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I’ve spent a couple of non-Olympic days in London this week and have been pleased to see travel disruption significantly down on what had been feared – in fact away from the Olympic venues and major train stations there seem to be less people around than there are normally.
The other big fear of many organisations was that sickness absence would rise to Robbie Grabarz heights as employees take unathorised leave to attend the games in person or more probably watch them on TV. Badenoch & Clark’s not thoroughly believable survey even suggested that a quarter of young employees (18-24) were likely to take sick time.
Of course the issue isn’t really about management of sickness absence as it is about more progressive employee support. For example, Nicola Linkleter, MD at Badenoch & Clark comments:
"To discourage employees against pulling a 'sickie', employers might consider embedding the London 2012 Games into the workplace. Showing events on big screens in breakout areas; allowing workers to take breaks to coincide with coverage and organising socials around major events could all help to increase employee engagement during the six week period."
Indeed, and I still think this sort of informal support would provide much more value than big, high profile corporate sponsorship schemes.
You could extend things beyond this too. Some progressive organisations already provide duvet days for employees who on some ocaisions just can’t be bothered to make it in. (I don’t think that should be seen as a criticism – the more engaged an employee is on an ongoing basis probably the more likely it is that they’re going to have the odd disengaged spell.) So how about ‘ticket days’ for those employees lucky enough to get one (perhaps only for the £20 tickets so it doesn’t just reward the richest).
What I don’t think organisations have to do is organise their own mini-Olympics. It can work in some organisations but just because your school kids have done it doesn’t mean it’s necessarily going to work for your employees!
So, yes, there is a lot of talk about gamification around these days and there should perhaps be a link between the games and organisations’ use of gamification. But gamification isn’t just about playing games (on an ipad or on a soccer field). It certainly doesn’t have to involve being given points and league tables as this article by the normally sound Will McInnes sort of suggests.
Gamification is simply about learning what makes games (including sporting ones) so compelling to make employment a bit more exciting too. Part of this is about striving for the best possible performance. As Lord Coe put in during the Opening Ceremony:
“The Olympics bring together the people of the world in harmony and friendship to celebrate what is best about mankind… There is a truth to sport, a purity, a drama, an intensity, a spirit that makes it irresistible to take part in and irresistible to watch… In every Olympic sport there is all that matters in life. Humans stretched to the limit of their abilities, inspired by what they can achieve, driven by their talent to work harder than they can believe possible, living for the moment but making an indelible mark upon history. To the athletes, gathered here on the eve of this great endeavor, I say that to you is given something precious and irreplaceable. To run faster, to jump higher, to be stronger.”
What games aren’t about is traditional reward. Though it’s interesting that some countries pay their gold medal winners up to £600k the UK doesn’t and I think that’s the right approach.
This is perhaps the real lesson from Olympic Games-ification – we need to make employment less about the salary and more about the mission of, performance development opportunities in, and the potential to have fun within, our organisations too.
More breaks, social events and ‘ticket day’ type flexibility are all examples of how organisations could make this sort of change.
Also see:
You know I’m a fan of Ed Lawler, right? (see 1,2,3). We’re not talking John Boudreau or Peter Cappelli here (though of course Boudreau is Lawler’s colleague at USC).
But I’m afraid I think Lawler’s article in the Executive Guide to Integrated Talent Management (featuring me, Dave Ulrich, Marshall Goldsmith – plus Peter Cappelli etc) has got everything pretty much completely the wrong way round.
It all starts off OK:
“The existence of an effective performance management system is often the major differentiator between organisations that produce adequate results and those that excel. Without a focus on performance management at all levels of an organisation, it is hard to see how an organisation can find a talent-based competitive advantage.
It is far from easy to get performance management right in an organisation. The corporate world is littered with companies whose employees never receive an effective performance appraisal. People at all organisational levels go through the motions of formulaic performance appraisals with astonishing insincerity and have little to show for it. There also are numerous examples of situations where individuals thought they were going the right thing and performing well only to find out that they were mistaken when they had their annual appraisals. Finally, in many organisations, performance appraisals simply aren’t done, either because of employee resistance or because managers ‘dry lab’ (fake) them.”
Agreed. And I think these reasons are why an increasing number of organisations are jettisoning their performance management processes and doing something more innovative and resonant instead.
But if you are going to do it, it’s important to know the best practices which will tend to stack the odds as far in your favour as much as you can.
To me, Lawler’s suggestions are more part of the problem than they are part of the solution. Here’s why:
1. Start at the top
Lawler: “In the best of all possible worlds, goals are first set at the top and then cascaded down so that individuals at each level have goals that are tied to the overall strategic direction of the organisation.”
Me: Well, I understand the logic for this – I’ve even led large projects (£1m+) based upon this principle, and shouted about the case studies which result. But increasingly I see organisations which are just to complicated and complex for this to work. You can’t just start with the top level goals and slice and dice till you end up with every individual taking on their own teeny little bit. Things don’t work like that. So as long as everyone is clear about the overall business strategy, and their own role requirements, they and their managers, and increasingly those other people working around them, are the best people to decide on their goals. Plus of course doing this makes the whole process much quicker and more agile, and less tedious all round.
2. HR should support, not own, the system
Lawler: “HR managers should not act as the conscience of the organisation or drive and sell performance management. These should be the responsibilities of the top managers.”
Me: If HR can’t own this, what can it own? (nothing!). It depends on what you want HR to be – if it’s just an administrative side attraction, then fine, just tell it to operate the logistics of the appraisal round. But if you want HR to drive competitive success but ensuring you have the people you need, you’ve got to give HR ownership of some of the key tools.
Some of this comes down to the difference between accountability and responsibility. HR can’t be responsible for managing peoples’ performance – that’s got to rest with the line. But HR can be accountable for good performance management taking place across the organisation. And owning the system which enables managers to own the performance of the people in their teams is a key part of enabling this to happen.
3. Cascade strategy and goals to all levels
Lawler: “The starting point for an effective performance management process should be the business strategy of the organisation. It should guide a goal-setting process that leads to individuals, teams and business units having transparent goals and objective sthat are directly tied to the strategy of the business. For this to be effective, the goal-setting process needs to begin at the top of the organisation and cascade down.”
Me: I would ignore the fact that this is really just a repeat of Lawler’s principle 1 except that my challenge is largely the same as my earlier one too. Not everything can be dictated from the top. If nothing else, it’s not very compelling to be treated like this ie as a small cog in part of the big organisational wheel. It’s often better to let people come up with objectives they’re going to be committed too, even if they’re not directly aligned with those of the top cheese. See my post on performance leadership for more on this.
4. Set measurable goals
Lawler: “Measurable goals need to be set, and individuals should be assessed in relation to them. This applies to both the skills and competencies that individuals need to develop and also, of course, their performance deliverables – the how and the outcomes of their performance.”
Me: Yeah, measurable’s nice, as it helps understand how people are doing and how much to pay them. But this is about performance assessment, not improvement. And improvement comes, once again, from making goals compelling, not merely measureable. See my earlier post on making objectives MUSICal, not just SMART.
5. Set talent development objectives
Oh good grief – get people to set these themselves. Then they may actually own them and do something about meeting them.
6. Rate outcomes and performance, don’t rank people
Lawler: “Some organisations (for example, ExxonMobil) rank-order hundreds, or in some cases thousands, of people from first to last, numbering them from one to whatever the total number of individuals is in the part of the organisation that is being appraised. This effort is like trying to measure the length of an objective to the closest thousandth of an inch using an ordinary straight ruler; the information needed to measure performance so precisely just isn’t available.”
Me: Yes, but you can’t accurately compare people’s performance at higher levels either. Nobody’s performance, goals or their job is the same, so you’re comparing apples with oranges whatever you try and do. Anyway, it’s not the ‘information’ that’s important here, it’s the conversation. The value of ranking, and why I suggest organisations do it, is the conversations between managers about what they value in different people and why they perceive some as more valuable than others. I’ve never seen the same quality of discussion take place over simply rating people. I4CP can show that it’s apparently less popular, but personally, I’d still do it.
Lawler: “Another seriously flawed rating practice is forced distribution. Some organisations (for example, GE, EDS and Accenture) require their managers to identify a certain proportion of their reports who are failing, often 5 to 10 percent, and a certain proportion who are doing particularly well, often 15 to 20 percent. The forced distribution approach ignores the reality that some work groups have no poor performers and other have no good performers.”
Me: Yes, that’s probably true, though GE never forced this to the extent that the story was spun. Anyway, you get round the problem by rating and ranking people. So they get rated based upon their objectives, and ranked against everyone else. If they’re performed well against their objectives but their colleagues have done even better (ie the bar has been raised) they’ll get a good rating but be ranked rather lower. I can’t see the problem in this.
7. Train managers and employees
I almost have to agree to this one, but there is a way round doing so. Recognise the need for emergence – if you have to train people (on the system, not just having good quality conversations) then the system is too complex. keep the bureaucracy light and just let it happen. Managers and employees will find their own ways to manage and improve their performance.
8. Link rewards to performance, but discuss development separately
Lawler: “Principle 8 is to link rewards to performance, but to discuss development separately. An important feature of an effective performance management system is the degree to which it affects the reward system; in other words, the degree to which it leads to pay increases, bonuses, stock options and promotions. Over the years, articles and books have claimed that performance management processes should separate the appraisal of performance from discussion about salary increases and promotions. This may indeed make some of the discussion easier, but it is not the way to make money and other tangible rewards effective motivators.”
Me: I certainly agree that there’s a problem here – put simply, if money’s involved, people won’t discuss their development needs (weaknesses) because they think it’s going to result in them being paid less. So they pretend they don’t have any needs, only strengths, so no, or at least less, development needs get identified. But I think Lawler is completely wrong to go with the reward vs the development aspect. Firstly because we know reward doesn’t motivate that much. And secondly, because it definitely doesn’t improve performance (by very much).
So use performance management to drive learning and development – both key drivers of improvement in any organsiation. And figure out something else (like this) to provide a basis for reward.
9. Appraise the appraisers
Again, a bit more of a difficult one to object too, but it’d be a shame to give up now…. so of course I need to note that simply appraising managers isn’t really going to be anything like enough. More important is finding people to work as managers who are motivated and competent to manage. And then you won’t have to worry about appraising them.
10. Consider having review discussions online
For a while I thought this would be the hardest principle of the ten to challenge – but then I saw my way through it. Don’t consider – just do it! This isn’t so much for the sake of being more ‘functional’ (“it gives individuals a chance to think a bit before they make their responses”) however, as Lawler suggests – it’s because online provides better clarity, sharing and memory than doing it any other way. Simps.
There you go – sorry Ed!
Also see
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I only managed to catch the final session yesterday but it was a good one.
We started with Bersin’s research suggesting that 70% of companies follow a coaching and development vs a competitive assessment approach to performance management.
It’s a potentially useful focus given that organisations with high quality development plans generate twice the revenue per employee as organisations with poor or ineffective development plans.
Plus moving away from focusing on the performance ‘score’ makes the process more relevant for people. Bersin see this, together with simplifying the process and bringing more people into the process eg through the use of social tools, as the key opportunities for improving appraisals.
I largely agree that this is the / an opportunity for performance management, though I’m surprised by Bersin’s findings that 70% of organisations are already focused on this track. I certainly don’t think many are as advanced as Kelly Services which provided the session case study.
Kelly had previously put too much focus into PMP – performance management ‘process’. Ratings took over from authentic discussion. But actually, this didn’t even mean that the ratings themselves were particularly sound – eg some managers never gave a ‘5’, whereas others only gave this out. It also took a huge amount of time.
The organisation therefore removed compensation decisions from this process and instead developed an employee led process in which employees call for performance review meetings (employees are also responsible for maintaining their own employee profiles and Kelly mine these so they can look for people internally before they have to look externally).
Pay is now based upon talent reviews and subsequent total reward reviews in which group leaders come together. These leaders know each other and know each others’ employees. And they talk about each others employees.
I though the most interesting question in the Q&A was one directed back at HR – suggesting that the HR function itself may be the main barrier to ‘blowing up’ performance management, and how organisations can best engage HR in making this sort of change.
Terry Hauer who was delivering the Kelly Services presentation didn’t have an immediate answer for this. I think I do, but it will have to wait for another time. And I agree it’s likely to be a key issue for organisations that want to make performance management work.
More from Bersin Impact 2012 later on today / tomorrow….
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I’ve been chatting to a couple of clients over the last fortnight about the importance of developing a unique proposition for people management.
We tend to think that there is just one best way of doing HR, whereas in fact there is a broad variety of potential approaches open to us.
The key point is that people are all different. This being the case, organisations can choose which sort of people they’re going to focus on employing and supporting. The challenge then is aligning HCM strategy and HC / HR processes around this strategy in a way that will appeal to (deliver the deal for) the chosen group of people.
There’s a good example of this in Paul Evans and Vladimir Pucik’s book, The Global Challenge, which also emphasises the need for differentiation supported by internal consistency, along with the balancing of dualities (local and global) in international human resource management.
This is Haier, established as a refrigerator factory in Qingdao in 1920 and now a multinational consumer electronics and home appliances company which with over 6% share of the white goods sector is the market leader. It is also credited with being mainland China’s (vs Hong Kong’s) only truly global brand.
Haier models its HR strategy on a race track in which case all employees, including managers, need to keep racing, and winning, in order to access rewards and responsibilities etc. The company explains:
“Haier provides its every employee opportunities to develop and demonstrate talents.
It is not able people, but the mechanism to encourage able people development, should we be concerned about. The responsibility of a manager is to establish a ‘race track’, ie. personality development opportunity, for every employee to become a SBU.
The ‘Horse racing court’ requires three principles, firstly, fair competition; secondly, ability-based appointment; thirdly, reasonable job rotation. Under the contract labor system policy, employees are regularly evaluated and classified by performances, and the managerial personnel do not work at the same position permanently but rotate regularly in a fixed period. The significance of Haier’s human resource management is to stimulate the enthusiasm of employees. In this system, every employee can feel the pressure from both inside and outside the company and convert the pressure into creative motility. This is the key to success.”
Some of the main features of Haier’s approach include:
There’s also a good description of Haier in ‘OEC Management-
Control System Helps China Haier Group Achieve Competitive
Advantage’ (Thomas Lin, Managing Accounting Quarterly, 2005).
This notes, for instance, that:
“Each employee receives a daily grade for actual performance and progress toward achieving his or her target. Daily evaluation results are shown to workers the next day on the bulletin boards in the factory. The employees who are acknowledged as the best workers for three consecutive days have the honor of telling their experiences to fellow workers…
Small yellow 6-S squares are painted on the factory floor. At the beginning of each workday, team leaders stand inside the squares to give a briefing on that day’s work and relay any news to the employees. At the end of each workday, some workers will be called to stand on the footprints inside the squares to criticize themselves for making mistakes and share corrective actions taken during the day or to share some of their good work…
The company adopts a point system for production workers using the 3E card, and, if an employee earns more points, he or she makes a higher wage and bonus (this way, both management and employee know the daily wage and why).
The company also uses quality-check coupons to provide an additional incentive mechanism. Each employee has a quality-check coupon booklet with red and yellow coupons for rewards and penalties. The booklet lists all quality problems the firm has detected and provides guidelines for checking each defect. If an employee failed to self-check a quality problem that was later found by his or her team member during a cross-check or by the superior during a managerial check, the employee will lose a red coupon and receive a yellow coupon that will be counted against that day’s wage and bonus…At the end of the day, all workers conduct a selfcheck of their own work with the OEC criteria, fill out their 3E (Everyone, Everything, and Everyday) cards with seven OEC criteria items, and submit them to their supervisors. All employees fill in a form daily and calculate their wage using the following formula: wage = rate 5 quantity + award – penalty.”
Now, we do need to be careful about stereotypes. So for example, Evans and Pucik note that ‘while China has been a high power distance country, characterised by high in-group collectivism, young urban Chinese exhibit a considerably higher degree of individualism and a more modest level of power distance. They are also more assertive than the previous generation.’
However I think most people would still agree that the US still has a more individualistic national culture and China a more collective one.
This makes it even more remarkable that Haier has managed to develop such a competitive company culture that it even strikes its newer US workforce as overly competitive (meaning that the company has had to adapt some of its HR practice such as giving out a brown bear or a pink pig, rather than assigning a red or yellow face to high / low performing employees).
I think this indicates very nicely and quite powerfully what can be achieved through differentiation.
The point here is that even a company as large and global as Haier (or GE or Aviva) can find a basis for differentiation, and enough people who will fit with this differentiated approach. We don’t all have to implement the same ‘best practices’.
Contact me if you’d like to develop an approach that is best fit!
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And I’ll be talking about the opportunities for using this critical but generally poorly implemented HR / business process area at this other session I’m running for Symposium Events:
Performance Management for Strategic Improvement
If there was one process in HR, or even across the whole of business, that most organisations would agree is broken, it would surely be employee performance management. Nothing else we do turns both managers and employees off so much or results in so much wasted time (mainly through poor application and ineffectual conversations but often not helped by bureaucratically heavy designs).
Yet it should not be like this. Employee performance management should be an absolutely critical business process – providing the main mechanism an organisation has for ensuring that work is performed and objectives are achieved effectively.
Attend this workshop to understand how performance management can be ‘enhanced’ (perhaps better phrased as ‘re-engineered’) to have a true and significant impact on business performance.
Dates:
25 May 2011 – Manchester
21 September 2011 – London
29 November 2011 – Birmingham
You can book here.
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The other event I’ll be attending (as a blogger) the same week as TRU is Symposium Event’s Performance Management Forum.
Speakers include:
Let me know if you’re going to be there – it would be good to say hi.
You can book here.
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This is the (slightly updated) presentation I made in Athens this week:
Regular readers will recognise the links to the value triangle etc.
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I’m a bit late on this one, but it occurred to me while I was preparing my slides for the performance management event in Greece next month, and thinking back over a recent client project, that Dan Pink’s points on intrinsic vs extrinsic motivation, made in his recent TED session, link to the differentiation I’ve made previously between performance management and performance leadership.
This hadn’t clicked for me before, and so in my HR Zone article last week, I just referenced Pink’s perspectives, and what I thought was a very compelling rebuttal from Paul Herbert.
But of course, they’re just two very different things:
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Winning People Strategies - How to drive performance, innovation and satisfaction
I’m presenting at this conference in Athens, Greece, organised by Boussias Communications, on Thursday 22nd October:
The People Management Executive Seminar is a meeting point for HR and management Leaders in the country.
The event, which in previous years world has hosted renowned academics, writers and HR experts such as David Ulrich, Lynda Gratton, Gareth Jones, Paul Evans and Ruth Wageman, is accredited as the most important event for executives who wish to acquaint themselves with the latest knowledge and thinking on people management and development.
In the difficult conditions in which businesses operate this year, the event will focus on the key area of performance management.
Let me know if you’re going to be there, and would like to meet. I’ve also got some availability on the afternoon of Wednesday 21st October.
Jon.
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“We are doing a small project to identify how we could ensure alignment of senior HR team members with the business.
From your experience could you share some key performance indicators used to measure the performance of senior HR Management members.”
My response (published here in case it helps other readers as well):
To explain my answer first of all, although I do know what a couple of my clients have been doing in this area, I wouldn’t want to share their work, and in any case I don’t generally believe that what works for one organisation will necessarily work elsewhere. So I hope it will be OK if I answer the question by describing the options that are available for you to do this.
And the first, most obvious option has to be to use your existing performance management system to ensure that your senior HR people are set performance objectives that align with and cascade from your business objectives, and that they are reviewed against these objectives – just like everyone else.
Your existing competencies should be able to fulfil the same role – or you could look at a set of HR competencies.
Either of these two approaches will allow alignment to be identified, but neither of them provides a specific measure of alignment. To get this, you could use a tool like the HCM value triangle and ask individual team members and others they work with to evaluate the proportion of their time / activity / output that is focused on value for money, adding value and creating value, or even isn’t value at all. For maximum alignment, you would look for as much of this to be focused on adding and creating value as possible.
Or there’s a useful framework in Becker, Huselid and Ulrich: the HR Scorecard (I’m not a fan of Becker / Huseild / Beatty’s HR / Workforce Scorecard, preferring my own HCM value chain, but the HR alignment model is OK – if a bit adding value focused) – see attached graphic. The authors suggest:
“If an organisation expects to develop HR as a strategic asset, it needs to think about alignment in two ways. The first is the alignment between the HR system that produces key HR deliverables and the requirements of the firm’s strategy implementation system… The second is the alignment between the role expectations for the HR function and the individual competencies required to put that role into action.”
You’ll find some examples of HR alignment measures in this book as well. However, my experience suggests that identifying HR measures is never actually that hard. When it is, it is because the objectives that you’re trying to measure still aren’t clear. You need to ensure that you are – that you fully understand what you mean by alignment, and why this is important to you. Once you are clear about this, using one or more of the options described above, I would expect KPIs to be fairly readily available to you.
Please do come back to me again (perhaps using the comments to this post) to let me know how you get on.
Other readers – anything else to add?
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“And then read Wally Bock's thoughts on abolishing performance reviews at Three Star Leadership. Bock refers to a recent Wall Street Journal article which suggests performance reviews are 'ill-advised and bogus' and should be replaced by 'Two-side, Reciprocally Accountable, Performance previews'. Bock is absolutely right in explaining that it's the ongoing conversation rather than the formal set-pieces which are important, but I think, although I don't agree with ditching performance reviews, that WSJ makes some good points too. However, I'd ditch the rather ugly name, and unfortunate acronym ('TRAP'), and just call this coaching, which I think needs to be part of any performance management system worthy of this name.”
One of the best things I’ve read on performance management recently is a review in People & Strategy (volume 31, issue 3), including a write-up of a discussion with Ed Lawler, about his new book, Talent, held almost a year ago. The discussion group concluded that performance management is the most critical process in managing talent, but is executed poorly, and “actually, the system/process often gets in the way of managing talent.”
Moving on into the Point / Counterpoint article, Marcus Buckingham suggested that:
“The performance system in most organizations is among the least productive and least popular of organizational rituals. It tends to be disappointing to the employees, frustrating to the managers, and nets little productive output for the organization. It is the equivalent, one might say, of a visit to a bad dentist: Before it happens, you don’t look forward to it; while it’s happening, you wish it were over; and when it’s done, you rarely get the outcomes you wanted.”
And Lynda Gratton recalled:
“When Gary Hamel and I asked a group of 20 CEOs at London Business School what was the process that was most broken in their companies, we expected them to talk about production or quality—or even perhaps some manufacturing process. They did not. Almost all said that the process that most irritated and annoyed them was performance management. The emotion in the room was running really high. It was not just that they believed it was broken—they absolutely hated it. They hated the bureaucracy, they hated the form filling, and they hated the ranking.”
Supporting my points about design and engagement in my previous post, the group noted that “the ‘ideal’ system and process still will have to be designed, and accepted”. These are some of the suggestions for improving performance management made within the article:
Much of this aligns with my own recommendations although these tend to go a little bit further than the above - tending to focus on creating a more innovative, higher value approach I’ve called performance leadership, being based upon dreams rather than objectives, and being MUSICal rather than SMART.
But of course, these are only examples and suggestions. I think the most powerful point emerging from the articles is the need for best fit, and uniqueness, in the approach. I’ve criticised some of Lynda Gratton’s signature processes previously, but I do think she’s right in suggesting that:
“Good practice can be a real spur to action—but great companies also invent their own ‘signature experience’ that sets them apart. By explicitly communicating what makes your firm unique, you can dramatically improve employee engagement and performance.”
This applies to your performance management process as well.
Photo credit: Baskyes
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