Life is full of big mysteries. What exactly did happen to
the Marie Celeste? What causes
spontaneous combustion? And why did it take Fulham so long to fire Martin Jol?
Perhaps the biggest mystery of them all, and one that keeps
me awake at night, is why companies put so much emphasis on the importance of
performance management only to completely undermine these good intentions
through having an annual, backwards-looking, ratings-based, tick-in-the-box
approach to reviewing performance that is deeply unpopular with managers and
not trusted by employees?
The quarterly International HR Forum meeting on 15 July was
devoted to trying to get to the bottom of this enduring mystery. Very timely,
given the “hot topic” status this has achieved in the HR press of late, the
emphasis that Peter Cheese put on this during his keynote at our annual do, and
the growing trend amongst some pretty big players to be more innovative in this
area.
First up to set the scene was the CEB’s Kim Bast. Kim proved very adept at pulling out the salient points
from some pretty dense slides! The key takeaways were:
·
Business leaders require a 20% improvement in
“breakthrough employee performance” to meet their goals.
·
The raft of statistics that show just how
dissatisfied business leaders, managers and employees are with their
performance management processes.
·
The changing business environment
(globalization, remote working, matrix organization structures, the increasing
importance of collaboration to get things done, etc.) has also put stresses on
traditional performance management processes.
·
Traditional performance management processes
focus on individual task performance, whereas network performance (how
effective an employee is at improving their own and other people’s performance
by working with and through others) is now just as important. So performance
has shifted, whereas performance reviews have not.
·
The CEB’s model of high performance is based on
the concept of “enterprise contribution” which is an employee’s effectiveness
with their individual tasks, their contributions to others’ performance, and
the use of others’ contributions to improve their own performance. Individual
Task Performance + Network Performance = Enterprise Contribution =>
Achieving Business Goals.
In summary, the traditional annual, ratings-based approach
to reviewing past performance is no longer compatible with the need to provide
quality feedback not just on past performance but also on future requirements
on an ongoing basis.
Simon McDougle
then took us through the journey that Adobe have taken. Imagine a world where
performance management, rather than an annual HR-owned, HR-policed,
process-driven, ratings-based, backward-looking activity becomes an any time,
any format, ratings-free, manager-owned, HR-enabled activity that focuses as
much on future outcomes and development as prior performance and contributions?
Adobe’s “Check-In” process provides just that world. It revolves around the
following:
·
Feedback. What contributions have you made to
enterprise success? This part of the discussion is based on observable behaviour
and activity not just from the manager, but from peers and other stakeholders
who have worked closely with the employee.
·
Expectations. What will you be doing in the following
6-12 months? And how are you going to be doing it? In the sales world this has
been adapted to “Get It Done” and “Do It Right”. In either scenario, the “how”
is as important as the “what”.
·
Growth. A combination of identifying development
within the current role, and also discussing career aspirations.
Other processes that traditionally had strong links to
performance ratings were de-coupled, with managers being empowered to own and
distribute the merit and bonus pots that get allocated to them. There is
guidance provided (e.g. market data, position in range data, etc.) and
governance has been retained (through a calibration process).
It was clear that this was a major cultural shift, but one
that “before” and “after” focus groups have shown to be a highly welcomed
shift. Simon highlighted the following as key to enabling this transition:
·
Recognition that is a journey.
·
Executive championing.
·
Equipping managers with the right skills
(coaching, feedback, difficult conversations, etc.).
·
Plenty of communication. Adobe went beyond email
to also embrace social media and a dedicated intranet site.
·
Recognizing that in certain geographies certain
aspects of Check-In may not work. Such as 360 in India.
·
Incorporating the critical skills around
Check-In to the leadership capability model.
Finally, Rod Ireland
took to the stage (well, the floor) to share with us key levers that can be used
to make the transition to a more innovative approach to performance management.
This was based on his experiences at Intel, when they went through this
particular journey. There was a lot of resistance to change in certain parts of
the business – “we’ve always done it this way”, “it was good enough for me, so
it’s good enough for them”, “how can I manage pay and allocate bonus without
ratings?”, and so forth.
The levers Rod advised us to use were as follows:
·
Legal. Not just because of the “weight” that the
opinions of lawyers carry, but to avoid the sorts of litigation that Intel
experienced.
·
Data. As the CEB studies have shown, there is
plenty of data to support the need to move away from traditional models of
performance management. Within our own businesses there will also be other
sources of data. Attrition spikes after the annual performance review season,
feedback from esat surveys, looking at changes in perception at point of recruitment
to current day, focus groups, etc.
·
Cultural considerations. The shift from
directive to coaching, to strengths based leadership, etc.
·
Environmental considerations. Chief amongst
these are the more rapidly changing nature of the market, companies seeking to
differentiate through innovation, the need to engage all, and the move to reward
collective contributions and behaviours, not just individual performance and
outputs.
So, as my teenage daughter would say, we had, like, a
super-amazeballs sesh. Massive thanks to Kim from the CEB for providing the
context drawn from the rich data provided by the CEB’s members, to Simon for
taking us through Adobe’s journey, and to Rod for equipping us with some levers
to anticipate and overcome barriers. Performance management is one of the most
critical activities that a business undertakes, and the process must support
the reality of what this is today by enabling real-time feedback and coaching
on not just past contributions but future expectations and potential growth.
And a final thanks to Simon for hosting the session, and for
all of those who took time out of their busy schedules to make it a highly
interactive occasion.
Enjoy summer, see you in three months for the next quarterly
meeting!
