Blowing Up Performance Management

The shift away from annual performance evaluations is increasing at a rapid pace. With managers and employees frustrated by this time-consuming, ineffective legacy process, HR is under pressure to find alternatives.  Regardless of the current system's well-documented lack of effectiveness and reputation of being reviled, change is hard. It means leaving something familiar behind for something unknown. We've all heard the expression, "The devil you know is better than the devil you don't." To add fuel to the fire, you only have to read a recent article in The Washington Post's daily On Leadership section: "This big change was supposed to make performance reviews better. Could it be making them worse?”

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Talking about blowing up performance management

A recent meeting of Boston area CHRO's on performance management trends began with attendees introducing themselves and their organization's readiness to undergo change. Encouragingly, several organizations described their shift away from ratings and appraisals and towards a framework that emphasized informal and frequent dialogue between managers and staff. People noticeably leaned in to absorb every detail and asked questions on how their peers were making strides to reshape performance management. The majority of CHRO's were in the "thinking and talking about change" stage. I couldn't help but notice the number of times I heard the words "blowing up" performance management:

• "We're thinking about blowing up performance management."
• "We've been reading about how other organizations have blown up their approach to performance management."
• "We're not ready to blow up our approach to performance management."
• "I think we should blow up our performance management strategy, but am having a hard time convincing others."
  

Facing the fear of the unfamiliar

Unsurprisingly, the idea of completely changing a legacy process that impacts people's pay and career without a clear path forward – and the real or perceived organizational barriers to change – feels daunting.   Even if the CEO or key change supporters like the idea of "blowing up performance management", some may consider this too radical. 

1. Employees will wonder, "How will my pay be determined?" or "How will I officially know if I'm doing ok?"  or "How will this impact my employment and career advancement opportunities?"  
2. The CFO will want to know how to distribute merit pay without ratings.
3. Legal counsel might balk at the idea of discarding a process credited for creating documentation.  
4. Strategic-minded HR professionals will more easily make a paradigm shift - seeing new opportunities to redesign and re-image performance management.  Otherwise, your biggest change resistors may be your own HR colleagues who fear giving up control of a familiar responsibility.  

A Familiar Rhythm The thought of abandoning performance management as we know it means leaving a familiar and accepted practice where everyone knows their role:

• HR is the keeper and administrator of performance management.
• Managers comply with the system designed by HR; usually culminating in writing and delivering annual performance reviews, assigning ratings and deciding merit pay.
• Employees receive their performance review in a meeting lasting anywhere between 15 minutes to one hour, and are given a copy of the performance form which likely includes ratings and comments.  Oftentimes the employee learns of their rating and corresponding pay increase. 

Wash, rinse, repeat. The whole cycle repeats without any material difference from year to year. 

Making the Leap

When you’re discussing how to upgrade your performance practices, keep these two points in mind: 

1.  When socializing new ideas on how to evolve performance management, identify your change supporters, change resistors, and the readiness of your organization and top decision makers. Forward-thinking colleagues and organizations might love the idea of "blowing up" performance management and working from a blank slate. But the same language that motivates some can alienate more traditional thinkers and organizations, ultimately slowing your change efforts. The important thing is to move your efforts forward – it doesn’t matter if you’re taking baby steps, or a giant leap, as long as your helping to evolve your organization's approach to performance management.  Instead, focus on things people can agree on, such as emphasizing a move towards optimizing employee performance through more frequent informal conversations designed to align performance expectations between managers and staff.

2.  Whether you’re just starting, or in the middle of your journey to re-imagining performance management, think beyond just making small, non-material fixes.

It’s clear that the pressure to fix performance management is real and the need to act is now and not at some future date. Performance management has always created a need for HR to act, but this action has always come in the form of re-configuring the annual form, ratings, competencies and automating paper processes. By now, we now know these well-meant, but ineffective tweaks to the existing system aren't the answer. A profound change in the system and our thinking must take place in order to advance performance management – a paradigm shift.