By Brad Federman
Performance management officially started in the 1920’s when companies started moving toward mass production. At the time, operational efficiency was the focus. Time and motion studies were deployed and work was dictated by the most efficient method possible.
As the economy moved forward and changed, so did our approach to performance management. In the 1950’s traits such as loyalty became the centerpiece. Personality-based appraisals came into fashion. However, this left a great deal up to subjectivity and overtime the workplace realized it was not connected to productivity or performance.
Performance management continued to evolve. In the 1960’s Management by Objectives (MBO’s) became the popularized approach. Companies were interested in what someone might be capable of in the future and meeting their current objectives. However, there was still a great deal of concern regarding objectivity and fairness, and we saw court cases challenging these systems.
All the noise from the current approaches led to change in the 1970’s. Psychometrics and rating scales were thought to be the answer. Forms would make the process more objective. As things progressed, multi-rater feedback, also known as 360 Feedback, was popularized in the 1980’s. With time, our performance management processes have continued to evolve, but for many the appraisal still lives on. However, a few companies intend to change that. Let’s look at some of those pioneers and where they are taking performance management.
Adobe
In 2012, Adobe made a strategic direction to abandon the performance appraisal. They studied the time it took to “tick the boxes” and write the narratives. The time it took to go through the appraisal exercise was 80,000 hours — the equivalent of 40 full time employees! Instead, they decided to replace the appraisal with frequent one-on-one check-ins. Work cycles determine the actual frequency, and ratings are no more. They not only saw an increase in engagement, but voluntary turnover decreased by 30%.
Deloitte
They scrapped their appraisal process in 2015, a system that took over 2 million hours of work time to complete across the company. They replaced the appraisal with weekly check-ins centered on SMART goals and priorities allowing them to provide timely coaching. These check-ins are supplemented by quarterly meetings reviews focused on the future, not the past.
Accenture
They decided forced ranking and yearly evaluations were no longer the road to travel down and ditched the traditional ways in 2015. They changed to frequent conversations and feedback aimed at performance development rather than performance evaluation. These future-focused conversations center on progressing in one’s career and their aspirations.
Cargill
Cargill has also decided to abandon annual reviews and ratings and move towards frequent on-the-job conversations. They went even further by rewarding managers for demonstrating good coaching practices, proactively sharing best practices, training people on holding two way conversations, giving feedback and coaching, and an accountability process for practicing the principles needed to make this effort successful. The result: 70% of Cargill employees feel valued because of these conversations.
General Electric
They were not only a fan of the traditional appraisal, but the poster child for force ranking. But in 2015 they dumped it into the figurative trash bin. Why? They said the “Rank and Yank” created problems with teamwork and employee engagement, promoted unhealthy competition, and caused burnout. They too have replaced the appraisal with frequent feedback and touchpoint conversations focused on near-term goals supplemented with an end-of-year reflection rather than evaluation.
What we are seeing is a shift from an event-based approach to an on-going effort. But this shift is even more profound. We are swinging from a past-referenced approach (what you have done) to a future-referenced approach (what you can or will do). This change completely alters our thinking and relationships. It means that we are moving from a correction and evaluative mindset to a progress-driven mindset. We are recognizing that performance appraisals attached to compensation have negative consequences. It becomes an exercise of negotiation. The employee is desiring to gain more money and the company wants to stay within a budget. Employees are less likely to have a real conversation because it can hurt their chances for a raise or a bonus, and managers must justify their compensation decisions. It colors the entire conversation. Removing compensation from a direct relationship with the appraisal allows us to drive and promote learning and allow coaching to become the centerpiece of performance management.
Why is this happening?
Change. Organizations are experiencing more change than ever and the speed of change has increased as well. To keep up we must be agile. Traditional performance appraisals do not allow for that type of flexibility.
Learning. Because of change employees must constantly be in learning mode. They must focus on progress and staying ahead of the curve. Traditional performance management approaches do not appropriately account for this need.
Flatter organizations. Organizations are now more centered on networks and relationships. They are flatter and less formal. They rely on trust more than authority and hierarchy. Employees need support and collaboration more than bureaucratic structure.
Agility, Speed, Adaptability, and collaboration are now the name of the game. Companies that recognize this change and alter their approaches will win going forward.
What to focus on:
Alignment. Maintaining alignment in this new world is difficult. It is one of the main reasons that frequent check-ins matter. Without the frequent check-ins, it is too easy for an employee to get lost, take a wrong turn on a project, veer from the team, lose sight of what is important or worse, feel unsupported and worry about falling behind. Learning through feedback is paramount.
Feedback. Employees hate surprises. They should never have to ask, “Where do I stand with you?” Managers need to be willing to provide consistent and regular feedback. Remember that praise is also feedback. Employees learn and succeed from recognizing and focusing on their strengths. Constructive feedback is also important. However, most managers struggle to productively give constructive feedback. Remember the feedback should focus on learning not evaluation. Employees need to know you are on their team.
Coaching. One of the most important aspects of being a manager is coaching. Unfortunately, many people largely see coaching as telling, advising and sharing. Of course there are times when that may be necessary. But coaching — great coaching, anyway — is all about helping people think through things. Finding ways to help your employees reflect is a centerpiece of strong coaching. Coaching is more about asking good questions than anything else. No one ever learned anything difficult or mastered a new skill or challenge because someone gave them the answer or did it for them. When we use our expertise for coaching we are reducing bench strength rather than building it.
If we are being honest with ourselves we will recognize the dramatic shift that is occurring. We will also recognize the change we must embrace within our organizations. This is more than doing away with a form. This is much larger than unlinking compensation from an expensive yearly exercise. We are talking about a culture change. Moving from a hierarchical evaluation to a supportive, progress-driven coaching model. We must prepare our managers for such a change. Mindsets must shift and skill development will be necessary. But first, please let the performance appraisal finally die.
PerformancePoint, LLC
bfederman@performancepointllc.com
www.performancepointllc.com