Aug. 11, 2018 "Why performance management is a thing of the past": Today I found this article by Harvey Schachter in the Globe and Mail:
Managers manage performance. Performance comes from people.
People are human, however, and will often disappoint their managers.
When managers’ frustration builds, they look for an easy solution. I remember when I first heard about performance management. At last, a system that could make my problems go away!
Instead of solving them myself, with better communication and being more realistic about my expectations, I grasped for a magical potion that promised salvation. Fortunately, I had a boss who had little enthusiasm for managerial enthusiasms.
Then came Jack Welch. During his tenure as chief executive, General Electric Co. made performance management seem so seductive and sensible. There were endless meetings, with executives carrying large binders filled with data on employees, debating each person’s performance to judge it perfectly and then acting with courage.
There were rewards and advice on performing better. Those in the bottom tier were jettisoned, so the company could continually get better and better – which it did, either because of this rigour or despite it; none of us will ever know.
There were rewards and advice on performing better. Those in the bottom tier were jettisoned, so the company could continually get better and better – which it did, either because of this rigour or despite it; none of us will ever know.
These days, many organizations are admitting that performance management is not working for them. They are throwing out the systems or retooling them, often with an emphasis on feedback throughout the year rather than semi-annual meetings that raise anxiety and create disappointment.
McKinsey & Co. found two-thirds of companies in the previous 18 months made at least one major change to their system.
McKinsey & Co. found two-thirds of companies in the previous 18 months made at least one major change to their system.
First, some obvious points. Feedback is best given regularly, close to the incidents that prompt the need to discuss performance. That doesn’t mean a broader discussion shouldn’t occur at other junctures, however.
Good performance requires more than feedback. It requires motivation, which comes from within the employee, not from the manager’s inspirational words.
Forced rankings are arbitrary and cruel. Yes, managers can be too kind judging employees, deciding that everyone on their team is above average.
But compensating for that by arbitrarily deciding that a certain percentage of people are subpar and thus need to be turfed is unreasonable.
Good performance requires more than feedback. It requires motivation, which comes from within the employee, not from the manager’s inspirational words.
Forced rankings are arbitrary and cruel. Yes, managers can be too kind judging employees, deciding that everyone on their team is above average.
But compensating for that by arbitrarily deciding that a certain percentage of people are subpar and thus need to be turfed is unreasonable.
People don’t want to be compared with others in performance reviews. They want to be compared to themselves. Jinseok Chun, a PhD candidate at Columbia Business School, along with Joel Bockner, a professor at the same university, and David De Cremer, a professor at the Judge Business School in England, conducted four studies looking at comparisons to colleagues’ performance during the same time period or the employee’s own performance in the past.
Employees consider comparisons to past individual performance – the trajectory of their work – fairer than social comparison evaluations.
Employees consider comparisons to past individual performance – the trajectory of their work – fairer than social comparison evaluations.
“Employees whose performance was compared with another person’s performance believed that while delivering such evaluations their manager failed to account for specific details of their performance. Thus, they considered the evaluations to be less accurate.
They thought that their evaluations were less respectful, perhaps because they felt like they were being treated like another face in the crowd. Importantly, these differences in the perceived fairness between temporal and social comparison evaluations were independent of the favourability of the evaluations,” the academics write in Harvard Business Review.
They thought that their evaluations were less respectful, perhaps because they felt like they were being treated like another face in the crowd. Importantly, these differences in the perceived fairness between temporal and social comparison evaluations were independent of the favourability of the evaluations,” the academics write in Harvard Business Review.
Fairness has surfaced as an important issue in recent discussions on performance management. That issue has, of course, always been there, just ignored by performance management enthusiasts.
Gallup has found only 29 per cent of employees feel their performance reviews are fair. So you are alienating two-thirds of your employees – as was Mr. Welch, undoubtedly – when you conduct them. Not a great tactic.
Gallup has found only 29 per cent of employees feel their performance reviews are fair. So you are alienating two-thirds of your employees – as was Mr. Welch, undoubtedly – when you conduct them. Not a great tactic.
Consultant Bruce Tulgan says on LinkedIn, “I have a motto when it comes to performance management: Management should be good news! Employees shouldn’t dread the moment their boss comes to speak with them about their work.”
McKinsey consultants Bryan Hancock and Bill Schaninger, along with Elizabeth Hioe, an alumna of the consultancy, says procedural fairness is the concern: “It’s far from a platonic ideal but instead addresses, in this context, the practical question of whether employees perceive that central elements of performance management are designed well and function fairly.”
They don’t suggest killing ratings, because that can lead to a struggle in telling employees where they stand. But the ratings need to balance many complexities, including the fact that work is collaborative.
They don’t suggest killing ratings, because that can lead to a struggle in telling employees where they stand. But the ratings need to balance many complexities, including the fact that work is collaborative.
Is your organization’s performance management system perceived as fair? You can’t manage performance with a widely detested approach.
Cannonballs
- The five main causes of burnout, as delineated by Gallup Research, all stem from poor management: unfair treatment at work, unmanageable workload, lack of role clarity, lack of communication and support from a manager, and unreasonable time pressure.
- Be available to your team less often. This will protect your time and also encourage the team to figure things out on their own when they can’t consult you, says trainer Maura Thomas.
- Research on hurricanes shows the people who are least prepared are those who have been through a storm that wasn’t very big. Similarly, says Bryant University management professor Michael Roberto, repeated mild competitive threats leads managers to reduce their concern about risk.
Aug. 18, 2018 "Is it possible to fix the performance management system?": Today I found this article by Harvey Schachter in the Globe and Mail:
Performance management is broken. How do we fix it?
Ultimately, senior management decides. But all of us have a stake in the system and so all of us should understand the options.
The first step, as discussed last week, is to review your current approach to gauge fairness. What part of the system is or can be perceived as unfair? Even if fair, who on your staff may be implementing it in ways that could be deemed unfair? Probably more than you have wanted to admit.
Assuming the organization wants to stay with a system – and moving away from a routinized approach can trigger its own unfairness – McKinsey &Co. offers some broad principles to follow. Consultants Bryan Hancock, Elizabeth Hioe, and Bill Schaninger looked at a host of factors that may affect employee perceptions of fairness and found three stood out:
- Linking performance goals to business priorities: The system must be clear about what is expected from employees and specific about how their work ultimately fits into the larger picture of what the company is trying to accomplish.
- Employees should be given a say and senior management must be flexible. “Connecting the dots starts with making employees at all levels feel personally involved in shaping their own goals.
- Mandating goals from the top down rarely generates the kind of employee engagement companies strive for,” they write on the corporate website. I’d add: In an agile world, this raises questions about time frame that you must consider – an annual system may just lead to end-of-the year evaluations based on goals that are outdated.
- Coaching by managers: Managers must be taught how to be coaches. Less than 30 per cent of the McKinsey survey respondents said their managers are good coaches. Only 15 per cent of respondents with poor coaches reported the performance-management system was effective.
- Before the company evaluates its staff it must improve the managers. This will be difficult, people being people. But junking the system and opting for a more informal, managers-as-coaches approach, which some organizations are trying, runs up against the same obstacle.
- Differentiating compensation: People expect to be paid for better performance. But it’s hard "to find the right benchmarks or to differentiate among top, middle, and low performers when roles are interdependent, collaboration is critical, and results can’t easily be traced to individual efforts.
- The only way, in our experience, is to carefully tinker your way to a balanced measurement approach, however challenging that may be. Above all, keep things simple at base, so managers can clearly explain the reasons for a pay decision and employees can understand them,” the consultants advise.
They urge organizations not to eliminate rating systems. But they need to avoid sizeable differences in compensation among team members in the middle of the pack given the collaborative environment these days. It will lead to charges of unfairness otherwise.
If the company has forced rankings – a certain percentage of employees must be declared A, B or C players – get rid of it. Nobody considers that fair, outside the executive suite.
Consultant David Dye, on the Let’s Grow Leaders blog, notes management creates contradictions as it hires great employees, but then advises a segment of them that they’re not great after all; the rankings create internal competition rather than outward competition; and it provides strong incentives to game the score rather than play the real game of serving your customer.
Another step toward fairness can be creating calibration committees of higher-level supervisors. These committees adjust the ratings supervisors give employees to improve consistency. “It may seem counterintuitive to allow a committee to adjust the ratings of employees they generally do not observe firsthand,” professors Will Demeré of the University of Missouri, Karen Sedatole of Emory University, and Alexander Woods of the College of William & Mary write in Harvard Business Review.
“But even though supervisors may have better information than calibration committees about the performance of individual employees, they do not know how the ratings they assign compare with ratings given by other supervisors.’
Their three-year study of a multinational organization found the committee adjusted ratings 25 per cent of the time – decreasing them four times as often as they were increased, with downward adjustments larger than upward adjustments. Ratings were more likely to be adjusted downward if given by a supervisor who tended to give higher-than-average ratings, while upward adjustments tended to come for supervisors who tended to give lower-than-average ratings. So it would appear calibration committees improve fairness.
Assume your system is broken, or impaired. Use these ideas to push for improvement.
Cannonballs
- Try this question this week with subordinates:
- What do you know you can do well but haven’t done yet?
- And be prepared to act on what you hear, even if it makes things more complicated.
- The 20/60/20 rule for leading change was originally stated by a new CEO as: “Twenty per cent of you know where we are going and are on board with it.
- Sixty per cent of you understand the need for change but are skeptical that we can really do this. My job is to win you over. And 20 per cent of you do not agree with our plan and have already made up your minds about it. My commitment is to ensure you a fast and graceful exit.”
- Michael Bungay Stanier, CEO of Toronto-based consultancy Box of Crayons, says coaching need not take a long time – it should be fast, not adding to workload. And don’t try to turn managers into coaches; just aim to make them coach-like, which involves staying curious a little longer and delaying a bit in rushing to action and giving advice.
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