If The Curve Is Dead, What Is Alive?

A TIME OF SEISMIC CHANGE

Exponentially accelerating technological advancement, geo-political dynamics, shifting demographics, cyber insecurity and resetting work models, are just about a few of many drivers fundamentally changing businesses around the world and across industries.?The Human Resources (HR) function strives to sense-make?and evolve quickly to keep up with the tides of change.

As organizations redesign their HR service delivery models with evolving business strategies, performance management will remain as an area of strategic importance.?In fact, with businesses reforming even more quickly and frequently, agile and adaptive performance management constructs will become the hallmark of thriving organizations.?

Many?organizations have made fundamental changes to their performance management practices in recent times.?These included changes to their processes of goal cascade or calibration, introduction of continuous feedback or re-direction of focus onto future performance, contribution?and careers, away from the traditional retrospective performance orientation.

With radical changes being made to performance management, it is important to note that the fundamental intent of performance management has largely remained unchanged, which is to align the efforts and contributions of teams and individuals with the business results that the organization desires.

WHAT IS DEAD?

One of the most notable changes of late?in the performance management space has to be the removal of stacked rankings and performance ratings -?key features of what is?known as “the curve”.?Industry giants had led the charge to either remove ratings or experiment with doing away with “the curve” altogether.

Consistent themes exist across organizations that have done away with “the curve”.?Firstly, there is a shift in focus onto continuous conversations that are oriented towards future contributions and career development, away from annual retrospective discussions on demonstrated performance.?Secondly, a re-direction of HR attention to equip managers with newly-demanded for coaching skills rather than operate as a gatekeeper of legacy performance management mechanisms,?such as?policing the completion of appraisal forms and protecting the integrity of?performance distribution quota.?Thirdly, deployment of technology solutions to?better facilitate?manager and employee interaction as well as enable analytics that drive decision-making approaches that?are more data-centric and evidence-based.

WHAT IS THE CAUSE OF DEATH?

Organizations that embarked on radical modifications to their performance management systems and practices generally did so due to impetuses coming on 3 main fronts.?Firstly, traditional performance management systems were proving to be resource-intensive without evidently demonstrating payoffs in driving business performance.?Secondly, rigid annual performance management cycles are becoming misaligned with evolving commercial realities, such as shortening business and product development cycles.?Thirdly, more organizations are reporting?that traditional performance management approaches are not driving employee engagement and worse still, causing disengagement.

WHAT THEN IS ALIVE?

With some organizations doing away with “the curve” and potentially more to follow suit, it may appear that the death of “the curve” is imminent.?What is noteworthy is that there are?organizations in Asia that still?prefer to retain “the curve”,?in order?to continually harness the convenient?performance differentiation leverage?that is afforded by it.?Whether “the curve” is dead or alive, a number of practices would need to prevail to drive effective performance management systems and realize the business ambitions of?organizations concerned.

Absolute over relative? Absolutely – Goal setting has to be done with greater rigor and discipline.?Performance goals must be built to clearly drive desired business results and be cascaded from organization to teams to individuals.?With meaningful goals set, more emphasis should be given to assess the extent to which one meets or exceeds?those goals for oneself rather that pit one employee against another.

Shooting at a moving goalpost would become a “necessary evil” – Commercial models are changing and product development cycles have shortened.??Organizations are compelled to evolve their operating models more frequently in order to thrive in the marketplace.?This must mean that individual performance goals would need to change with shifts in corporate strategies several times in the course of a year.?People must get used to a moving goalpost and?course-correct their efforts to shoot at a goalpost that moves?over time.?Managers need to be unapologetic about changing the performance goals of their employees and be nimble to maintain line-of-sight between individual and team goals with the changing organizational strategies.?Performance management will need to be a lot?more dynamic than ever, aligning performance and contributions on an ongoing basis rather than only?at prescribed points in a traditional annual cycle.

Outcome first, process always – Business results are sometimes subject to externalities that are beyond the control of employees.?By giving appropriate regard to not just outcome goals but also process goals, organizations demonstrate an enlightened?interest to recognize employees for making the right efforts even?if the eventual results?could turn out?less positive than desired.?In addition, organizations that create and manage process goals show that they not only care about what accomplishments are made but also how the accomplishments are to be made – a values-guided approach.

Thinner is not always better?– While we discussed the allure of a performance management system with no curve, it?is unrealistic to expect that such a system would work for all organizations or that organizations could immediately adopt such a system even if this is the right thing to do.?A relatively safer step to?inject more agility into a performance management?system would be to replace a performance distribution curve that has many narrow bands with one that?has few broad bands.?A system with many narrow bands supports the intent to aggressively differentiate performance, but it forces managers to different employees’ performance even when it is not beneficial to the organization to force such a differentiation.?On the contrary, a system with few broad bands does not force the manager to differentiate when it is not beneficial to the organization to do so.?At the same time, if and when more differentiation is needed, managers have the?flexibility to accord differentiated financial recognition even within the same broad performance band.?

Iron fist in a velvet glove – Of paramount importance to any performance management system is timely and effective conversations between manager and employee.?This is even more critical in a system without a curve.?We need managers to want to hold such conversations and know how to conduct these effectively.?To address the willingness issue, managers need to be given appropriate nudges.? While it is pleasant to have HR encouraging managers to hold timely conversation with employees, it would be many times more effective if that emphasis comes from a business leader who is appraising the performance of the managers.?This is the “iron fist” – managers must know that their business leaders expect them to conduct timely performance conversations.?However, managers should not be forced to do things that they are ill-equipped to do.?Hence, they must?be properly developed to carry out the conversations well and the organization?should give the?right recognition?to managers?who?get this right?-?this is the?“velvet glove”.

Stand on the shoulders of robots - Intelligent machines are available to help managers craft performance feedback messages with convenient prompt inputs, recommend performance goals for roles and even use operational network analysis to support multi-source performance feedback. This vastly raises the velocity and hence frequency in which performance recalibration and course correction achieved.

CONCLUSION

No two companies are identical and a practice that works well for one?organization may prove ineffective for another one, no matter how similar these organizations?look on the surface.?It is important to adapt practices to the specific context of the organization, take calculated risks to act, and observe the resultant impact to recalibrate and refine the designs dynamically.