The Performance Management Pi?ata

In 2015, General Electric moved away from the traditional performance management’s annual appraisals to a more dynamic and flexible style. This was a big deal, considering that former GE’s CEO Jack Welch was the very father of that traditional approach to performance management. GE joined a club that Accenture and Deloitte, the biggest consulting companies in the world, had already been enjoying.

Last week IBM joined that very special group and got rid of the annual performance review. I can’t generalize, but it seems to be true that everywhere the traditional approach to performance management is becoming a real pi?ata, getting punched and hit from every possible angle. Some companies are moving faster, some slower, yet they are talking about it, and there is a lot of noise everywhere. What is going on? What are the implications of these changes? And what can be done?

GE, Accenture, Deloitte, Adobe, Microsoft and many other companies realized that the workforce is changing really fast, including its behaviors, needs, motivations and interests. People are not inspired, engaged and rewarded anymore by the premises claimed by the traditional approach to performance management. Getting a monetary reward based on a rating given on a once-a-year appraisal is simply not working. It is necessary a new understanding of the ways people are creating, innovating, collaborating and communicating in order to define a better system that truly drives high organizational performance.

I have mentioned in previous posts that understanding the new dynamics in the workplace must begin with coaching people to find their voice. It essential to help them explore their potential by providing the opportunities to thrive and succeed. A once-a-year appraisal is actually the opposite and offers the wrong kind of incentives.

A once a year written appraisal and “feedback” conversation between people and leaders have two perverse premises. First, that the information of what was done, learned, created, scaled, or innovated can be accurately communicated in a document. In reality, not only is it impossible to capture with precision all that has been done in one year at only one time. But, even worse, the learning process from successes or failures, the need for pivoting when things don’t go as planned, the experience and stories that emerge from true collaboration, and the processes behind the creations and innovations, are lost.

The second perverse premise is that “feedback” is necessary in order to understand what one has done right or wrong. As I mentioned in my post Coaching is the New Feedback! (a new leadership style for the future), people are craving for coaching and mentoring. The new workforce, particularly the one constituted by millennials and generation Z, want to get the type of support that comes when they are given the opportunity to talk about their own professional careers, development and performance. It is not the same listening to someone telling you what you did wrong, than listening to someone asking you questions about the way you see things, including your own professional future. Coaching is by far more powerful than feedback, and a once-a-year appraisal doesn’t capture that.

It is true that there will always be cases of people who are absolutely disconnected from the purpose and mission of the organization. In some instances, it is better to let them go, for the benefit of the organization and their own. However, there are even more instances where people are doing things they dislike, and their talents and abilities are not even taken into account. In these instances, they are not asked or given the opportunities to show their potential. In both cases, the performance appraisal will have unfortunate results, even though the reasons are very different.

One important concern is how to drive higher performance and distinguish and reward top versus low performance. Well, the first concept to define is what does high performance mean and look like for a particularly organization. If you work in the stock market, maybe it is selling as many shares that make as much money as you can. But if you work in an innovation lab, it would be to come up with as many ideas as possible, so that you can experiment, pivot and scale when necessary. Questions about the type of company or organizational unit to be built are important, because they will also determine the real metrics of success. Unfortunately, the existing performance management approach considers metrics that not only fail to measure success, but also fail to understand when something works or doesn’t.

Distinguishing top from low performance is not a big deal if leaders know their people well, what they are good at, where and when they thrive and become their best. However, if organizations and leaders pretend to understand all this only by having one appraisal and conversation a year, well, I don’t foresee positive results. Real change comes when leaders are able to coach their people on a regular basis. To ask them questions and allow them to come up with their own answers, experiment with them and decide accordingly. In such instances, the role of a leader is the coach who is able to ask and guide by allowing people unveil truths, rather than by telling them. A once-a-year appraisal makes leaders look more like enforcers of a rule, rather than experienced coaches willing to support their people's professional growth. And even that perception makes a big difference in how people perform. 

There is still a huge conversation that needs to take place around the concept of performance management. This conversation needs to have a foundation on the new ways people interact. The traditional performance management approach was created in a time where there was no internet, no smartphones or apps, and no digital revolution. We are living in a very different setting now, and we need to upgrade and adapt the processes that are used to reward and drive high performance.

------------------------------------------------------------------------------------------

About the Author: Enrique Rubio is an Electronic Engineer and a Fulbright scholar with an Executive Master’s Degree in Public Administration from Syracuse University. Enrique is passionate about leadership, business and social entrepreneurship, curiosity, creativity and innovation. He is a blogger and podcaster, and also a competitive ultrarunner. Visit the blog: Innovation for Development and Podcast. 

#leadership #bestadvice #innovation #organizational #development #engagement #motivation #learning #growth #creativity