Although it has obvious benefits for aligning, motivating and developing an organization’s workforce—and for improving organizational performance and innovation—performance management is the most hated of human resource processes.
If not done well, it interferes with the relationships between managers and employees and stifles collaboration, productivity, and innovation.
Performance management is often bureaucratic and time-consuming, with long forms to complete, 360-degree feedback, rankings, forced distributions, and conflicting and overlapping competencies to rate. What often gets lost in the process is relationship building, feedback and employee commitment to higher levels of performance.
Over the last eight years, organizations have seriously examined their long-standing 
performance management practices. According to Deloitte’s 2017, Global Human Resources Trends report, 79% of executives rate performance management as a high priority. According to Deloitte, 39% of the companies they survey are changing their performance management systems to place more emphasis on continuous feedback, coaching and separating feedback from pay discussions. Companies who have made such changes include: Adobe, New York Life, Motorola Solutions and Kelly Services.[i] Others such as Dell, Juniper, IBM, and even GE have as well.
The impact of these changes is high. 90% of the companies that have redesigned performance management practices report seeing improvements in employee engagement, and employee and manager conversations, according to Deloitte.
UCLA professor Dr. Samuel A. Culbert advocates eliminating performance appraisals, saying that they are, “A negative to corporate performance, an obstacle to straight-talk relationships, and a prime cause of low morale at work. Even the mere knowledge that such an event will take place damages daily communications and teamwork.”[ii] Instead, he advocates performance previews: problem-solving discussions about how the boss and employee will work together more efficiently and effectively than in the past.
However, some companies have reviewed their performance management practices and after making some tweaks decided to keep them and performance ratings. Facebook is one of them. After analyzing their performance management system a few years ago, they conducted focus groups and a follow-up survey with 300 employees. An overwhelming 87% of employees wanted to keep performance ratings. Facebook kept their performance evaluations for three reasons: fairness, transparency, and development.[iii] Facebook ties their ratings directly into compensation. Facebook management also concluded that ratings help employees understand how their contributions are seen by the organization.
Intel, Price Waterhouse, and Deloitte are also reinstating performance ratings. Deloitte is using more than one rating (based on competencies) and keeping the emphasis on developmental feedback.
A survey by research company CEB of 30 organizations and just under 10,000 workers found a 10% drop in employee performance and a 6% drop in employee engagement by companies that abandoned performance ratings and made the process less formal.
CEB concludes that when managers didn’t provide ongoing feedback and employees did not receive performance rankings workers become confused about where they stand. Some workers even become less satisfied with their pay since their bosses don’t explain salary decisions anymore.[ii]
Whether your company uses or does not use performance ratings, it is critical that managers provide ongoing feedback, both positive and negative, so employees know what goals and milestones to focus on, and what they need to do differently to improve their performance. Managers who cannot provide this ongoing feedback should not be in management. To be sure, the documentation of performance is essential, especially for difficult performance discussions, for discharges and reductions in force.
Furthermore, when the compensation discussion occurs, it will be a yardstick that employees will use to measure the perception of their performance and how it stacks up against other employees and where they stand in the company. The bigger the pay raise, the higher your value to the company. When this conversation occurs, it is critical that managers have laid the groundwork for their ongoing feedback and with the performance review regarding the employee’s performance and what they need to do to improve.
The CEB report doesn’t mean that companies should go back to conducting ratings. For most companies, I don’t recommend them. What the report does reinforce is the importance of ongoing performance and developmental feedback and the value of having managers in place who are capable of and have the courage to provide this feedback.
If you are going to eliminate performance ratings be sure to follow these four steps:
- Train your managers on giving frequent performance and developmental feedback.
- Get feedback from employees on how well managers do with providing feedback, motivating, coaching and empowering. It is not necessary to conduct weekly surveys on manager performance as some pundits or software platforms encourage. This is counterproductive and gets old fast. But it is essential to seek anonymous employee feedback and provide it to managers.
- Use on-line performance management software technology that allows managers and employees to set goals, provide ongoing feedback, take and document notes on weekly meetings, update goals quarterly, and provide annual reviews. If your payroll/HRIS system does not enable this, there are many stand-alone software platforms that do.
- Calibrate the performance and potential of employees by using job-specific competencies and group calibration meetings. Allowing individual managers alone to provide the sole feedback is risky. Your organization needs to have objective standards and more than one manager’s input on an employee’s performance to counter unconscious bias and organizational politics. As Artificial Intelligence evolves and is used more by human resources organizations, it will improve an organization’s ability to identify the competencies of its best performers and help reduce unconscious bias.
Remember, your performance management system provides analytics to inform your learning system goals and your succession planning. Business moves fast, and high performing organizations need to be continually assessing workforce skills and motivation to judge what future learning or new skill sets are required to compete against new competition, technology, and business models.
It is essential to truly understand the performance, innovation, and engagement of your workforce for your company’s overall financial performance.
The performance management system and changes your organization needs to make will depend on your organization’s mission and business strategy.
If your organization needs to attract new skills, become more innovative, encourage more collaboration and rapid change, you will need to have a performance management system that incites and rewards these behaviors, and measures the performance and individual of your workers and teams. Often these business strategies are better supported by performance management systems that do not require managers to “force rank” the performance of their employee and do not give performance ratings to employees.
On the other hand, if your organization needs more accountability and compliance, or if you believe your management is too lenient on performance, or if you anticipate that your organization will be going through a period of restructuring, your organization may need to force rank performance and provide performance ratings for employees.
We will work with your organization to review your business and talent strategies to help you identify the performance management system that best fits your organization.
We provide organizations with training options to improve the ability of their managers to set goals, provide ongoing feedback, performance assessments, and to make empirically based decisions on pay and promotions.
Manager Training to Develop ACE Leaders – One and Two Day Options
This workshop is for recently promoted managers who are accountable for the performance, development, and results of their teams, including goal setting and providing performance feedback.
These leaders often face the challenge of understanding that leadership is different than being the technical expert. New leaders frequently fail to learn that they need to stop doing the tasks which led to their promotion and instead learn and perfect the functions of successful leaders.
This workshop will develop ACE Leaders. The ACE Framework stands for leaders who learn to be agile and align employees with the strategic goals of the organization. Leaders who learn to provide constant clarity and communications. Finally, leaders who learn to act, and act with empathy and to empower their teams. I invite you to read my blog, “Seven Mistakes New Leaders Make” to learn more about ACE leaders.
This training is offered in one and two day sessions, and a package which includes an ongoing coaching to help new leaders develop and apply their recently learned skills in real-time situations.
In the first day of this training, the new leaders will learn the characteristics of great agile leaders and what makes them successful. Specifically, they will learn on how to:
- set up team operating norms
- align their teams to the organization’s frequently-changing goals
- write A-SMART goals
- delegate work based on each workers readiness and skills
- motivate their teams
- provide constant feedback and coaching
- complete performance appraisals.
During the workshop, we will apply their new learning to the real-time issues they are facing today.
At the end of the workshop, the attendees will understand what steps and tools to use to help their teams understand their unique role in the organization, their specific accountability, their strengths and development areas, and the specific steps to take to improve. The attendees will also learn how to adjust their leadership and communication styles for the various personalities and diverse cultures that will make up their teams.
This workshop has an optional second day, which I highly recommend. The second day session includes administering the Skill Deployment Inventory, which helps leaders understand their dominant communication style in normal interactions at work and how their communication style changes under stress.
The second day of training provides essential steps to diffuse and resolve conflicts. The second day accelerates the learning and skills new leaders need to effectively build relationships, act with empathy, and to empower their teams.
During the second day session, the leaders will learn the strengths and weaknesses of their communication style and how it positively and negatively impacts their teams. They will also develop strategies to communicate more effectively with each member of their team and how to lessen misunderstandings and resolve conflicts. The result will be a more harmonious team that is better aligned with their common goals and produces higher results.
The administration of the Skill Deployment Inventory requires attendees to complete the assessment two weeks before the training to allow for the results to be delivered and used during the second day of the training.
And there is more. This training also comes with an option for Ongoing Coaching, after the workshop.
During the ongoing coaching, I work individuals, and with the group of workshop graduates, to assist them in applying their newly learned skills real time in the workplace.
The coaching could be for activities such as delivering difficult performance or developmental feedback, practice in giving their first performance appraisals, deciding on pay increases, brainstorming on how to motivate struggling employees or other topics such as improving team operating norms.
After this training, managers to set goals, provide ongoing feedback, performance assessments, and to make empirically based decisions on pay and promotions.
Your employees will see the positive impact of this training. Your measures of employee engagement and satisfaction should increase, and the amount of your employee turnover should decrease. In addition, as your managers improve their ability to lead and motivate their teams, you will see an increase company performance.
Are you ready to improve your performance management system and train your managers to improve their ability to lead and motivate their teams?
Contact me at 707-331-6740 or at VA@VictorHRConsultant.com.