This is still a bit draft - will tidy up later!
Performance review needs a performance review - the philosophy behind it, and the conversation are key.
CEB research suggests we need about a 20% improvement in performance from employees to hit businesses' objectives, globally. Over the past 15 years we've seen about 10-12% improvement, but not enough, and current activities are only going to give us another 3-4%.
Is performance management actually improving performance? CEB correlated performance ratings and business performance and found there was no correlation.
We're not measuring performance correctly - those receiving highest performance scores aren't truly highly performing. We're getting it wrong 2/3 of the time!
David has got a key bug bear about forced rating - we don't always want to motivate the top people or get rid of those at the bottom - a range of people factors get in the way. It therefore tends to demotivate people (other than the HR people who love all the data they have.)
What are your goals for performance management, and what mindset do you want people to have? Then we can rebrand it.
We started with Mindset.
Josh's suggestion is that the current, wrong, unstated belief about performance management is that talent is fixed and we need to assess it. It'd be better to focus on how people could be better.
And it's a belief. Lots of research suggests change is based on whether we belief we can change, eg Carol Dweck's research on fixed and growth mindsets again.
You can see the impact on peoples' brains - people with a fixed mindset react much more strongly to negative feedback and don't show the signals necessary for later encoding .
People with growth mindsets pay more attention to feedback they can do something about and that they can do something with later.
People with growth mindsets become better leaders when they have a mentor, those with fixed mindsets the opposite.
We're priming people for fixed mindsets, and by the way research suggests you can prime people in just 10 minutes.
If you tell someone they are smart that's different than thanking them for their work and performance. But the first of these suggests a fixed mindset and is therefore counter productive.
David suspects the higher up you go in an organisation the more you find fixed mindsets.
If you say I can't the brain can't work. So instead say 'I get better the more I focus' - an important shift to make.
For me, I think this reinforces an existing shift from using performance management for reward towards linking it with coaching and development. But there is a build here too. It's not just that there's a fixed mindset behind the design of many of our performance management systems, it's that these systems then create a fixed mindset in the workforce too. So a growth mindset is first likely to be more helpful in designing an effective system, but that system is then more likely to lead to performance too. I'm not sure that point is widely appreciated, or even if I had appreciated it myself.
We then had an input from Steven Rice at Juniper Networks.
Steven doesn't have a lot of patience for a lot of what we do in HR. Everything we do must drive business value. (Doh!)
One night they started to think about their HR architecture from an employee perspective, rather that how companies tend to think about their employees.
Came across a simple and powerful question - where will you do your best? They want the answer to be Juniper. Many of their processes raised employees to question this.
Want to be able to link their own persona to what they do on a daily basis. To be able to link who they are inside to who they are outside (from Firms of Endearment.)
They've now linked all of their processes to their brand etc. And he went out with their Marketing Director to here how customers describe them. There was a disconnect between this and their internal value and behaviours.
After having updated these, they were then accused of running performance management as a clear violation of their values and behaviours. To walk the talk they had to update performance management.
This led to a relaunch of what they now call Talent Works.
We are a meritocracy - differentiate
Line managers own people and performnace
Enable quality conversation with individuals about their performance
Reinforce the values and behaviours. One of these is trust so they couldn't have a process which was time consuming and frustrating.
They don't do ratings or rankings now. And they've erased the terminology about performance management. He gets emails from employees aying this is the best process and best conversation. better corrleations performance and bonuses.
When they do determine someone isn't a J player, employees seem to respond positively to this as well as it's helped them understand that Juniper isn't the right place for them.
What's the trust of validation? The use of analytics to confirm that what they're doing is working?
Note this is only part of a much bigger change, eg they removed all time off policies so people manage their own time. This no doubt makes the changes in performance management easier too.
Secondly, you need the right type of conversations.
Identify the number and type
Process the list of dialogues as process maps.
The current process tends to lead to overwhelming threats where they can't process what you want them to focus on. the aim is a manageable threat.
They also create a fixed mindset.
So are people telling the truth or not?
Would you let your customers come into the organisation during performance review week? Or is there lots of tension and frustration?
Is it possible for a manager to be a judge and coach at the same moment? Maybe if we didn't have such socially focused brain. But as soon as we confront a status threat we tend to close down. Forced rankings in particular reduce trust and sense of fairness. If you have one you need to do an enormous amount of work - calibration processes etc - to manage certainty and fairness for people.
If you're trying to manage it compensation it may not matter, but if you're trying to grow people, change their habits in an evolving workplace, you need to help people adapt. then traditional performance management doesn't work.
We need to have conversations around habits not performance gaps - what type of habits are you trying to build?
Habits are built on moving from impasse, insight, action. When you generate insight in the minds of another person, habit start to change.
Inisghts matter because many problems they require it, and importantly because they tend to be more memorable than providing solutions. They also require a deep sense of engagement and they can then create wide scale, sustained neural change.
It's not about the coaching model you use, but how this is used. But there is a philosophy around things which are personal, emotional and complex.
The difficulty is you need to change managers' behaviour around this in a sustained way over time - helping them create insight rather than telling them what to do!
Steve believes and Junpier uses these four principles:
Goal setting important - everyone should have accountabilities and measures. he knows how many of 10k employees have goals reviewed by their matrix managers
Manager should have input and insight from across the organisation about how their people are performing. They use relative laddering - through peer groups managers should have inputs to this
Conversation Day. Change in vocabulary is important. They put the processes in the hands of individuals. Conversation Starter to talk about capability, contribution, careers and connections. This provides an opportunity for them to put forward their thoughts for their manager. How they connect to the organisations, whether they live and breathe the values, and how they need to develop and grow. It's a very positive conversation, and energy goes up which the conversations are going on.
They then make the pivot to the 5th C - compensation. they provide the manager guidance and input so managers can use their judgement. HR doesn't prescribe or dictate. if goals are set well and laddering is used to provide feedback from peers and there's a meaningful conversation that the process goes quite smoothly.
but there's no rating or ranking involved in this process. theres no data or labelling in the system. Transparancy is the process, so there's nothing to identify them as J player or a non-J player.
Taking out the assessment, the idea you're being give a number, allows the shift from judge to coach, and quality conversations..
It doesn't mean not having any structure.
One difficulty is a lot of ERP systems reinforce old ways of doing things.
And Unions and Works Councils? - well they've got it through every single country they do business in.
By the way pay decreases performance. In one study, when people had a £5 vs 50p payoff participants had a 10% drop in performance. (Mobbs, Psychological Science, 2009). It applies wherever there is any interest of fine in the work.
People are getting over excited by the pay and this arouses the brain at the expense of what you want them to focus on.
PPP helps with hiring and keeping talent but shows less link to improving performance than you might expect. CEB research suspests an 11% impact on performance but up to 26% increase in retention. So maybe if we do use PPP we use it for retention, and get creative about making this link, rather than pretending its about performance.
David thinks the entire financial crisis was based on over excited brains not processing properly. Some really interested unexpected consequences.
So how do we measure without ratings or rankings? Don't put people in boxes but think about people's progress towards mastery. If it's something of interest to the person there's a natural reaction to want to master it. this can be about contribution or values, and you can still put people in zones.
The process works because it's based on procedural justice. Having a voice, being able to make a point etc. It allows you to predict that in the future you'll be treated fairly.