Performance Management Blues

By some estimates, there are well over 100 million managers of people in the world. Since the New Year rolled around, many of those managers have been in the midst of their organization's annual performance review cycle. Employees have been or are about to sit through a one-hour performance review, based on their efforts over the past year.

A few of them are actually enjoying it.

With regards to the robots -- who are coming for our jobs -- will they love performance management too?

Forced Performance

But first, some background. It's long been sport in the corporate world to take potshots at the performance management process. There are several reasons for the pervasive disdain and melancholy that drips from office walls and laptop screens on behalf of performance management processes.

First, there is an organization's fixation on performance stack ranking. It's the process where employees are pitted against one another as the manager is encumbered to fill out a bell curve of annual performance for her team. Forced to plot employees against an arbitrary curve -- where a certain number of employees must be classified as low, medium or high performers to fill out the curve -- it creates angst for the manager, and depression, envy, guilt, rage or happiness for the employee. But, as Josh Bersin brilliantly notes in his Forbes post entitled, "The Myth Of The Bell Curve: Look For The Hyper-Performers," we need not use this process any longer:

Research conducted in 2011 and 2012 by Ernest O’Boyle Jr. and Herman Aguinis (633,263 researchers, entertainers, politicians, and athletes in a total of 198 samples). found that performance in 94 percent of these groups did not follow a normal distribution. Rather these groups fall into what is called a “Power Law” distribution.

There is proof the bell curve of performance is bogus, but employee stack ranking remains entrenched in an organization's performance management practices. (Thanks Jack Welch, although he now refers to it as 'differentiation'.) To further the point of stack ranking, in Hard Facts, Dangerous Half-Truths And Total Nonsense -- written by Jeffrey Pfeffer and Bob Sutton -- the authors state, “performance rankings can lead to destructive internal competition, which can make it tough to build a culture of knowledge sharing.” Well that's just great.

Second, annual performance classifications are simply a cop-out for bad leadership. I don't personally have anything against organizations who use a fair (and non-bell curve mandated) performance classification system -- after all, employees do seem to appreciate a formal classification -- but to do so annually is a bit like waiting for the Easter Bunny to show up each year and then wondering how many chocolate eggs might be waiting for you.

For me, the Easter Bunny of performance management should come monthly, preferably bi-weekly, but ideally weekly or even daily. In their book, The Progress Principle, authors Teresa Amabile and Steven Kramer referred to a study that claimed, “of all the events that engage people at work, the single most important – by far – is simply making progress at meaningful work.” And how does an employee make progress at meaningful work? In part, it's the direct manager that is providing a coaching and supporting role as frequently as is possible throughout the daily efforts of the employee. Performance management, therefore, is more like brushing your teeth (daily, three times a day ideally) versus the once a year Easter Bunny visit. Leadership, ergo, is about coaching and developing the performance of employees all the time, not once a year.

About Those Robots

They're coming, so we best prepare for them.

In 1982 Time magazine declared the personal computer its “Machine of the Year.” Time publisher John A. Meyers wrote, "Several human candidates might have represented 1982, but none symbolized the past year more richly, or will be viewed by history as more significant, than a machine: the computer." I don't recall my Commodore 64 or Apple Lisa computer ever having to go through a performance review like us mere mortal humans. Those lucky computers.

But about those robots ... they are definitely coming soon to an organization near you. Authors Andrew McAfee and Erik Brynjolfsson of the brilliant book, The Second Machine Age, state rather chillingly:

"After spending time working with leading technologists and watching one bastion of human uniqueness after another fall before the inexorable onslaught of innovation, it’s becoming harder and harder to have confidence that any given task will be indefinitely resistant to automation."

Comforting, I know.

Let's visit the country capital of all things robots, Japan. A hotel, scheduled to open July 17, 2015 will soon be staffed by robots where they will "provide porter service, room cleaning, front desk and other services to reduce costs and to ensure comfort." President of the hotel and amusement park, Hideo Sawada, mentioned at a news conference, “In the future, we’d like to have more than 90 percent of hotel services operated by robots.” I can't wait for the day R2D2 brings me ice for the ice bucket, but I'm a bit alarmed by a robot who is employed to "ensure comfort."

Not to be outdone, Nestlé Japan has announced it will begin using robots in December of 2015, "to sell Nescafé Dolce Gusto and Nescafé Gold Blend Barista coffee machines in home appliance stores." I'm not certain if it's a translation issue, but the company has decided to name the robot Pepper. I don't know about you, but anyone (or any robot) called Pepper trying to sell me coffee is a tad pungent.

Japanese banks are also getting in on the C3P0 craze. Nao is a 58cm tall robot about to start 'employment' in April of this year at Japan's biggest bank, Mitsubishi UFJ Financial Group. “Robots can supplement services by performing tasks that our human workers can’t, such as 24-hour banking and multilingual communication,” said Takuma Nomoto, the chief manager of information technology at the company. Last I checked, humans are in fact capable of working at times outside the normal 9-5 time clock and many workers are even capable of speaking multiple languages. But I digress.

The Ultimate Robotic Question

My ultimate question (cheekily and with a dash of humour) is intended to address the pending avalanche of robots earmarked for organizations everywhere. They're coming, so it's best we prepare. Is HR (or perhaps it should be IT) ready to add the robots to the existing performance management practices already established in the organization? After all, if humans are currently suffering from the indignation that is the 'annual review', shouldn't the robots suffer too?

For example, the Society for Human Resource Management (SHRM) reported only 26 percent of employees were satisfied with performance management processes in their organization. I say let's add robots to the mix. Let them have just as much fun as the employees are having with the annual performance review rhetoric. Sadly, Sibson Consulting discovered even worse results, where only 5 percent of respondents graded their company's performance management practices at the highest level on a 5-point scale.

To rub salt in a wound, the firm also found that 58 percent of HR managers actually disliked their own performance management practices. Now how is a robot ever going to enjoy being part of their organization's performance management system if HR won't even fess up to liking it themselves? Maybe the robots should work in HR?

Deloitte has even come out and suggested "Performance Management is Broken" claiming"only 8 percent of companies report that their performance management process drives high levels of value, while 58 percent said it is not an effective use of time."

When Mercer conducted their Global Performance Management Survey, asking the question, are company performance management approaches effective, 51 percent of respondents claimed their planning process needed work, 42 percent stated their linkage to compensation decisions required improvements, and 48 percent suggested their overall performance management approach needed to be improved. Incidentally, the firm surveyed performance management leaders from 1,056 organizations representing 53 countries around the globe, so not even those responsible for performance management are 100 percent onside with the process and practices.

To summarize nicely, in their book, Get Rid of the Performance Review!: How Companies Can Stop Intimidating, Start Managing and Focus on What Really Matters, authors Samuel Culbert and Lawrence Rout state, “Mainstream management is embedded in, and relies on, a culture of domination and the performance review is the biggest hammer management has.”

How will the robots ever cope in this maddening world of performance management?

"Don't call me a mindless philosopher, you overweight glob of grease."

If successful companies such as Microsoft, Adobe, Juniper Networks and Expedia have done away with the madness that is the stack ranking process of performance management -- while witnessing, according to research firm i4cp, "increases in either bottom line revenue or employee engagement, or sometimes both" -- isn't it time for all organizations to do the same? Isn't it time to have a rethink about the entire performance management system before the robots arrive?

Bob Rogers, president of DDI (a leadership development company) says in his book, Realizing the Promise of Performance Management that this type of employee segregation "causes damage by filtering employees from the bottom, and causes changes in people's behavior, and not to the good." From firsthand experience I've witnessed the nutty behaviours of managers and employees alike when it comes time for the annual performance management process. Favourtism becomes an issue. The derogatory term "managing up" makes an appearance. Vendettas surface. Finally, the bell curve quota creates mental anguish for a leader and the team members particularly when the team is perfectly functioning, if not high performing. When the robot begins to out-think the human -- perhaps the intelligence explosion often referred to as the 'singularity' -- it will probably be smart enough to recognize it's time to do away with much of the performance management nuttiness that exists today. How ironic would that be.

In the meantime, what should we do?

When on the topic of the performance management process during an interview, noted organizational development guru Edward Lawler stated, "every organization I’m aware of has trouble doing [performance appraisals] well and effectively." He takes it a step further in his book, Talent: Making People Your Competitive Advantage, where he suggests for performance management to be effective, 4 things need to be accomplished:

1. It needs to define and produce agreement on what type of performance is needed.
2. It needs to guide the development of individuals so that they have the skills and knowledge needed to perform effectively.
3. It needs to motivate individuals to perform effectively.
4. It needs to provide data to the organization’s human capital information system.

I'll take it a few steps further.

Performance management needs to become:

1. A daily leadership action, armed by coaching and development attributes.
2. A model in which constructive feedback is applied as often as necessary.
3. A system that provides both formal and informal recognition for a job well done (or when things go awry, we should recognize what the employee learned through the process).
4. Linked to career -- and dare I say purpose -- ambitions.
5. Devoid of stack ranking.

Failing any imminent changes to an excessively flawed system, may we yearn for a time when performance management processes and practices have to be updated because the robots made us do it.

Domo Arigato, Mr. Roboto.

Originally posted to Forbes

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Dan Pontefract is the author of Flat Army: Creating a Connected and Engaged Organization and is Chief Envisioner at TELUS Transformation Office. He's currently at work on his next book.

Reach him at www.danpontefract.com or on Twitter@dpontefract

You can even email him ... dp at danpontefract dot com