Across all industries, the performance review process is being scrutinized, along with many aspects of talent management, in light of the dramatic changes taking place with technology, generational migration, and new insights into the efficacy of the process. One of the more striking and provocative conversations I have come across recently was published by Strategy + Business (Issue 76, Autumn 2014) entitled, “Kill Your Performance Ratings” (http://tinyurl.com/lkfvjgg).
Conventional performance ratings are practical, rational, and in headlong conflict with neuroscience research. New findings challenge the emotional impact on the employee (as well as the supervisor) which results from quantitative performance ratings. The underlying concept is that when performance is netted down to a numerical rating (general on a 1-5 scale, with 1 being highest and 5 being lowest), the emotional defense shields go up, and productive dialog is essentially curtailed. In the article referenced above, the legacy approach is evaluated from five angles: (1) An individual’s sense of status in the organization; (2) Uncertainty associated with an employee’s (perceived or real) lack of control over their rating; (3) A diminishing sense of autonomy, and a focus on the past, not the future that impedes the associate’s development path forward; (4) The sense of “competition” that occurs when limits are placed on the number or percentage of employees that may earn a high rating; and, (5) The employees perceived lack of fairness that often accompanies a forced ranking system.
The authors of the S+B paper advocate a shift from ratings to more in-depth conversations focused on results, collaboration, and emphasizing continual learning and growth. Goal setting, where the associate determines their own objectives for the coming 60-90 days, creates a plan to achieve, and is guided by a supportive management approach, has been shown to deliver far better results than the legacy annual review process. I have personally witnessed how individual goal-setting delivers far greater performance in the sales arena, by challenging the individual for determining their own growth potential and recognizing/rewarding them for their attainment. There is no assigned quota. The individual challenges themselves to deliver above their trend or seasonally adjusted performance track.
One of the more recent (as well as controversial, and generally discarded) point of views that has been brought forward recommends harvesting peer-to-peer and manager discretionary recognition data as a basis for performance reviews. The idea is, at its essence, to determine a performance rating based largely on the number of times an individual has been recognized by his/her peers or supervisor. This concept defines an organization’s best performers as being those who receive the most recognition in their job.
This approach, (which, not surprisingly, was authored by a technology company that generates revenue by selling retail gift cards to be used as recognition for employees; the more recognitions passed along, the more gift cards they sell) is a perfect example of what is wrong with the performance management process.
The reality is that there is no equanimity in the utilization of data that is: (a) unevenly distributed, (b) subjectively based, (c) easily corrupted by “gaming” the system, and (d) fraught with every issue that S+B identifies with traditional quantitative ratings and/or forced rankings.
A social recognition system, which affords associates and managers the opportunity to express in a socially acceptable digital venue appreciation is an extremely powerful tool. Given the global distribution of employees, and the reality that associates may not frequently (or ever) meet in person their critical teammates, recognition is essential and receiving rewards can provide a powerful sense of inclusion. In tandem with a corporate charter that delivers on the promise of autonomy, growth, empowerment, and inclusion, the recognition system becomes a highly visible and valued cultural element.
There is a cautionary aspect to deployment of a corporate-wide recognition and reward system that must be acknowledged and planned for. Specifically, this has to do with adoption by management (and leadership) of the technology. In my experience, for example, the first-year following the launch of a social recognition system may generate between thirty and fifty percent utilization by managers. As well, there may be spotty usage of the peer-to-peer tools for recognition. Some groups or natural work units may place a higher value on recognition than others. Why is this? There could be a lot of reasons. For instance, it may have to do with the level of commitment of leadership to get aboard the system, or it could be the level of exposure (communications and interactivity) that roll forward with the launch of the new technology. Most significantly, associate utilization and adoption will be heavily influenced by the degree to which first and second-level supervisors/managers engage with the system. The best-in-class examples have integrated training, gamification, and a high level of visibility in their planning and execution in order to minimize the gap between access and activity on the recognition portal.
The gap referenced above is yet one more factor to caution against using recognition data as an adjunct or alternative to structured performance reviews. If some managers and supervisors get on board early, the circle of associates they oversee or have nexus to will possess a distinct advantage over those who work for or with the late adopters or laggards to the process.
Clearly, change is in the wind within performance management and the review process, with lots of good ideas and available technology to support improvement. But not every new idea is a good idea. Some may appear innovative on the surface, but fall short upon further review. My recommendation: Inspect carefully what you expect. And beware of the charlatans who proffer a novel idea that ultimately serves their interests first, all in the name of “innovation”. The tubes beneath London say it with certain eloquence: Mind The Gap.