You may not want to miss my latest Talent Management Blog where I challenge readers on their definition of Performance Management and recommend that we rename Performance Appraisals to something that more clearly encompasses its original intent. Click over to find out what I think it ought to be called.
Also, don’t miss this month’s special report on Performance Management where you can read more from me and other leaders in the strategic HR arena.
Now, I know I’ve said this before but, just because something is printed in HBR doesn’t necessarily make it true or valuable.
I was reminded recently of an article in HBR that provides tips for how to do effective performance reviews, Ditch Performance Reviews? How About Learn to do Them Well? (Written by University of Michigan professors Maxim Sytch and D. Scott DeRue) For as much as I am asked to comment in the media about the annual performance appraisal process, it is clear to me that organizations absolutely insist on keeping them around. You see, business has been “tweaking” performance appraisals for more than 50 years and it is still the occasion for the most contentious interaction between employee and manager. Tweaking a bad system, while having the potential for making it “less bad,” cannot make it good or effective. Much has been written attributing the “badness” to the frequency of appraisal. This HBR article suggests that increasing the frequency from annual to quarterly will improve its effectiveness.
While frequency is an issue with the annual review, going from an annual to a quarterly appraisal will not address the frequency issue in any significant way. In fact it just keeps employees in a perpetual state of agitation over the process—they are not over the negative emotion of the last one before it is time to do it again. It bears repeating, as I have said this many times before, “the best job people will ever have is one where they know at the end of every day how well they have done.”
The real problem of performance appraisal is not how often or even how well the appraisal is done, but the fact that it is a divisive, labeling process. Once employees have been labeled as “average or below average” it is very difficult to shake the label.
Years ago I was employed by the Georgia State Department of Vocational Rehabilitation to give IQ tests to children to determine if they qualified for State services of various kinds. Qualification was based primarily on low intelligence. One day a young boy I was testing, looked at me and said expectantly, “If I do good on this test will I be able to get out of Special Ed?” I can’t tell you what I said because the question depressed me to the point that at that moment I began to question the value of the knowing one’s IQ. Soon after that I quit giving them. Since he had been labeled “Special Ed”, I knew that the chances of this boy getting into a regular classroom were slim and none. Unfortunately, once you have the label, you are treated as though you are the label. I am sure there will be readers who don’t like that fact that I am writing about special needs children in the context of writing about a “sacred cow” of business. However, the process is essentially the same. Once an employee is labeled “average” only the rare bird will escape the label. The label creates certain expectations about ‘the labeled” and any opportunity to demonstrate they are not the label only provides others that you are the label, “That was really good for someone who is only of average ability.”
You need not respond to this blog by giving me examples of people who have overcome the process. I know there are some but I assure you they are the exception. There should be only one business reason for giving an appraisal (I prefer to rename it, “progress report.”) and that is to help the employee improve.
The mission of a boss at any level of the organization is to “create successful employees.” In this sense a performance appraisal of direct reports is a scorecard of the boss’ effectiveness, not the employees! How about that for a surprising turn of events?
Professors Sytch and DeRue have it all wrong. Comparing one employee to another promotes mediocrity, not excellence. Let’s get rid of this outdated, ineffective, wasteful labeling process and get back to focusing on an effective coaching process that creates an achievement-oriented culture.
And all the people said, “Amen!”
This is not the first blog I have written about mistakes I think Google is making in how they are managing the company. It will probably not be the last. This blog was prompted by an article a friend sent me from the New York Times by Adam Bryant, Google’s Quest to Build a Better Boss.
It appears that Google has invested quite a sum to determine what kind of boss they need to manage their company in the future. As Bryant says, “So as only a data-mining giant like Google can do, it began analyzing performance reviews, feedback surveys and nominations for top-manager awards, they correlated phrases, words, praise and complaints.” He also reported, “Once they had some working theories, they figured out a system for interviewing managers to gather more data, and to look for evidence that supported their notions (bold italics are mine). This activity involved more than 10,000 interviews and over 100 variables.
With this kind of “research” it is no wonder that the results were “so forehead-slappingly obvious.” They found—get this—that managers had a greater impact on employees’ performance and how they felt about their job than any other factor. How many thousands of employee hours and company resources did it consume to come to this conclusion?
Google now trains managers based on the results of this study. Quotes from a couple of managers who had been through the training speak to what they learned. One said, “…two of the most important things I can do is just make sure I have some time for them and to be consistent. And that’s more important than doing the rest of the stuff.” Another said the training helped him understand the importance of giving clear and direct feedback.
While I understand that someone who is inconsistent and does not give clear and direct feedback will be less effective than those who do, those things will not create a company that brings out the best in its employees. Even spending time with employees does not guarantee an improvement in morale or performance. It is possible that spending time with the boss can be a punishing experience. Many managers who give clear and consistent feedback are also very punishing, and can therefore create employees who are only willing to give just enough do get by.
The most important thing Google can teach its managers is how to deliver contingent positive reinforcement. They are not likely to do that since their culture is built on non-contingent reinforcement. Indeed one of their 10 Golden Rules for managing knowledge workers is to cater to their every need. I think they have misinterpreted Peter Drucker who said to strip away everything that gets in their way. I think Drucker meant that a company should eliminate all the unnecessary administrative goobledegoop. What Google has interpreted it to mean is to provide things like first-class dining facilities, gyms, laundry rooms, massage rooms, haircuts, carwashes, dry cleaning, commuting buses—just about anything a hardworking engineer might want. The problem is that they are also all the things a non-hardworking engineer might want. The assumption is that having these things available for employees will cause them to spend more time in productive work. I know of no research to support this notion.
It seems to me that Google has spent a lot of time and money to learn that employees at Google are just like employees everywhere else. They all respond to the laws of human behavior. Googlers are not so special that they follow their own set of behavioral laws. By learning those laws, executives and other managers at Google can save a lot of time and money and develop truly effective managers who bring out the best in all employees.
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Everybody seems to have a plan for reducing the deficit. President Obama created a National Commission of Fiscal Responsibility. There is the Bipartisan Policy Center’s Debt Reduction Task Force and the Peterson-Pew Commission of Budget Reform. All have put forth ways to reduce the deficit. Not one of the task forces and commissions think it will be easy to achieve all the changes they are recommending. The Co-chairs of the National Commission produced a list of 58 concrete proposals to eliminate over $200,000,000 of Federal spending from a budget that is in excess of $2,000,000,000. While this is a good start, it turns out to be less than 10% of the budget. For a clear visual understanding of the impact of just 10%, I encourage you to view this short video on Wimp.com.
There is not a citizen outside Washington who believes there is only 10% unnecessary government spending. In some circles this would be considered “chump change.” I must say that all the suggestions sound reasonable and there is considerable agreement on many of the ideas across committees. Why then should it be difficult? As we say in the South, many people “have a dog in that fight.” Incomes and jobs of thousands will be affected. All those affected will be putting forth justification for exempting them from the cuts. You can expect to hear, “I know we need to cut but cutting my job will not save money and my job provides a necessary function.” Turning this discussion to business for a minute, one of the biggest failures in corporate downsizing is that organizations rush to cut jobs and fail to cut work. This means that the remaining employees have more work, so everyone gets punished. It is common in these downsizings that when the work unit falls behind, which it almost always does, or when customer service is reduced, which it usually is, old employees are hired back on a temporary basis or private contractors are hired to help catch up, yet they rarely do! It is not all that unusual for people to have temporary jobs for years.
Unless there are positive consequences built in, the savings from down-sizing will be short lived. It is often the case that in only a couple of years, the current organization looks strangely like the pre-down-sized one.
Art Buchwald, longtime columnist at The Washington Post, had what some would say was a radical idea about reducing the size of government. He suggested that since the cost of keeping someone on the payroll is several times the salary when offices, equipment, maintenance, supervision and supplies are considered, why not pay anyone who can figure out how to eliminate his/her job their full pay for life. Although he suggested this tongue-in-cheek, I think there is a lot of merit in such a plan and it should be given serious consideration by those in charge of cutting spending. Let’s face it; our current problem is a spending problem as the government revenue in 2009 was in excess of $2,500,000,000. If there is not some incentive to government employees to save or cut, someone will always find a way to spend whatever is available.
Here are a few ideas that, if properly implemented, will motivate Federal employees to reduce spending without a disruptive effect on their families and essential government services:
When employees are properly motivated to reduce unnecessary work, I am convinced that permanent savings can be realized far in excess of the 10% proposed by the National Commission. When they are not properly motivated, government will continue to grow in spite of current efforts to shrink it.
Just because you read something in HBR doesn’t make it true or valuable. In a June article, Ditch Performance Reviews? How About Learn to do Them Well? University of Michigan professors Maxim Sytch and D. Scott DeRue give tips about how to do effective performance reviews. At one point in the article (and in subsequent HBR Management “Tips”) when writing about how to reduce the subjectivity in performance evaluations, they state: “Some helpful practices here could include direct peer-to-peer comparisons. For example, ask yourself, “How would Lisa compare to Mary?” You can also think of ranking your employees or forcing a distribution.”
Listen and find out why this is a bad idea and what to do instead.
Oops! #3-Performance Appraisals
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Oops! #4-Ranking
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A recently published book on the topic of annual performance reviews was brought to my attention this week. It’s getting quite a bit of press and while I haven’t read it, from one of the articles I have seen, it still lacks a ‘prescription’ for what to do instead. I took to my Flip Video camera to share my views on why and when to measure employee performance. The value is not just for the organization but should benefit the performer as well. The benefit to the employee is misunderstood and consequently overlooked when considering a measurement system.
I have said many times that the best job you will ever have is one where you know at the end of the day how well you performed. Most employees don’t have such a job now but with increased ability to measure performance through modern technology, managers can, and should, provide them. Organizations need to drastically change the method and frequency by which they measure employee performance. Measurement allows performers to see the small improvements that occur over time and in doing so, it allows managers many more opportunities to provide positive reinforcement. Annual performance appraisals have never been successful at getting more of the behavior an organization needs and they certainly don’t provide any opportunities to provide positive reinforcement to your employees in a meaningful and productive way. If you are accountable for the performance of others, you really ought to consider attending Designing a Performance Measurement System led by Dr. Bill Abernathy.
Since there is much to be said on the subject of effective performance measurement, I would suggest that you take a look at my blog post from earlier this month. It is a podcast on Oops! #3: Performance Appraisals.
With a system that allows performers to see their accomplishments daily and with managers and supervisors who understand how to deliver positive reinforcement effectively you will be able to create a high performance culture where everyone wins.
No activity in corporate life is more universally despised, by both managers and employees, than performance appraisal.
Richard Warner and I discuss the pitfalls and what to do instead.
In his latest podcast, Aubrey Daniels discusses the reality that salary and hourly pay produces the lowest performance, and instead companies, at the very least, need to build in contingencies of reinforcement.
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The modern organization wastes more time and money in the way people are compensated than it wastes in any other area of the business. Salary and hourly pay is pay for showing up, not for performing. Raises are forever. Bonuses are only loosely contingent on performance. Even profit sharing and pay-for-performance plans are poorly designed to create the best performance.
New YouTube video where Richard Warner and I discuss. www.youtube.com/aubreydaniels
Let’s say that you make business decisions where the impact on the future of the business is not well-thought out. The decisions are praised by Wall Street but, even so, turn out to waste the resources of the business over the long term. Let’s also say that in an effort to grow the company fast, you buy assets above market value to close the deals quickly, hire talented employees and pay them outlandish wages in order to get up and running as soon as possible. You also have little understanding of how to effectively motivate people but believe that money is most effective. In particular, you believe that money will buy you the right talent, since you believe money is what matters most to talented people. Therefore, you either use salary, bonuses or other perks to motivate them.Then let’s say that as the result of current economic conditions, your company has fallen on hard times in no small part due to the excesses created by your growth strategy and financial excesses. (more…)
