Stop and Think Before You Change Your Performance Management Program! (Part 2)
Some consulting firms claim there are ‘best practices’ for creating an agile performance management process. At best, there are some similar activities. No company does everything exactly the same.
What some call "disruptions" of the old performance management paradigm, I call "common sense."
Here's a list of key considerations when eliminating your formal annual review and rating scale. As you read them, note that it's critical the actions you take fit your company culture and business strategy.
1. Focus on Purpose to Build Your Foundation
At workshops and with clients, I ask people to describe their vision for their performance management system. Most don’t know. Often it is a habit perpetuated by the misbelief that there is a legal requirement. If you don’t know the purpose / vision of your performance improvement process how do you know if it is meeting your expectations?
Are you looking to drive improvements in productivity, skills, engagement levels, or commitment to overall objectives, etc.? Know your performance program’s North Star before you begin. It will not be the same for each organization.
When creating a higher-level focus, on the expectations you wish to achieve, make certain it is consistent with your authentic culture and business strategy. Clarity of purpose, culture and strategy should and will influence every decision.
2. Behaviours are the Basis for Measuring Success
What will your performance management system measure? If you are only concerned with business results then any means to the ends is justifiable. Today most organizations are also highly conscious of how results are achieved. That's why you need to have your behaviours clearly stated before the process is launched. They must be clearly integrated into performance management conversations.
Skills and knowledge are important but behaviours are essential. You must explicitly define the behaviours that differentiate highly successful employees to know how you want to direct others to behave. If you aren't clear about those behaviors, managers and direct reports will make up the “correct” answers on their own. These behaviours will be relevant only to your company, and cannot be based on some consultant’s list they develop or provide you. It is only your authentic behaviours that will help you anchor people to the very definition of success.
When behavioural statements are written correctly (a topic for another post) you can focus people on a common definition of success. Merely dumping in statements that came with your HRM system is worse than not having any statements.
Most behavioural models have way too many statements. Stick to what's relevant for success, not an entire list of statement or competencies.
Don’t overlook what you have that is working. Too many organizations throw away the baby with the bathwater. Talent management teams are easily influenced by the latest conference, article or research into neuroscience and try to build some ideal system that may have nothing to do with what their company needs.
There's no ONE correct way of doing this. As a result, you can't cut and paste someone else's approach for use in your company. In my experience, a design thinking process helps evolve the process appropriately.
Hold focus groups and interviews with cross sections of employees, at all locations and levels, before you begin the design. Otherwise, you might OVER CORRECTsomething that doesn't need to be fixed.
Pro Tip: If you have a leader, respected by many in the company, who is negative about feedback and formal performance management, make sure you include her or him on the design thinking team.
4. Don't Focus on the Process, Graphics or HRM Systems
Too many people start at the wrong end of the journey.
For example, if you build your approach by finding a Human Resource Management (HRM) system that's been developed by an external vendor, chances are it won't suit you. After all, no two companies are alike or will have the same purpose, values and strategy.
It is important to build your own forms and processes first with your own content, wording and design. Until you have piloted a process and gathered data from your employees on what needs to change, don’t seek an HRM solution.
As a client in England said:
“The challenge is in getting the IT guys, the HRM system providers and the HR/OD people all talking the same language!”
Forget buying the slickest most powerful or popular HRM system. This will only delay your implementation. Build your own system instead. Successful companies start with a process not a technical solution. When they are comfortable with their content, they set out to find an IT / HRM that fits their needs.
True, if you don't buy a vendor's slick product, your solution may not have pretty graphics. But those graphics will mean nothing if real meaningful exchanges between people are not happening. An HRM tool should support your needs, not vice versa.
5 Get Serious about Training and Execution
Training is critical for success. A new performance management paradigm represents a titanic shift in expectations of behaviours from both managers and direct reports. If you're looking to create a sustained change in behaviour by conducting low impact e-learning and webinars, you're bound to be disappointed. People respond better to in-person contact to have a first-hand and direct experience that goes beyond academic theory.
The research has revealed most in-person training takes between 90 minutes and half-a-day. I don’t believe that gives the manager enough time to process and practice desired behaviours. Remember, you're also trying to get the buy-in and support of individual contributors. They are the real beneficiaries of the process. Yet, very few organizations conduct formal training for individual contributors. Employees need to appreciate how the approach will impact them before they begin.
6. Remember the Details
You need more than a blueprint when you introduce a new performance management approach to your employees. You must also address all activities and aspects from day one to year end and explain how this impacts bonus or merit computations.
One organization I spoke with recently had a great start to this process but did not explain the impact on bonus or merit until half way through the year. This left employees with too many questions and concerns about whether the process is well planned out. They need to understand that it's a work-in-progress and that many things over the next two to three years will be changed.
They also need to see how all the components and parts come together as a whole. Even as you bring them through your complete blueprint, let them know this is an evolving process and that it will improve as you all learn more.
7. Enlist an Executive Who is Not Supportive
Who is accountable and responsible for the success of your program? It should not be HR, rather it should be your executive leadership.
Getting executive support and ownership is essential. But the first question many leaders, especially those who are pragmatists, will ask is: “Who has already done this? What is that company’s experience?” Your responses might go something like this:
Every firm's experiences and activities are different. As a result, there is no one ‘correct’ way of doing this. At best, you can say the elements you are building in have been applied somewhere or other with success. You need to explain that the pieces come together for your company in a way that is unique to your business and company culture.
8. The Likert Scale
Can you really abandon year end ratings?
Most of us have been graded constantly since elementary school. But grades need to be meaningful. If you are measuring a positive change in behaviour how can you measure it objectively? If you get rid of year end ratings, you need to have frequent exchanges that validate desired behaviours during the year. You also need to make sure that demonstrated behaviours don't just show up closer to year end. They should be demonstrated more often and more correctly as the year progresses.If you do decide to abandon year end ratings make certain you don’t put in a shadow rating scale by not having a transparent process for how your bonus and merit is distributed.
Some Final Observations
Many people ask me how long does it take to get a good process in place? One global organization I spoke with started the process and began rolling it out within five months. Others have taken two plus years.
When audience members ask me about my approach, they often tend to bring up the topic of bonus / merit calculation. I have not addressed that here. There are as many answers for this as there are companies trying the process. No one solution will fit every company.
I have also not addressed how you measure the success of the implementation. Many have surveys; some have a short list; others have a list of 12 questions. I believe the right answer is actually only one question which lies in your vision / purpose for the program. Try to imagine the one question that will help you clearly judge the impact?
I have not brought up my views on why conversations and coaching are NOT the best way of implementing this type of program. for another post in the near future.
I hope you have found this helpful. Perhaps it reinforces your approach or challenges your perspective. At the very least, I hope it will generate an exchange of ideas here with your comments.
Please share what your company has tried. Remember we learn more from what did not work than what worked; sharing both experiences will help others immensely.
For additional insights on setting up and monitoring activities that enable implementation of the process please contact me. I have been working with organizations in the public and private sectors on this transformation for over 17 years.