Change Performance Management, But Don't Kill It

The deepest fear we have, 'the fear beneath all fears,' is the fear of not measuring up, the fear of judgment. It's this fear that creates the stress and depression of everyday life.

Do you like going to parties and events where you meet new, non-HR,  people?  Do you enjoy the small talk about what you do for work?  That used to be so easy when I was a lawyer.  Everybody knows what that is.  But now that I am in HR, I don’t really like to answer this.  It is not because I don’t like my work.  I do.  In fact, I am really passionate about work.  It is just that I don’t know how to explain it well.

It always goes something like this:  “What do you do”?  Me:  “I work for Sanoma? “   Then: “What do you do there.”  Me: “I work in HR.”   And then the response is:   “oh” or “huh”  or “really” or “oh no”.    It never seems to  impress or inspire anyone.   I know, I know;  it shouldn’t matter  what others think.   But, instead of just letting it go, I find myself being very defensive of my career choice and end up cheerleading HR.  Because it is such an exciting and important field and I want everyone to understand that.  And sometimes this works.  At least for a little while. 

But, inevitably, things get tense when we get to the topic of performance management.   That is what I do.   And here,  the pleasant small talk turns a bit edgy.   Everyone who has worked in a company where performance was rated seemed to have had a bad experience.  No one likes it, and most hate it.    And I always get the feeling they blame the likes of me for their bad experiences. 

So, why do we keep doing it and why do I like it.

Critical Clarity

First off, performance management is not just about rating and judging.   The frustration and anger is always about this part.  But, the first and foremost goal of performance management is to make clear what you expect of people.   
We all want to know what we are expected  to do.  Clarity is critical.  Great managers will also show how we fit into the bigger picture.  So that we people feel part of something bigger than just their own job, team or department. 

And when you know what you’re expected to do, you obviously want to know how you are doing in meeting those expectations.   And here it gets difficult.  Here is where things go wrong.  Because here someone needs to pass judgment on another person.  This is inherently uncomfortable.

Courageous Feedback

For feedback to work, both the giver and the receiver have to understand their part.

If you are the feedback giver, you need to care enough to give constructive feedback.  You need to mean well, be honest and open.  And you must say so in clear, convincing and actionable terms. 

That takes courage.  Because when you speak up you are crossing a social boundary.  You may be rejected, or scolded or made to feel dumb.  Plus, your hope that things might change just may be crushed.   This happens when the feedback receiver feels attacked, deflects blame and points fingers.  

You run the risk that your relationship will be forever be scarred.  And many don’t bother. 

If you are the feedback receiver you need to care even more.  You need to be open to the constructive feedback, savor it and dive into it.  It is wise to receive it with an open mind.  It is a gift that is not offered often.    And you’re lucky someone cared enough. 

Dare to differentiate

But it does not stop here.  There is also the rating and the ranking   The “guts” of performance management.  Here you need to let people know where they stand – how they’re doing today and what their future looks like.  Are they a star, just average or below?  The critics call it “Rank-and-Yank” which means that companies supposedly identify their worst performers once a year and then, boom, fire them (yank them).   And there is tons of criticism.

But, rating and ranking is about differentiation.  Lets face it, not everyone is performing at the same level.  People come with their talent.  Different talent.  Talent is just not equal.  Period.  We all know that.  We should not be looking for equal but instead we need to think of what is fair. 

Let’s start by acknowledging that fairness has nothing to do with treating everyone equal.  No company’s strategy is to invest equally in all employees.  The last time where everyone got a trophy was in kindergarten.  Differentiation is what we want and expect.  Fairness is recognizing that some contribute more than others.  And the ones that contribute the most should get the biggest piece of the pie.   This is the practice of differentiation and it is powerfully effective.

There are many who feel that the bell curve aspect of differentiation is “cruel.”  But we do not find this a problem in school where we grade children as young as 9 or 10.  And we are totally fine with this in sports and play as well.  Why is it then that when we rank at work people can’t take it.  Explain that one to me. 

Differentiation is about consistency, transparency and candor.  Candor is absolutely essential to make differentiation work.   Great managers know that you owe candor to your people. Why should anyone guess what you think of them. Most people appreciate this reality check, and today's "Millennials" practically demand it.

Satisfy your Stars
So much of the criticism is about the value of ranking when it comes to motivating mediocre performers.  “I am afraid that she will be totally crushed and demotivated if I tell her she is not as great as she thinks she is”,  “he will stop putting in any effort if I tell him he is not great.”   

Obviously, mediocre performers do not like it.  It is calling attention to the fact that they are not meeting expectations and letting their team down.  Being told that you  aren’t making the grade is ego-threatening and generally unpleasant.  But they need to know. 

This is why we need great managers who can give courageous feedback. 

But, let’s not stop here.  How about the high performers.  What about them?  Shouldn’t you not be even more concerned with your stars?  What do they need?

Stars like the outcome of performance management; the rating and ranking.  Stars are motivated by being the best in their class.  They want to win, it is part of their DNA.  Or else, if stars  do not care how they stack up against others, they want to  be as best as they can possibly be.  To be as close to perfection as possible. Ranking then is recognition for a job well done.

Stars also like ranking because it protects them from low performers.  They do not like working with people who do not share their commitment to quality and productivity.    

High performing folks like to work with other high performing folks in a high performance culture.  Ranking and rating are a critical part of creating this culture. 

Don’t be a Foolish follower

The blogosphere is full of pleas to do away with performance reviews and ratings.  Because employees and manager alike hate them.  They take lots of valuable time from our managers and its effectiveness is ambiguous at best.    These stories are compelling and they make me feel as if I am a bit old school for still doing it.  The last thing I want to be accused of is being old school.    

But hold on a minute.  Can it be that simple, just get rid of it?  Does that not sound too good to be true to you?  It did to me.  And it is too good to be true.  The fact remains that every company has limited resources for investments (salary increases, development and promotion).  If you get rid of your measuring stick (rating), how are you going to make decisions?  Because decisions will still be made by someone somewhere.  As said before,  no company’s strategy is to invest equally in all employees.  So, without this process those judgments are now completely hidden

This total lack of transparency is certainly not what we want, right?. 

So, we need this process.  But we can do better.  No one likes a lousy process 

Measure more things

One of the criticism on differentiation is that the focus in on individual results and that it kills teamwork.  But, that is not necessarily true.  If you made clear from the start that you expect people to act as team players, it is part of what is being measured. 

The same thing goes for values.  Defining what you expect of people should capture the company’s mission (where it's going) and its values (the behaviors that are going to get it there).

Finally, the forerunners are starting to include personal achievement goals, totally unrelated to company goals.  Here are some examples:

• complete 3 chapters of a novel


• broaden social network


• lose 20 pounds


• add 6 pounds of muscle


• create a healthier home environment

Why?  Because this has everything to do with caring for someone’s well-being and thus company culture.  Supporting employees in their personal goals has a direct impact on their performance in the office.

I am following this with great interest.  I believe that well-being is the next big thing.   And I am not alone.  Well-being has been put on the agenda for large multinational CEOs and governments all over the world. 

Measure more often

Employees need and want regular feedback (daily, weekly), so a once-a-year review is not good enough.  Regular coaching works best.  For the poor performers it is absolutely necessary to address the performance issues immediately.  And praising high performers in real time is much preferred.

Google is using the so-called OKR (Objectives and Key Results) and many start-ups have copied this secret sauce.  OKR process is a quarterly process where you define an objective and have measurable results toward reaching that goal in simple terms

Interestingly, quarterly OKRs are NOT performance reviews.  The performance review is a separate process.  As part of the performance review process, Googlers need to reflect on their performance.  OKRs are a perfect tool for that.     

Not many will argue that once-a-year review is enough.  It is the absolute minimum.  And doing it once is better than not doing it at all.   

More people measure

Most performance reviews are done by just the manager.  It is about his/her opinon; a manager knows all – type- of- process.  But manager and employee relationships are no longer 1:1.  To get the true measure of performance lots of peer input is needed.

The pioneers here are going much further.  They believe that we’re on the cusp of a major change that uses the power of social to fundamentally shift from a traditional, top-down management hierarchy to a new bottom-up approach.  They will be using the wisdom of the crowd or crowdsourcing.

The idea is that a group of independently deciding individuals will make better decisions and more accurate observations than those of an individual.  By leveraging social tools and data, managers can better collect, evaluate and share information on employee performance. 

We better watch it.  It will disrupt all of HR.

…  

Back to the party.  So, how would you explain it well.  Let’s face it, it would be incredibly obnoxious to lecture anyone at the party who does not share a passion for HR.   In fact it would be totally uncool to lecture at all.   I don’t want to be that person.  I want to be the person that doesn’t try to be interesting, but interested.  I want to be that person that is actually listening and not just waiting to talk.     

So, I am going to think of a new strategy for small talk.  And do the “lecturing and cheerleading” at a more suitable place like ….. here