by Jennifer Gerves-Keen

“Evidence is mounting that conventional approaches to strategic human capital management are broken…If you want a high-performance organization, you have to reverse the destructive effects of conventional performance management”¹.
— David Rock, Josh Davis & Beth Jones, “Kill Your Performance Ratings”

There has been a lot of talk over the last few years of the ineffectiveness of many performance management systems. The data coming out of the field of neuroscience is in support of creating something new, and clearly shows that numerical performance ratings  in particular have negative impacts on both motivation and ongoing performance.

Fresh Systems Required for Ongoing Change
Performance management systems are not just about motivating, developing and rewarding employees. They need to fit into the overall talent management system, and are a key part of an employee’s life cycle within an organization. The systems that most organizations currently have will struggle to support some of the forecasted changes within talent management, including an increased desire for autonomy, flexible work structures and greater outsourcing.

According to a survey published in 2014 by PricewaterhouseCoopers of 10,000 employees located in China, India, Germany, the UK and the US, 29 per cent of the respondents said the most important thing they wanted from a job was the chance to take control of their career (what they do and when they do it).

In an accompanying study, 46 per cent of HR professionals surveyed expect that at least 20 per cent of their workforce will be made up of contractors or temporary workers by 2022; that’s only seven years away. How will we ensure that our performance management systems support future trends and challenges while being effective at motivating and rewarding employees effectively?

Where Performance Management Errs at Present
Essentially, if you look at the neuroscience, there are two basic areas where we go wrong with performance management. The first is in creating a “fight or flight” response due to the fact that we label people with numerical or other ranking systems. Our brains are threatened by this and our ability to practice good judgment is stymied by this perception of an immediate danger. It creates a situation where people will react quickly and possibly aggressively, nullifying the possibility of a thoughtful, productive conversation around development needs or opportunities for positive reinforcement.

The second area of concern is grounded in our current performance management systems’ tendency to focus on “talent” as opposed to “growth.” For anyone familiar with Stanford University psychologist Carol Dweck’s work around fixed and growth mindsets,  the talent trap is apparent. Rewarding talent by comparing employees to each other gets in the way of actual employee development which supports growth through effort and progress—as well as comparing people to themselves over a period of time.²

Those two areas underpin a broader slate of complaints with performance management at present; as HR professionals, you have heard and experienced the majority of them—too time consuming, managers and employees hate it, not measuring the right things, only tracking results but not behaviours, and that it’s not being used as an effective development tool.

A New Measure of Management
Naturally, some organizations have acted upon their frustration, and are testing out new ways of measuring their employees. In many cases, those organizations have started to measure progress or growth, as opposed to only results. They have kept their initial performance systems, but changed what they measure; they also measure more often. However, while almost every manager or leader is likely aware that performance is an ongoing conversation and not an annual event, performance conversations are still not happening often enough.

A key piece to improving or changing your performance management system is ensuring that your managers are trained in having those regular feedback or performance conversations. We lose far too much effectiveness in poor delivery, and it makes any performance process a challenge for both the manager and the employee. A transparent focus on development, and a supportive conversation around how the employee can get there can be highly motivating if conducted correctly.

Crawl, Walk, Run or Sprint
For example, a US-based company that deals in data analytics has a weekly “speed” check-in. You assign different speeds to your colleagues—crawling, walking, running or sprinting—based on their performance over the week. The whole process takes about five minutes and involves every individual in the company right up to the CEO. They use speeds because the nature of their work—analyzing and producing—culture and success is very much based on how fast they can get accurate data to their clients.

When an individual has been ‘crawling’ for too long (perhaps their training phase is taking longer than average), management looks to the team, as well as the individual, to see if they are being supported correctly and have access to the necessary resources for success.

It could be effectively argued that rating people at speeds is very similar to assigning them numbers. However, the speed system fits with their culture, the process is weekly and totally transparent (two factors rarely present in performance systems), and the individual isn’t put on the defensive for poor performance, as such performance is carefully and thoroughly researched by the group as a whole.

Innovation Set to Trump Numerical Ratings
Juniper Networks Inc., another global company with thousands of employees across the world, stopped using numerical ratings in 2011. They conducted a year-long audit of their performance systems and discovered that not only ineffective, but inconsistent between countries and offices. As a result, they replaced a bi-annual ratings review with quarterly conversations based on their five corporate values:

• We are authentic;
• We are about trust;
• We deliver excellence;
• We pursue bold aspirations; and
• We make a meaningful difference.

How was the employee living and representing those five values in their job every day? What was working? What was not? Where was help required? Were they due recognition? An overwhelming 88 per cent of their employees declared themselves satisfied with the new system.

A Fresh Measure of Success
Some companies are really trying out some very innovative ideas. A North American retail chain is currently conducting a year-long experiment in measuring employees’ moods. When they punch in and punch out at the beginning and end of each shift, the employee chooses five moods, from fairly negative or disengaged all the way up to “unstoppable.” The organization is hoping after 12 months to correlate mood to success, find the links to good or poor leadership, and see which comes first, the mood or the increase in floor sales. Their research will be extremely insightful into how our mindset drives our behaviour, and what factors in an organizational environment increase our level of success.

Although there is no one successful formula as yet, as HR professionals and business leaders, we owe it to our employees and the future of our organizations to look at how we are currently using performance systems, and to better understand how we can create brain-friendly workplaces. It is time to invest in thinking differently about how we measure ourselves, and create clarity around why we do it, in order to build systems that directly support vision and outcomes.

1. From the article: Kill your performance ratings by David Rock, Josh Davis & Beth Jones, Autumn 2014
2. Dr. Carol Dweck, San Francisco, 2014 NeuroLeadership Summit

Jennifer Gerves-Keen, MA, PCC is a coach and consultant focused on collaborating with her clients to develop people in effective ways that actually make sense.

(PeopleTalk Spring 2015)