Killing the Traditional Performance Management Approach

In the last few years, there have been tons of stories about how companies are ditching performance management as it has long been practiced and replacing it with a variety of approaches. Just a few of the many recognizable names:

• Sears
• SAP
• Adobe

At the same time, there have been a large number of companies popping up to support different approaches to performance management. A small sampling:

• Reflektive
• HighGround
• BetterWorks

Changing Our Thinking Around Performance

[Click here to see the latest research on how high-performing companies manage employee performance]

The challenge I have seen time and time again is the attempt to focus on this as a technology problem or a process problem. In reality, it comes down to the culture of the organization and how it fits around this idea of performance. Managers, for the most part, hate the review process. Simply asking them to do more frequent reviews isn’t the answer, because you’re asking them to do something they don’t enjoy even more often while hoping for a different result. That’s the definition of insanity.

Recently I heard an interview with Patty McCord, the former HR leader at Netflix (the one that helped to launch the well-known “Culture Code” (see SlideShare deck below). During the discussion, she pointed out that when talking with so many well-established companies, they commonly use the traditional “once a year” performance management approach. Her response? To paraphrase:

That performance management process typically shuts down your company for a few weeks every year so that everyone can gather their notes, have meetings, turn in forms, etc. Your startup competition will catch you eventually because they are working 12 months of the year instead of taking time off for some outdated approach that delivers no value.

Hear hear.

In case you’re curious, here’s the famous “Culture Code” deck that demonstrated the Netflix culture to the world in real behavioral terms:

Radical Thinking About Performance Management

What if we (gasp) started holding managers accountable for the performance of their teams? Instead of offering a crutch or trying to make it easy, we instead put the onus on them and give them some more accountability.

Rajeev Behera, CEO of performance management startup Reflektive, said during the recent HR Happy Hour podcast interview that it’s not about helping managers know what to say–it’s more about getting them to give feedback in any capacity.

I completely agree. It makes me think about the SHRM Bookstore, a common place for HR leaders to find books. Some of the best sellers have titles like “1001 phrases for performance evaluations.” Really? We need to stop letting managers get away with trying to give the “perfect” feedback and instead get them to give feedback on a regular basis. They will get better at the practice over time, but too many HR pros are hampering the effort by putting too much emphasis on the exact wording people use.

When I was leading the HR function in years past, I was always happier with the managers that actually did thorough reviews than those that tried to come up with the “perfect” comments.

Let’s do as some have said over the years and dump this idea of “performance management.” Instead, let’s look at it as performance improvement or performance enhancement. By the way, that is how you get managers on board. What manager do you know that wouldn’t jump at the chance to improve the performance of his/her team?

Simple changes in the words we use to describe this help to frame the way we see our employees. Are they resources to be managed, allocated, and evaluated? Yes. But if that’s the way they see the company treating them, then it is going to be challenging to keep them engaged. On the other hand, when the company (and managers on the front lines) treat employees like they are valuable resources that have infinite opportunities to improve themselves and business, outcomes, that brings about a very different feeling from people.

Bottom line: we get what we expect from people. Teachers are well-versed in the concept of the Pygmalion Effect, or the idea that one’s expectations about a person can eventually lead that person to behave and achieve in ways that confirm those expectations. Think about how your managers see their direct reports. Do they see them through the aspirational lens of “you are good, how can I help you be great,” or is it more of a “do what you’re told and keep in line” type of approach? This has been bouncing through my head a good bit since my recent visit to the O.C. Tanner campus in Salt Lake City, where the company’s mission is to enable people to do great work.

Let’s bring out the old Google 20% time discussion, where employees have the ability to work on projects outside “normal” work that they think are interesting or valuable for the company. Note: that 20% time block is where “little” things like Gmail and Google’s AdSense programs were first explored. 

Employees at Google that feel like the company values them and their ideas are going to put more effort into creating new and innovative things. Just like any company, Google probably has some bad managers within the firm, and employees working for those managers are less likely to contribute mightily to the organization’s success. I can say from personal experience–when you don’t feel like your ideas are valued and the company has your best interests at heart, it’s tough to go the extra mile and deliver more than what is expected of you.

The Process vs. The People

The answer lies in the direction of performance management as a discipline. Our research shows it is not productive or constructive for managers to save up their feedback to blast the employee with 12 months’ worth of comments and criticism. Even 12 months’ worth of praise is not as help as praise given consistently to reinforce good performance and motivate future performance.

We’re seeing a slow growth of employee-focused activities that enhance the employee experience while still delivering value for the business. This includes everything from coaching and informal feedback to shaping managers into development advisors for their employees to help them grow and succeed. But there is still a struggle in determining how to provide structure and consistency while still keeping the employee at the center of it all.

Process vs. People: Creating the Right Balance

Many organizations say their performance management process is more process-focused than people-focused. For instance, the goal setting, assessing, and review process is at the forefront instead of incorporating elements such as employee strengths, in-the-moment feedback, recognition, and rewards. Perhaps that is why just so many firms believe their current approach is ineffective for managing employee performance.

Traditional performance management does not deliver value for companies and creates an adversarial relationship between employer and employee. By gathering information on how employees are performing once or twice a year, performance management seems more punitive than productive. In addition, traditional performance management is not tied to business outcomes or overall organizational success.

Some of the common areas companies use to shift the traditional approach.

• Supplanting annual discussions with informal, frequent feedback
• Eliminating use of a forced ranking system
• Replacing annual goal-setting with near-term goals

These three items are a stark contrast to the performance management processes of old: they are focused on actual business and individual performance. But, the small percentage of companies actually doing this shows that much opportunity still remains.

The Future of Performance

The answer lies in the direction of performance management as a discipline. Our research shows it is not productive or constructive for managers to save up their feedback to blast the employee with 12 months’ worth of comments and criticism. Even 12 months’ worth of praise is not as helpful as praise given consistently to reinforce good performance and motivate future performance.

I’m seeing a slow growth of employee-focused activities that enhance the employee experience while still delivering value for the business. This includes everything from coaching and informal feedback to shaping managers into development advisors for their employees to help them grow and succeed. But there is still a struggle in determining how to provide structure and consistency while still keeping the employee at the center of it all.

I talk with a lot of companies, and many of them are not sure how to shift their approach from the traditional way of doing things. Until we can get some good use cases and stories from companies that have dumped the heavy-handed approach for something that delivers better results, I think this change is going to continue to happen slowly. At the same time, I believe that if we can help companies tie these processes into something on the bottom line, we have a greater chance of making the new approach stick.