Riding the wave of change- Performance Management

Before we look at why or why not performance management approach should change in organizations, lets look at the context of where we are.

It all started in the late 18th century with the “Industrial Revolution”- mechanization of manufacturing processes-a major turning point in our history. It resulted in creation of multiple enterprises employing large number of employees. As the industries started to grow, employers felt the need to manage costs. Frederick Winslow Taylor, in the late 19th century developed a theory -Scientific management, which focused on optimizing workflows by primarily improving employee productivity. In 1947, Ford established a new department called as “Automation” which basically stands for using control systems for various equipment like machinery and plants. A big next step in industrial evolution- move from mechanization to automation. This also started a belief that machines can replace an employee. It led to an era of silent worker. Organizations set rules and employees followed them as conformists. The exploitation of workforce resulted in establishing strong employee unions to represent the voice of employees.

In 1960s and 70s, lack of natural resources, cash and space led to Japanese companies develop JIT and Lean principles. Guess what, these companies built great quality products at unbelievable costs. At the heart of Lean and JIT principles, it was the belief that if the ownership of the tasks transferred to the employee, they will deliver their best. To get the best from their employees, they focused on “winning loyalty” by offering Job security and care for the employee and their family.

In the late 20th century, with the advent of computers and internet, the digital revolution hit us. Employees evolved to “Knowledge workers”. Through creative thinking, they could solve complex problems. In Software companies there were no “hard” products- output of the minds, made the difference. More and more organizations wanted knowledge workers. For the first time, retention of employees became a key concern- “Keep them happy and excited at work, else they will leave”. So the organizations focused on unique benefits, long term incentives, built exciting workplaces with laundry services, free food etc.

The evolution of industry continues. While the employee engagement principles from scientific management to retention of employees are still relevant, the context of the industry has changed and that requires us to evolve as well. Today, in the twenty first century, the convergence of digital and industrial world stands in front of us. Ten people start ups have demonstrated disruption of business models of billion dollar companies. We all know that Airbnb without owning a single hotel is one of the largest accommodation provider. Uber has launched driverless cars in Pennsylvania and many more such examples. Old age industries have no other option, but to evolve. To disrupt, one needs new ideas. Research around employee creativity highlights three factors which enable innovation- “sufficient motivation to generate new ideas”, “ability to self-manage” and “continuous development”. We need to transfer the ownership of the organizations and not just tasks, to the employees. Employees need to act and behave as owners who have the flexibility to try different ideas at the same time. The organizational environment should encourage learning from failure and not fear of failure.

For us at GE, Performance Development (PD) is at the heart of this change. It, not only transfers the ownership to the employee, but also builds an environment of trust and support. No more, manager is boxing an employee in a “rating”. No more, an employee should be afraid of the year-end evaluation process. PD encourages a continuous dialogue and makes “continuous development” as the central theme. Not only the manager, but co-workers share the development process for an employee by sharing insights to either reinforce behaviors (continue) or change behaviors (consider).

Friends, I don’t think we have an option to not change. It is the context of the times we are in. Either we change or we, as organizations, will die as many others in the past. Let us ride this wave of change faster than the wave, itself. Are you in?