According to news reports over the last decade or so, performance management is on the way out. It has survived after many changes, like dropping forced rankings. Today, some believe it is too anxiety-inducing and the terms “feedback” and “performance management” are being replaced with more gentler terms “feed-forward” and “performance development.”
Companies are taking this seriously and making changes.
In 2020, AstraZeneca changed its review process to include quarterly review check-ins and replaced the terms “feedback” and “performance management” with “feed-forward” and “performance development.” (I like AstraZeneca’s change to include quarterly review check-ins.)
According to current and former employees at Microsoft, managers are encouraged to use the word “perspectives” instead of “feedback.” Reviews, meanwhile, have been branded as “connect” conversations and not performance appraisals.
Did feedback or performance management ever exclude performance development? Of course not. Employees can’t improve without feedback. The issue is how feedback is delivered, by whom, and if it includes coaching to improve. More importantly, it is about building trust.
I have never found that changing the title of something makes any real impact unless employees feel a substantive change in their relationship with their managers and in the organization’s culture. Employees are smart. Consider the following: Changing the name of a layoff to a “reduction-in-force,” and later to “restructuring,” didn’t fool anyone. Jobs were going to be cut no matter what the process was called.
Build Trust in the Performance Management Process (or Whatever You Want to Call It)
The practice of performance management should build trust. Trust leads to individual and team success.
Performance management is the process of setting goals, building alignment and motivation to complete those goals, and providing feedback, coaching, and training. Hence, people and teams improve. It includes recognizing progress, success, and excellence. The process also feeds other talent management processes, such as determining merit pay, identifying training needs, and carrying out succession planning. Done well, performance management will significantly improve team and organizational performance and innovation. But underlying it all is trust.
Multiple Studies Show the Importance of Trust
Several studies have identified the critical dynamics that contribute to team success. These studies come from the MIT Human Dynamics group, the Harvard Business Review, and Google’s People Operations. Let’s look at one of these studies, and I will provide you with a link to learn about the others.
In the fall of 2017, Google’s People Operations published the results of its study on team effectiveness. They found that group dynamics mattered and that the critical issue of psychological safety (trust) was most important. The People Operations analysis conducted more than 200 interviews with Google employees and analyzed 250-plus attributes they identified from more than 180 active Google teams. They compared high-performing teams with low-performing teams.
According to Google’s re:Work website, they discovered that, “Who is on a team matters less than how the team members interact, structure their work, and view their contributors.” They discovered the following five key dynamics that set successful teams apart from the rest:
- Psychological safety (commonly called trust): Can we take risks on this team without feeling insecure or embarrassed?
- Dependability: Can we count on each other to do high-quality work on time?
- Structure & clarity: Are goals, roles, and execution plans on our team clear?
- Meaning of work: Are we working on something that is personally important for each of us?
- Impact of work: Do we fundamentally believe that the work we’re doing matters?
According to Google, psychological safety was far and away the most important of the five dynamics, and it underpins the other four.
The Google post explains that new team members are reluctant to engage in behaviors that could negatively influence how others perceive their competence, awareness, and positivity. Although this kind of self-protection is natural, it is detrimental to effective teamwork. Conversely, the safer team members feel with one another, the more likely they are to admit mistakes, form partnerships, and take on new roles.
The Google post goes on to explain another significant finding:
Individuals on teams with higher psychological safety are less likely to leave Google. They are more likely to harness the power of diverse ideas from their teammates. They bring in more revenue, and executives rate them as “effective” twice as often.
Another study by Paul Zak in the Harvard Business Review looked at the neuroscience of trust and the relationship between trust and the brain chemical oxytocin among people at high-trust companies. By measuring people’s oxytocin levels in response to various situations — first in the lab and later in the workplace — Zak identified eight key management behaviors that stimulate oxytocin production and generate trust: (1) Recognizing excellence. (2) Inducing “challenge stress” (tough but achievable goals with a concrete endpoint). (3) Giving people discretion in how they do their work. (4) Enabling job crafting (people focus their energies on what they care about and their strengths). (5) Sharing information broadly across the organization. (6) Intentionally building relationships. (7) Facilitating whole-person growth. (8) Showing vulnerability.
He discovered that compared to people at low-trust companies, employees at high-trust companies report the following:
- 74 percent less stress
- 106 percent more energy at work
- 50 percent higher productivity
- 13 percent fewer sick days
- 76 percent more engagement
- 29 percent more life satisfaction
- 40 percent less burnout
Paul Zak says the following about his decade-long research on the neuroscience of trust:
“Ultimately, you cultivate trust by setting a clear direction, giving people what they need to see it through, and getting out of their way.”
Performance Management Needs to Engender Trust
To engender trust, managers need to continually provide candid feedback and coaching to employees and allow an open dialogue for questions. Additionally, managers need to work with employees to secure needed resources and access to experts to overcome obstacles. I recommend a quarterly formal process to update and revise goals, as strategies and goals frequently change during the year. I don’t recommend giving employees ratings, and certainly not forced rankings — they are detrimental to morale, reduce trust, and require too much time for their value. In many cases, forced ranking is too subjective.
I encourage everyone who gives feedback to learn the “bottom-of-the-cup” technique.
You will know when you have built trust with your employees. They will no longer dread performance management meetings because you have already discussed their performance, strengths, and development areas. No surprises. Your employees will confide in you because they know that you understand their unique skills and abilities, the type of work they like to do, their contributions to the team, and their career aspirations.
Despite the headlines, employees, even young employees, want feedback. An employee can improve if the feedback is delivered tactfully, with respect and coaching. Don’t believe that “feedback” or “performance feedback” is on the way out or that we need to sweeten it up with gentler words. That is the wrong discussion. Build trust and enable people and teams to grow.
About Victor Assad
Victor Assad is the CEO of Victor Assad Strategic Human Resources Consulting and Managing Partner of InnovationOne, LLC. He works with organizations to transform HR and recruiting, implement remote work, and develop extraordinary leaders, teams, and innovation cultures. He is the author of the highly acclaimed book, Hack Recruiting: The Best of Empirical Research, Method and Process, and Digitization. He is quoted in business journals such as The Wall Street Journal, Workforce Management, and CEO Magazine. Subscribe to his weekly blogs at http://www.VictorHRConsultant.com