectives are supported by agreed measures of success â both of which can change as agreed priorities change in the year It is a continuous; although it does retain formal review points A manager review of performance remains an important event in the performance cycle, as too does self review and colleague or 360 review â giving the employee and manager a fuller, richer view of performance and basis for development Performance assessment remains a feature with feedback used help control, sustain and improve performance Development of the individual is of equal importance Dialogue is at its heart â meetings and discussion to build understanding and a performance focus on the things that matter to the organisation and to you - the employee In short performance management is what a good manager should be doing and expecting in their relationship with their team.
- I went looking for a succinct definition on the CIPD Web Site and instead was returned with the following Error 404 PageâŚ. Reading slide⌠Sorry â the page you are looking for is underperforming. Weâve set it special development objectives and appointed a suitable mentor. We hope to see a significant improvement in performance before we have to take the regrettable step of dismissing it on the grounds of capability!
- Organisations are exploring new ways and case studies and articles abound of the likes of Microsoft, Deloittes, Adobe, Juniper Networks and others, leading the charge. We are seeing orgasnisations tinker around the edges with rating descriptors, numbers of ratings, refocus calibration efforts, move from relative ranking to assessing as against a standard and pursuit of open and regular feedback. Then when that does not deliver to expectations, we are seeing more profound and grounded changes: Get rid of the distribution curve â bad science in ay case Introduce looser âdistribution guidelinesâ Reduce ratings or Lose ratings altogether Focus equally on the âhowâ as well as the âwhatâ Get rid of PM technologies and go native on PM Refocus PM on Development, rather than assessment of performance Tight wire ratings pay outcomes; and more laterly Decouple pay from performance Itâs all here as this is a time of great experiment and some significant successes too
- A high percentage of organisations have said they had either updated their PM in the last 18 months, or were about to do soâŚin 2015 this has grown to 89%, of which just under half state they have made changes in the past 18 months.  So it begs the questionâŚare we beginning to see the impact of the significant changes being made? Lets have a lookâŚ
- Here is what the same report in 2014 found In 2014 58% of HR executives felt that the formal performance management process was not an effective use of time â the same number felt that the performance process is âweakâ at driving engagement and high performance. Sadly this is not inconsistent with other studies I have seen, which show more are dis-satisfied with PM, than satisfied, when it comes to effective use of manager (or HR) timeâŚ.and that has been a consistent picture for the last decade.
- Same Survey updated and freshly in for 2015, again from Deloittes (who have clearly rebranded the publication!) We can see an emerging positive shift in opinion. In this survey, the split appears to be exactly 50 / 50 in terms of PM being an effective use of time. Driving Engagement and High Performance has also increased, so now 56% are positiveâŚalthough those that say it is âExcellentâ remain low at 10 or 11 percent. I fact all four areas show incremental improvement of more than 10% - this is interesting! Even so, in the same survey 75% of respondents are stating that they see PM as âImportantâ or âVery Importantâ and yet 50% state PM is not currently an effective use of time â I detect some PM turbulence here. So it seems there are significant internal drivers for change to PM and according this survey at least, 71% of respondents state they have made changes in the last 18 months or are actively evaluating their PM practices right now. A further 18% plan to do so in the next 18 months. We like to think the pace of change and timing of such reviews are in our control. But there are two significant factors not in our control that are already and increasingly will have a fundamental impact on the role of the manager and PM over the next few yearsâŚ.
- From âThe Commission on the Future of Management and Leadershipâ report of July 2014, a report commissioned by an all Parliamentary Group and created with the Chartered Management Institute, the following attributes are given to Generation Why (Y) brings significant change⌠Thereâs more but I am sure you are familiar with this as you already see it the workplace. How does this work with a PM practice of annual or twice yearly review?  Gen Zâs vanguard is 15 or 16 years old today and they are very different from any who have gone before. Forget Facebook, Instagram and the rest for social networking â Gen Z have their lives in video â live time, face to face; warts and all. Thatâs what they have done and they will assert themselves forcefully when they arrive in our places of work. We need to know moreâŚperhaps at another conference. Â
- PRE SLIDE Of course the generational changes are heightened by current and emerging technologies. Gartner offer a view around the technology environment of 2020, as an ever-networked world, where interconnectivity is valued and expected as a means to ensure flexibility, social inclusion and expected and valued ways of working. Mercer tell us that Managers will be expected to lead teams who are increasingly âvirtualâ work flexibly, are a mix of employees, contractors, and partners, based from an increasing number of geographic locations. In such a scenario, workplace structures become wider and flatter and hopefully, less hierarchical. Feedback is faster, weaved in with âdaily witnessâ accounts from co-workers, customers and suppliers, technology is smarter and data mining to useful information is, fast and revealing. SLIDE 10 Time for another graphic, from the same report as previous, using Gartner Analyst predictions for 2020 âŚ. <go through slide> What can we deduce from this? Access, speed and reliability of such connectivity is the key enabler to flexibility in where you work, when you work and how you work. The days of the manager being the âdaily witnessâ, able to regularly observe work and behaviours of their team are reducing significantly. These changes are not in our control and they will increasingly determining the way we need to work and inter-alia manage performance So how are we managing performance today? It seems that the aspirations of PM and described practices are solid, yet the results are found wanting. Lets define PMâŚ
- I have two definitions â you will not find the one I cite from Wikipedia, as being the nature of Wikipedia, it was changed within a day or two of me capturing this just last week.  <Read the Wiki Definition> Although in line with many others, it is perhaps a bit broad, so to anchor it for us here, today, I have included the definition from our own Michael Armstrong, as an authoritative source.  <Read Armstrongâs Definition> Michaelâs definition is robust. It brings out the continuous nature of performance management. And⌠While we all encourage a âcontinuous processâ of check in, feedback and dialogue, very few ever achieve it. The pre-eminence of the rating and all that is associated with it means the focus of PM tends to be annual or half yearly at best. Even the provider technologies struggle to provide us something more akin to a âcontinuous processâ without locks and gates built in around open and close processes. So we struggle on this point and I will return to the rating phenomena shortly. Both definitions reference individuals and teams. And I want to spend a few minutes looking at that, as we seem also to have lost the âteamâ aspect of managing for performance.
- Â <Read the Definition and the sums> I have always liked this definition of a team - yes it harks back to the days of self directed work teams, but it does remain relevant for any close working group also. In many cases we have short cut the team process â it seems to me to be false economics to do so and undermines the very activity managers are trying to improve â correcting, nurturing and lifting overall performance. Although it may seem easier, briefer and in most cases be anticipated, by setting objectives directly with individuals, we cause social and professional isolation and we play to the appeal of competition, undermining chances of collaboration, innovation and breakthrough performance. Our PM practices seem to have brought down a veil of secrecy held between manager and individual and a mystery to the team. Our performance equation will always equal 1+1 = (up to) 2 and we will never see 1+1 = 3 or more. Have we placed synergy on the sacrificial altar of perceived efficiency? I am not arguing for team objectives that hide individuals, or team rewards (although they have the place). I am arguing that individual goals derived out of a team process and mutual accountability to a team as well as manager is a powerful aspect of PM. We seem to have lost the âteamâ aspect of PM â I suggest it was never intended to be an optional extra.
- It is all to easy to blame the manager â they are hard pressed for time, increasingly working in a soft skills world, but being held to account against hard results. No wonder they might take such a short cut. Â Few HR departments seem equipped or interested in developing team processes as a core element of managing for better performance. Â How many of you have development of high performing teams as a priority in your 2015 people plan or people strategy? <Conclude section> So what about HR? Whatâs our role in the way PM is practiced? Perhaps HR has the hardest role to play of them all. We want the business to âownâ PM â they cannot just leave it up to HR and not take ownership of their decisions right? ..and yet, I think, we have made and sold some shoddy assumptions to our organisations. PM is right for most businesses â the ethos of alignment of effort through goal setting, continuous feedback, discussion, development and celebration of success is intuitively right â as they might say across the pond, its motherhood and apple pie. Yet, in my experience we have introduced such concepts and then bound them, constrained them and whipped them with the following assumptions:
- <Run through the assumptions> I know there are other assumptions, but I think these are the ones worth some reflection today. Do people really want ratings to know where they stand? I hear that one all the time. Perhaps they yearn for this comparator of how they stand as against others, or against performance standardsâŚ.or so the argument goes. Bit what happens when you no longer have ratingsâŚ. Lets take a brief look at one of those who haver done that â 3 years ago now, so we have history and we know outcomes. In their actions they tested all four assumptions and found them to be wanting at best or simply unfounded. So lets have a brief look into Adobe â the problem, their solution and the results.
- <run through slide> So Adobe found itself in the position of having performance management system, process, policies and practices that simply ran counter-intuitive to their organisation values. The structure of annual ratings and review dominated and crushed the more critical need for collaboration, innovation and team work. After 5 years of trying to adjust their PM practices, Adobe decided a more radical approach was required.
- <Run through slide> Ye, I am certain there is a lot more detail to this story. However as you might imagine the impact of this level of change is immense. For one, (it seems to me) this level of change in PM and pay decision making immediately tells managers that âwe trust youâ and we are going to support you â not proscribe to you. <check to see if anyone else is familiar with the Adobe story> Any other changes they might be aware of? From my reading ,one of the significant changes in this was to get managers to focus on the strengths of their people - not the weaknesses. OKâŚso what other impacts did this have?
- <work through slide> (Super competitive industry) Ok, on the last point, this is something I have to assume. The lessons for Adobe and others taking similar actions appear to be: Tinkering with PM, while retaining ratings and distribution targets is unlikely to cause a behavioural change Ratings do dominate â taking them away also has a profound impact on performance conversations, collaboration, innovation and ambitions Colleague and all-way feedback can be ânormalisedâ They do not need to prescribe a process for PM â create the right expectations and remove the locks and gates of central process, then managers and employees will drive it as a necessary part of the way they work Managers can and do make pay decisions, still understanding performance differentiation and do this without a rating Training and communication around the changes and on-going support for employees and managers is absolutely necessary â giving and receiving feedback, difficult conversations, coaching and growth â roles plays, lectures and online PM System or technology was not leveraged, as it would cause process and IT to dominate â build conversation and practices first, then deploy technology support
- <Quick view of Glassdoor> I know it would be wrong of me to conclude a spurious correlation is same as cause, but it is undeniable that Adobe have done well and the results they talk about are evident in what there employees say also.  Changes in Adobeâs Glassdoor trend line certainly seem to indicate that something significant is going on here. âŚMicrosoft too have embarked on significant change to PM.
-  <Background: go through slide and read quote Author Kurt Eichenwald â working as an Investigative Journalist at the time in 2012>  The fear MS faced was that Competition was internal, not outward facing  In 2013 Microsoft declared⌠ No more stack ranking No ratings More focus on team results, collaboration and impact Equal focus on growth, development and aspiration â looking forward Software support âConnectsâ provides structure and means for manager and employee, with equal emphasis on past and future  The quotes I used still resonate on Glass door also.
- It is difficult to get information about the changes in Microsoft as perhaps the dust is yet to settle. However as we heard yesterday, 90% of people apparently use Glass door for initial insights when considering a new employer. <Run through Cons list and explain GDoors auto aggregation of Top 5> A look onto Glass door earlier this week highlighted for me some 800 reviews (out of 10,000) with negative comments on Microsoftâs performance review approach â the 2nd most commented on âConâ from the list of top 5 Pros and Cons for working at Microsoft. Closer investigation and the majority of these reviews reveal the longer legacy of Microsoftâs former forced ranking approach. While ratings have been removed, there is much recent commentary on the behaviours of ranking and rating individuals against each other still being practiced. Part of that picture is the shift away from performance achievements, to a focus on the âimpactâ people have on others, their teams, the business and most importantly customers. The change is a deliberate and radical departure designed to extinguish internal competition and create more collaboration. Reference HR Magazine Interview with UK HR Director, Theresa McHenry in late 2014 The apparent realisation by Adobe, MS and others is that not only do they not need to attribute a rating, but in a modern, complex work environment, they had to get rid of them â they were a hurdle to collaboration and a perverse incentive to internal competition.
- There is another element around the practice of performance ratings, that is perverse <Time check - quick idea only > When we were at school, it seemed OK to have a school report that provided you (your parents) with a grade across all areas of interest. For me it would mean a focus on why I received an âEâ or a âdid not gradeâ comment in a couple of subjects, vs. the A, B or C grade I would receive in other subjects. âCultural Heritageâ was my thing, so too was (relevant) History and (interesting) Geography and (plausible) Economics. And yet I recall my high school discussions following report time, seemed to center on the mysteries of mathematics and the sciences. The workplace should be the one place where the focus is on our strengths and your ability to contribute, not on your weaknesses. The conditions that allow your strengths to flourish and be used should be the focus â perhaps those same conditions will allow you to address or reduce the weaknesses too. A performance rating has little to do with developing strengths and is likely to have a overwhelming justification bias and therefore emphasis based upon weaknesses. Thatâs my personal experienceâŚ.there are other solid reasons that suggest we could consider scraping ratings altogetherâŚ
- Here is my summary of the case against performance ratings Performance ratings⌠Narrows the focus on performance to a justification of the rating by the manager Biases PM to assessing and rating past performance (a science in itself) at the cost of developing and growing talent Provide a veneer of objectivity over what is a subjective process and then supplies this output for all sorts of other decisions â reward, exiting and promotion decisions Are an outcome of a false assumption that to make people perform better, you need to measure them and point out short falls âinevitably ratings bias the conversation to overplay weakness, while under-playing the opportunity in the strengths Hijack the brains processes to one of fight or flight, making enquiry, listening, reflection, trust and openness far less likely to occur in the instant or in the future â direct impact and anticipation People want someone to help them improve; not someone to assess, evaluate and lable â if a manager has to do the latter, they will fail to do the former Working formations are changing significantly. The 1:1 manager-employee link is weaker than it was â the manager is often unable to observe work and behaviours and this adds to difficulty in consistent rating The rating âjudgmentâ is typically yearly â idiosyncratic bias of rater is exaggerated over time.
- The 2nd assumption â and I will will be brief here Itâs probably correct, although not exclusively and I do think we struggle to get the balance right. We need to shift this relationship to one of performance partnerships. That is the manager, the team and the individual have an expectation to be equally involved in defining performance goals and priorities, assessing progress to date and forming a view about how we are doing and where do we go next. In building this house of performance the Manager is the architect, the team is the planner or planning system, the individuals are the contractors and HR provide the right tools at the right time to get the job done â most of these will be âon demandâ. I donât think we have generally got this balance right yetâŚalthough some organisations have. Most however organsiations, even with best intentions still seem to push performance management down, making it something âHR need managers to doâ. Instead we need to generate demand for it â by providing the freedom within a framework of performance principlesâŚ..not prescriptive policy and risk averse requirements.
- And to the 3rd assumption â that PM must be done the same way, at the same time in an organisation <Explain the matrix> This goes to the 3rd assumption I listed earlier The matrix (an idea I have adapted from a TW presentation I saw in 2014) plots roles in such a way â the role holderâs degree of control over performance outcomes, vs. impact on company results. We can clearly understand that each role will have its own unique place in such a matrix. What I want to show is the idea that with such differences based on role alone means that the assumption of a single approach for PM (and reward for that matter) is probably not sustainable or sensible. We need to segment and tailor PM or otherwise allow local variations in practice, as much as we do reward. I like Adobes rationale for not putting PM online as they make their changes âas just one of the reasons they provided was that any PM platform would have stopped managers and employees discovering what works for them, and what does not. Brave and for Adobe, it seems a successful route to the challenge of âone size, does not fit allâ
- Do these sound about right? So we do ratings for a variety of reasons. Yet the problem with ratings are 3 fold A rating triggers an emotional response. It goes to the same part of the brain where Flight or Fight decisions are formed, narrowing focus and over-riding creativity, reflection, growth, curiosity, enquiry and learning. The awarding of a performance rating is as stressful for the appraiser as it is for the appraised and leads to a justification bias, limits the scope of discussion and fails to seek to engage in the drivers of actual performance and behaviours And in most organisations, it seems to be a zero sum game; when an individual experiences an improved performance rating, someone elseâs must be reduced. In this, the assessed performance of a group or team appears to remain relatively static over time. So consider life without ratingsâŚ.
- Performance conversations and reviews conducted without the need of a rating, where managers and employees are provided with a structure and appropriate training to have such conversations, will do several things:  It de-clutters the conversation and allows a positive focus around goals, observed performance, feedback and pathways to progress, It reduces or removes the anticipation of fight or flight responses, and open up more constructive neural pathways in the brain with performance review conversation far more likely to be met with openness, enquiry, collaboration, active listening and problem solving, than closed down responses It fuels a belief that it is always possible to grow; as opposed to a ratings reinforced belief of limits â thus making it âsafeâ to work on stretch goals and new opportunities  Drop in a performance rating and the chances are that this will all close down. So that being the case, how do we differentiate and identify top and bottom employees and deal with the 1st four reasons for holding onto ratings?
- <Quick over view of Grid> Â Matrix of Potential vs. Performance When a manager and employee truly engage in a performance and development discussion, jointly reviewing feedback from peers taken at regular points in time, mining performance data and sharing their observations, then they are both in a strong position to use this approach, for self assessment and as a manager and business strategy tool to meet every single purpose of the performance rating. I think there is considerable value in dusting off the grid and using this much more broadly, including in terms of understanding the reward equation and segmenting reward responses with a view to actual performance and future potential. Performance ratings generally only take account of actual performance â not potential or value. The nine-box brings the added piece for the manager, to think about and engage in growing talent, not just utilizing it!
- So what then do we do about the need for a rating to support performance pay decisions? I see the link of ratings to pay as the last remaining and perhaps, most significant driver for performance ratings. I have had many conversations with experienced reward people in financial services, who have told me there is no alternative. You need a rating to inform performance pay decisions. So is pay-for-performance the true reason we still clutch at performance ratings, and for many of us we still use some form of âdistribution guidelineâ? Has reward lost its innovation to such a degree that we are not able to think of a way to reward, without recourse to calling for performance ratings and rankings? Are we sitting in a comfortable groove, backed up by our guru writings on pay for performance? I am concerned that Lawlerâs constant call for pay-for-performance has been heard as pay-for-performance ratings. If we still need ratings primarily to serve the purpose of pay for performance, then the tail really is wagging the dog.
- Pay for performance is logical, intuitive and backed by much research. Pay linked directly to performance rating outcomes however is less clear. Neuro science and social science studies tell us that such a link ramps up the emotional content, distracts the individual from what drives performance and is most likely to drive down sustained performance for most modern workplace roles. The person rated as âGoodâ is deflated rather than inspired, while the person rated as âExceptionalâ will worry about their future fall from grace. The rating message, reinforced by an extrinsic reward outcome, serves more as a powerful detractor from performance, than it is an effective driver of future performance. You probably only need to run analysis of that spike in exits you experience after each pay review to know you are most likely bleeding the talent you thought you were rewarding. Surely what we actually need is for our managers to have a well-grounded and confident view of the performance of an individual and the ongoing value of that individual to the employing organisation. When we get to this nirvana, we will no longer need performance ratings. The dichotomy is that so long as we retain performance ratings of what-ever description: numerical, letters or descriptors, a true understanding of how to improve performance, release potential and realise value will remain opaque. In other words, we will continue to âperformance manageâ yet fail to manage for performance
- <PRE SLIDE> What if we took a different approach â an enquiry led one about manager intention? Such questions help the manager to directly engage in their intentions for the employee â forward looking rather than assessing the past. The final question forces consideration of the broader reward deal by giving a context of development and deliberate consideration of strong intrinsic reward. Yes, we may need to reconsider the role of broad based performance bonuses and the drivers of pay. My contention today however, is a simple one â we do not need the veneer of objectivity provided by performance ratings, to make pay decisions. Using tools such as the nine box grid, and the series of âmanager intentâ questions I have proposed, supported by manager training on how to make effective reward decisions (making better use of salary ranges, knowing the market, assessing value and understanding the message a pay outcome gives and understand âequityâ is about justified difference, not sameness), we will get better reward outcomes for the manager, the employee and the business.
- The biggest hack we have imposed on good performance management practices is linking performance ratings to performance pay. It is our crutch of convenience, it is a mortal wound to PM and we should stop it now!  <Conclude section> We have made our managers into âassessorsâ instead of being the problem solvers and the performance innovators that they should be. I see no valid excuse for us to continue with such an approach. What do we do next? Consider the external changes â the pull for change in PM The external drivers for change around how we manage for performance are already there. I mentioned just two of them in terms of the expectation of our changing workforce and technological change in all of our lives. Get informed on what others are doing, the basis for it and what is working I have included for you a list of references of materials I have been looking at, They are variously informative, provocative and useful. I am sure much of it will be familiar to youâŚ.and if so, then you already know the compelling case for change for others. Consider the reality of your own organisation and define what it is you are moving toward
- I have drafted some continuums you could consider to get those first insights into your own organisation â you can add and subtract, but a few of these should help you to get a better understanding of the choices ahead.:
- I am not sure how we will get there. I am certain however that in the next five years the pressures for change and dis-satisfaction with status quo will be such that we too will find ourselves experimenting and through trial and error we will find the way forward and perhaps we will articulate it as performance partnerships. In reward, we need to demonstrate a similar level of innovation.  To close  The developing features of progressive performance management appear to be:
- We are out of timeâŚso just to highlight a few Break the distribution curve â just stop doing it Reducing and ceasing of performance ratings altogether Managers rewarded on their ability to grow talent, rather than just utilize and use it A move away from HR prescription about PM policy and process in favour of performance frameworks and guiding principles - Freedom in a framework idea Better timeliness of feedback â real time, less formal and on-going from daily performance witnesses
- Less formality, less forms and better conversations leading to deeper performance insights and stronger development focus A pulling back from broad based annual bonuses based on individual performance, better use of base pay structures, reflecting market and value and better alignment of variable pay to company profits Experimentation with social PM feedback and breakdown of most âour way the only wayâ PM platforms peddled today At the beginning I said I feel like we in PM and Reward have got stuck in a groove. Â A South African friend of mine asked me the other day if I knew what is the difference between a Groove and a Grave? Â Not much he said â it is just the depth! ď Thanks for listening!