Hurricane Barney and winds of over 80mph but didn’t stop our HR Game Changers Event in Milton Keynes last week. HR professionals determined to tame Big Data and Performance Management represented a diverse range of companies including Santander, Weetabix, Kier Group, Unilever, Royal Mail, Home Retail Group, Ricoh and Cranfield University.
Our hot topic was performance management (PM). A perfect storm indeed with 93% not valuing the process (Mercer), 75% seeing it as unfair (i4CP) and only 8% believing it adds value (Deloitte). No surprise that nearly ¼ of our audience had recently reviewed PM in their organisations, with another ¼ doing so now, and ½ planning to soon.
This chimes with a bigger picture. Deloittes describe PM as the secret ingredient in the new world of work. One of the top 10 capability gaps identified across 3,300 businesses worldwide.
Why? A world changing with pace is bringing a new way of working. Talent is in demand, employees have more choice. They are consumers.
Bright shiny new approaches are hitting the headlines. Companies such as Deloittes are Reinventing Performance Management. Vocal HRDs such as ex-BBC’s Lucy Adams talk of ratings, systems and records being abandoned.
There are a number of trends emerging:
- from backward-looking assessments of performance to forward-looking conversations about development
- from structured annual processes to agile goal setting and frequent reviews
- from relative performance ratings to achieving personal best
Some of the trends may seem logical and right given a greater need for collaboration, innovation and agility in many organisations. But whether or not to remove appraisal ratings is far from simple.
Neuroscience is telling us that social threats provoke the same fight/flight response in our brains as a physical threat. Dr David Rock from the NeuroLeadership Institute says ‘Kill your Ratings’. His SCARF model outlines five social needs that trigger the same brain reactions as physical threat. Appraisals provoke a threat response for all five.
Not to mention studies that show ratings correlate with line managers rather than individuals. They simply measure rater bias.
But our audience were not so convinced; with very few considering removing ratings. And one HRD looking to re-instate them.
Perhaps it’s because ratings add real value. A simple categorisation for complex performance. A way to make smart investments in talent. Marc Effron loves ratings. He claims differentiation is useful and the ratings themselves are just a red herring. He suggests we stop searching for alternatives to traditional performance management and start executing the fundamentals that make this process successful.
Just maybe we are asking the wrong question. Perhaps it’s about 'Big Data' rather than line manager views. An amalgamation of a trillion bits of feedback from every interaction (email, phone call, meeting, conversation in the lift), and every achievement. Josh Bersin certainly sees ‘Feedback as the Killer App’.
We’re often asked about ‘reward without ratings’. Ratings do not affect your reward strategy. But removing them will affect how it is implemented. The answer is either consistent reward with no individual differentiation. Or it’s about greater line manager discretion.
What's critical is a reward strategy and PM strategy that work together. What’s the point in making PM ongoing and agile if your reward remains annual and structured? Ongoing recognition, bonuses at project end rather than year end, and real-time salary reviews feel more in tune.
The emerging trend in PM may not be right for everyone. The media examples of ‘best practice’ are specific to those businesses and their unique culture. Taming PM in your organisation is not about following the crowd - as exciting as it may seem!
Go back to basics. Consider your culture now and in the future. You’ll find the answer there.
Thanks so much to our partners for collaborating to create this event: Macildowie recruitment, Melanie from J6 MGP Consulting, Shoosmiths Solicitors , Broadwater Training and Inky Thinking. Here's a sample of comments we've received:
- "Performance management is a subject that causes so much debate and differing opinions, but Sam and Julia delivered the way that Verditer see this in a balanced and thought provoking manner that cut through the noise and left you with the facts you need to know to take this forward" Nick Court, Carlsberg UK
- "took interesting learnings from Performance Management" Vicki Cunnington, Barclays
- "It was a great event" Sue Pardy, Prestige Purchasing
- "found yesterdays sessions very interesting and informative. The event was well run and engaging. Thanks to everybody that was involved" Thomas Schilling, Tugela HR
- "We have chosen Verditer to review our performance management – as experts in both performance management and reward they can ensure both aspects are in tune with each other, and aligned to our coaching culture" Lena Russell, Ricoh UK
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At Verditer we make reward and performance management more effective. Contact us if you'd like to know more about our Performance Management Diagnostic where we work with you to define an approach to performance management that aligns with your business and culture.