Performance management - Pt I

There are a number of inter-related issues as to why performance review processes have such a poor reputation.

• Feedback: every company tries to encourage regular and meaningful feedback. There is endless discussion, and indeed training, about how to give good feedback. Part of the problem is that most people don't like giving negative feedback. This is especially true when it is linked to pay/promotion. even if a company is at pains to say that feedback is not connected to your pay/prospects, no-one believes it and indeed it is mostly not true. Of course it is.
• Scoring: related to feedback is that most companies have some scoring that needs to be completed. It may be 1-5 or similar. I would hazard a guess that if your company has something like that, then 80%+ of people score 4 or 5. Maybe if you are better than most, then that may extend to 3, 4 or 5, but there will be very few that score 1 or 2. Then you can congratulate yourselves on having a great workforce where the vast majority are above average!
• Craft v other skills: Many roles have a 'craft'. You are a developer or an analyst or whatever. Part of growing is to get better at your craft, so you become a better developer or analyst. The process therefore needs to find a way to measure that progression. Defining that set of capabilities can become very complex very quickly. However, there are a whole set of softer skills that enable you to be more effective at your chosen craft, such as team building or negotiation skills. These are more difficult to measure, but equally important. How do you balance the relative importance of these? Also many, many people are multi-skilled. Not only are they a developer at a particular level, but they also can run teams. Oh and they happen to have capability in data. And by the way don't forget that they have significant experience in supply chain analysis. Creating a model that describes each of those things, defining the level that individuals are at and then using that information in a useful way, for the individual and company, is nigh impossible.
• Grades: You might call them something different in your company, but you know what I am talking about. There is definitely a logic to defining some sort of ladder that defines your position in the organisation, but there are clearly drawbacks. Performance reviews inevitably turn into a discussion on promotion even if you try to say that they are separate. Salary and status will automatically connect to your grade. Also mapping a complex capability map to grades just gets ever more difficult as your company grows and gets more complex. What tends to happen is that the solution is 'add more grades'. That gives more granularity and makes movement between grades easier. Of course it just creates grade inflation and doesn't remove the problem.

One of the mechanisms that companies use to attempt to resolve these issues is to desperately try to make the assessment more and more detailed with more and more information needed. Instead of scoring 1-5 overall, we now a mass of areas, such as 'Leadership' which are scored separately and there is some formulae that weights the different criteria into an overall score. This attempt to make what is, by definition, a somewhat subjective process into something that can be fully deterministic is doomed. You still have to do the subjective piece at the end to cope with all the edge cases that your new process doesn't handle. The temptation to add more grades, more attributes, more people reviewing, running the process more frequently, is the usual way out of the hell you've created. Of course it just pushes you to the next circle of hell.

All these problems fall on the people who have to define and run an ever more complex process and those who have to execute the process - usually those who have some sort of line management responsibility. Everyone gets to spend more and more time generating less and less value; and most importantly the people on the receiving end of the process, who are the reason you are doing it, become more confused and probably over time less convinced that this is fair or helping them.

In Pt 2 of this blog I'll give my views on a better way to approach this important issue, but for now, let's focus on what we are trying to achieve. Part of the problem is that their are multiple stakeholders with a stake in performance management. Apart from the obvious employees, People/HR, what about Finance? I was once part of a initiative that considered getting rid of 'grades'. One the biggest reasons this floundered was that the Finance organisation needed grades to allow their pricing models and forecasting to work. So something that was introduced to manage employee performance was now stuck because the finance organisation insisted the change would create too many issues for them. Talk about the tail wagging the dog (and of course I am not saying that finance isn't important - of course it is). Once these structures are embedded in the operations of a company they are a nightmare to remove hence why what you see is a drive to more complexity and detail.

Taking a step back, what is the most important attribute that any of your employees should have and grow? There are many candidates but I would strongly argue that it is the ability to build and contribute to high performing teams. This outweighs everything else. I see arguments that employing the superstars who are x10 average peeps is the way to go. Am not saying that you shouldn't aim to have high performers, but however good they are they are only a individual contributor. Also these types of people are often not team players. Have you ever tried to manage a team with more than one of these x10 people? I have; it is damn hard. While there are many paths to success, the one thing that the vast majority of successful organisations have is high performing teams, starting at the top, which provides the right leverage. Yes, you need a great strategy, etc, but if you don't have united, high performing teams throughout your organisation, I would respectfully suggest that over time you will struggle. Everything starts with this - strategy, communication, excellence, culture, focus, delivery, etc. If you don't believe me, ask yourself whether you can make any of those things work without the high performing team being at the core? Again, in my experience you perhaps can for short periods, but to build and drive a company forward, you need those things to be owned and delivered by high performing teams.

If you buy that argument, and personally I have become more and more convinced after 40 years of being in good ones and bad ones, then ipso facto the most important characteristic to hire, build and reward is the ability to build and contribute to team success - not individual success. Yes, there is a place for that, but the primary measure should be the team one. I've witnessed many brilliant individuals fail to live up to expectation because either they couldn't build a high performing team or were part of team that was fractured and underperforming.

Part II will be more thoughts on the whole performance process. In the meantime, my advice is to focus on measuring the ability to build a team that is more than the sum of its parts. It will yield better results and invariably create a stronger culture. And.... start at the top. If your 'top' leaders can't do this, don't be surprised that lower in the organisation can't either. As always, these things flow downwards.