Death by a Thousand Paper Cuts - Performance Management and the High Engagement Paradigm
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Performance reviews aren’t engaging. Your managers and employees hate them. You probably do too. There’s no more reviled event under the workplace sun. Yet, you probably just inflicted another round of reviews on your employees. Again. Does that describe your performance appraisals? Why do we tolerate the status quo? What if we didn’t have to? We know that engagement drives performance. Shouldn’t a performance management process be engaging? If it isn’t, how could it ever promote performance? Isn’t that the point? This session explores the reasons why we in HR have failed to innovate performance management – for far too long. We’ll look at excuses we make for sticking with the status quo, and offer solutions to consider for each of them. We’ll show how we can efficiently leverage continuous employee feedback and do so in an accountable, engaging and strategic way. Objectives: 1. Learn why average performance management consistently fails its primary objective: To improve employee performance. (Human Resources Development) 2. Understand how broken PM systems do more harm than good. (Strategic Management) 3. Realize a culture rich in feedback is no longer a luxury, but a workforce requirement. (Workforce Planning and Employment) 4. Identify practical strategies to upgrade performance management processes to make them as engaging as they should be. (Human Resources Development)
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Death by a Thousand Paper Cuts - Performance Management and the High Engagement Paradigm
- 1. 1 New Performance Management in the High Engagement Paradigm DEATH BY A THOUSAND PAPER CUTS
- 2. 1. Why performance management fails its main objective. 2. How broken PM process do more harm than goods. 3. Why better feedback is a workforce requirement. 4. Practical strategies to remake performance management. 2 OBJECTIVES Discuss:
- 3. 88% of organizations use a performance management process. 3
- 4. 4
- 6. 6
- 7. 7
- 9. 9 PURPOSE Set & Track Goal Progress Manager / Employee Relationships Regulatory Requirements Talent Mgmt. Promotions / Transfers / Succession Planning Task Accountability Conflict Resolution Training Program Development Compensation Adjustments Identify Strengths & Weaknesses Strategy Alignment (OKRs / KPIs) Promote Feedback Risk Management
- 10. PURPOSE Set & Track Goal Progress Manager / Employee Relationships Regulatory Requirements Talent Mgmt. Promotions / Transfers / Succession Planning Task Accountability Conflict Resolution Training Program Development Compensation Adjustments Identify Strengths & Weaknesses Strategy Alignment (OKRs / KPIs) Promote Feedback Risk Management Documentation Development 10
- 12. 12
- 13. 13
- 14. PURPOSE Set & Track Goal Progress Manager / Employee Relationships Regulatory Requirements Talent Mgmt. Promotions / Transfers / Succession Planning Task Accountability Conflict Resolution Training Program Development Compensation Adjustments Identify Strengths & Weaknesses Strategy Alignment (OKRs / KPIs) Promote Feedback Risk Management 14 Documentation DevelopmentPromote Performance
- 16. INEFFECTIVE Time-Consuming Poor Timing Tasks Versus Goals Questionable Link to Strategy Process Burden Backward- Looking Ill-Defined purpose Ratings Bias Disengaging Managers are too X Too Infrequent Insensitive 16
- 17. 17
- 21. 21
- 22. 22 29.9% $98,968 Labor Cost Per FTE Labor Cost Per Revenue
- 23. SMALL COMPANY CASE STUDY EMPLOYEES HR STAFF MANAGERS COUNT HOURS S P ENT TOTAL 100 1.5 150 20 5 100 1 24 24 ONE ANNUAL REVIEW
- 24. 24 274 HOURSONE ANNUAL REVIEW 34 WORK DAYS 7 WEEKS =
- 25. 25
- 26. 26
- 27. 27
- 28. 28 54% of HR believe managers don’t effectively differentiate performance.
- 30. 30
- 31. 31
- 32. 32 SO, WE JUST NEED ONE VOLUNTEER TO GIVE UP THEIR SEAT. THIS FLIGHT WAS OVERSOLD.
- 33. 33 EMPLOYEES LARGEST INVESTMENT BIGGEST VULNERABILITY GREATEST OPPORTUNITY
- 34. Average 34
- 35. INDIVIDUAL ORGANIZATIONAL SET NEW GOALS & TRACK PROGRESS ENABLE STRATEGY DEPLOYMENT IMPROVE MANAGER / EMPLOYEE COMM. (RE)FOCUS TEAMS INCREASE PRODUCTIVITY RECOGNIZE CONTRIBUTIONS ENCOURAGE ORG. LEARNING ASSESSING SKILL GAPS & TRAINING NEEDS. IDENTIFY BEST-PRACTICES & STANDARDS MEASURE PERFORMANCE DOCUMENTATION FOR PROMOTION, TERMINATION & COMPENSATION ENSURE FAIR STANDARDS & COMPLIANCE 35
- 36. 36
- 37. 37
- 39. 1. TALENT 2. CULTURE 3. ENGAGEMENT PERFORMANCE 39
- 40. 40
- 41. 41
- 42. BARRIERS TO COMMUNICATION Relevance Poor Timing Authority, Status & Power Questionable Link to Strategy Emotions Common Verbiage Unclarified Assumptions Lack of Planning Ready > Fire > Aim Poor Listening and Evaluation Training Privacy Distractions Geographical Separation 42
- 43. 43
- 44. 44 …best get that hand out my face!
- 45. 45 NEW PARADIGMTRADITIONAL TASK-ORIENTED GOALS-FOCUSED ONCE A YEAR BI-ANNUAL OR QUARTERLY TIMED FOR ND OF FISCAL BASED ON ANNIVERSARY DATE PAPER, SPREADSHEETS AND EMAIL SOFTWARE-DRIVEN DISINTEGRATED FROM PEOPLE STRATEGY PART OF ENGAGEMENT STRATEGY UNIDIRECTIONAL / COMPETENCY-BASED FEEDBACK-BASED BACKWARD-LOOKING FORWARD-FOCUSED
- 46. 46
- 47. 47
- 48. 48
- 50. 50 ENGAGEMENT = P RO M OT IN G P E R FO R M ANC E
- 55. 55
Editor's Notes
- How many people here by show of hands have a performance management process in place? Source: DDI 2015 When I say performance management, what is the first word you and your managers think of? Of course, you’re all HR Professionals.
- Of course, you’re all HR Professionals.
- What words to your employees think of?
- And your managers? Let’s try to keep this PG 13 at least. When is this going to be over!?
- Objective 1: Learn why average performance management consistently fails its primary objective: To improve employee performance. (Human Resources Development). Shouldn’t it look more like this? This is a picture from the end of the Lincoln Marathon for a person running of Project Purple. Marathons aren’t easy. She’s probably exhausted. But she did it. She didn’t get a raise. Or a promotion. But all the work payed off. She got a trinket So let’s ask some questions. If performance in life is engaging, why is “performance” at work disengaging? Why is performance management a culture killer? Why do traditional performance management processes consistently underperform? We’ll never get employee engagement with a disengaging process. But, before we can identify “how to fix it” we need to know what it’s supposed to do and what’s wrong with it.
- Why do we manage performance? I don’t know. We always have.
- List the reasons invite people form the audience to play Family Feud. Compensation Adjustments Training Program Development Set & Track Goal Progress Identify Strengths & Weaknesses Task Accountability Risk Management Manager / Employee Relationships Strategy Alignment (OKRs / KPIs) Talent Mgmt. Promotions / Transfers / Succession Planning Regulatory Requirements Conflict Resolution Promote Feedback Other: Manager Development Mid year reviews make end of year reviews a lot easier.
- We’re basically trying to two things. Documentation and Employee Development
- With employee performance management we try to do two things. The first is documentation. Which means accountability. Peter Drucker said, “If you can’t measure it, you can’t improve it.” Documentation is time-consuming. So, we set aside time for documentation. But what about the employee development part? But, because of time constraints, fiscal calendars, we use the time established for documentation as an opportunity to give coaching.
- As is often the case when we try and combine two good things…the result might leave a bad taste in your mouth.
- When you add up all the reasons we engage in performance management, it comes down to this. The purpose of performance management is to improve performance – not just for the individual – for the benefit of the organization. According to research, 90% of business leaders think an engagement strategy has an impact on business success, but less than 25% report that they in fact have a strategy. How can that be? Remember how everyone says they have performance management program? It tells me that leaders don’t recognize that Performance Mgmt. programs are the primary means to engage employees with shared goals and objectives. How else do we communicate and measure progress on strategy? It’s also tells me something else about their effectiveness. Source: ACCOR Services (now Edenred https://www.edenred.co.uk),
- So everyone has a system – but nearly everyone thinks…it could be better? Those who raised their hands earlier - how long have you known it could be better? Why do we tolerate the status quo? We’ve already said that the purpose of performance management is ultimately to drive performance. Why are we so bad at this? Why is PM so challenging from your perspective? (invite answers)
- There's a lot of reasons why Performance Management processes are ineffective. Ratings Bias Process Burden Questionable Link to Strategy Ill-Defined purpose Insensitive Tasks Versus Goals Time-Consuming Poor Timing Backward-Looking Disengaging Managers are too X Too Infrequent
- Let me summarize it for you. Heavy process that’s really time consuming with limited immediate benefits so it feels irrelevant. Feels like paperwork. In many cases, it literally is paperwork. How many folks here use a paper-based system? See me after! Even large companies have failed to innovate here.
- It’s time to drain the swamp. I never watch the original season of shows anymore. I plan to watch this presidency on Netflix.
- Most companies are in the throes of remaking their performance management processes. Some organizations, like Microsoft and other, summarily dropped them a couple of years ago in favor of a model focused on continuous feedback. Simple conversations without ratings. Metrics free. And then it hit them. We actually need some metrics. Howa re we going to make workforce planning decisions? Top-talent, right-sizing, talent gaps, succession planning? Many of these companies began to reintroduce goals an employee could update throughout the course of a year. Goals have targets. Percentage completion rates. Metrics.
- As with any investment, we monitor its health, both for its own sake as well as for its impact on other facets of organization. What do we normally do with investments? We monitor their performance in hopes we can improve it. Let’s say you’re going to hire a financial advisor. Most of them will discuss with you the numbers - return rates, fees, indices and fancy charts. Would you hire a person who instead just feels it.
- “People” is literally the largest single investment that businesses make, beside real-estate.
- Source: PWC / Saratoga Costs certainly by industry. These are national numbers from 2014. Lowest in Retail, highest in Medicine. 2014: Revenue per FTE: $370,552 Labor Cost as Revenue Percent: 29.9% Labor Cost Per FTE: $98,968
- Let’s talk about this case study we did with a 100 person company. Adding up all the tasks and meetings people involve themselves with during the course of a year. The “average” performance will take each employee about 90 minutes.
- 7 work weeks for one FTE. 7.6% of the work year based on a 2080 annual 40/week job. If your average salary is $65,000, then your PM process has a hard cost of roughly $4,940. But that doesn’t even begin to measure the opportunity cost associated with that lost time. 2080 is the number of hours in 52 work weeks.
- So you see, your performance management system isn’t just a hassle…it leaks.
- We don’t tolerate leaks in our assets, unless you’re James Comey.
- On the document side of the equation, it’s the process that leaks. On the development side of the equation, it’s the bottle neck at our managers We place a lot of responsibility on managers. They’re top performers. So they become managers. But, now they’re top performers and managers. But, we also want them to develop our talent? Now they’re coaches too. And what kind of support do we provide them? A sheet of paper?
- Is it any wonder that only half of hr pros believe managers effectively differentiate good from poor performance?
- Something’s got to give. You guessed it. From leadership to managers to employees and to our customers. It’s customers who are the first to benefit from enhanced employee performance and the first to notice you have a poor performance management systems.
- I once stopped in to a local eatery to order a sandwich from one their renowned and esteemed sandwich artists. I asked for mayo on both sides of the bread which is the traditional custom among my people. He looked at me quizzically for a moment. He then spread the mayonnaise on the inside…and the outside of the bread. We definitely need performance reviews.
- But, in addition to procedures, we also have to our values, goals and objectives. These are the things we want to reward. In many ways our employees are just like customers. They’re either buying what we’re selling or not.
- If employees are held only to on time departures, and don’t engage the stuff about “friendly skies “ who knows what will happen?
- Our people represent our greatest opportunity for success. Not only with our customers, but also in realizing our internal strategy. Waiting a year for such worthy conversations isn’t altogether wise. People talk! An over-reliance on ratings as the sole basis for talent management decisions, rather than frequent and structured conversation, suffers from a fundamental flaw.
- Who knows what this thing is? Bell Curve. Let me introduce to one of our most talented employees: Jamie. And some other dude: Dave Performance management systems have the tendency to focus high performers…and low performers. Do you see who that leaves out? Most everyone. Most people are average. Average people do the majority of our work. We have a lot, in fact, the most to learn from them.
- Whatever you do in a performance review, you encourage throughout the organization. If the event is engaging, you’ll multiply that by the number of employees you have. If it’s disengaging, you’ll multiple that as well. set new goals & track progress | improve manager / employee comm. >enable strategy deployment (re)focus teams > increase productivity recognize contributions > encourage org. learning assessing skill gaps & training needs. | measure performance > identify best-practices & standards documentation for promotion, termination & compensation > ensure fair standards & compliance
- Can you build an organization with out building it’s people? If you develop the person – you develop the organization.
- If you foist a disengaging bear-trap on people every year, you hobble the organization
- It’s fairly obvious when we understand what drives performance.
- Can you have high performance without anyone of these three things? Engaging people requires engaging places. If you don’t have talented, trainable individuals how can they engage your goals and objectives? If a workplace has a toxic or disengaging culture, how will you attract and keep talent?
- You can get high performance in bursts though other means. Encouragement or command. Engagement or control. Enhanced compensation. When I directed analysis for the company that sponsors the national Best Places to Work, I used to tell audiences the secret to winning their local contests. I’d say, identify the date your company was to be measured. And a pay period or two before, announce a giant raise or bonus for everyone! You’d probably get a huge boost in productivity, engagement and everyone would only have great things to say about the company. Do the measurement. Then rescind the offer.
- What are the effects of such an action? What would happen to performance over the long term. Notice two things: We didn’t actually grant the bonus. So why’d we get a boost in performance? There was nothing to rescind or renege on, so why did our performance drop? We used only words to drastically change our culture. A performance management process is a part of your employee communication strategy. You either do it well or do it poorly, but you are doing it.
- There are many barriers to effective communication. Which of these affect your performance management program the most? Some can be solved with better process, technology and some with training. Other can be solved with better, more engaging content. Lack of planning Poor listening and evaluation. Emotions, distrust or fear. Unclarified assumptions Specialization / Silos Overload – too much information Formal Channel Structure Physical Distraction Geographical separation Common verbiage / Specialization & Silos Technology Leadership Visibility Relevance Poor Timing Common Verbiage Privacy Knowledge and Education Functional Diversity
- And some are just part of human nature.
- Feedback is a workforce requirement. Nothing gets done without communication. In fact, about 75% of employers rate teamwork and collaboration as “very important”. Yet only 18% of employees are evaluated on their ability to communicate on performance reviews. (Source: Clear Company 2014) In the meantime, 86% of employees and executives cite lack of collaboration or ineffective communication for workplace failures. How can this be when we have a person who spends roughly 7 weeks on exactly this effort? 40% of workers who are actively disengaged report they get little or no feedback. (Source: Office Vibe) Two-thirds of employee say they want more feedback. (Source: USamp Research ’15) 40% of Millennials (soon the majority of the workforce) would even pay out of pocket for social collaboration tools.
- Let’s quickly compare the differences between a traditional system and the new paradigm. Task-oriented > Goals-Focused Once a Year > Bi-annual or Quarterly Timed for End of Fiscal > Based on Anniversary Date Paper, Spreadsheets and Email > Software-driven Disintegrated from People Strategy > Part of Engagement Strategy Unidirectional / Competency-based > Feedback-based Backward-looking > Forward-focused Work is where we live. We actually spend about half of our waking lives at work!
- When we have problems in our house, we fix them.
- If we have problems with our cars…we fix them.
- We just don’t have to live with this stuff anymore.
- So, how do we make the change? Let’s summarize practical next steps. 4. Identify practical strategies to upgrade performance management processes to make them as engaging as they should be. (Human Resources Development)
- Realize that engaging employees equal to promoting organizational performance If this your mindset, you’ll go far. Don’t worry about getting everything right. Perfection comes later. Reduce process weight Shrink forms Use technology Increase their relevance Frequency Timely issues Content Goals Use Ratings and Open-ended Questions Manager & Employee Feedback Training
- Make it easy however possible. Lose paper altogether. Use software to automate the automatable. Use shorter forms, ask fewer questions. Heavy processes ensure infrequent communication by making it too expensive in terms of time. They also ensure longer forms so we can “take advantage” of the time we set aside. 4. Make it easier for your managers to engage their employees.
- We would never get good at anything if we only did it once a year. In Communication, as with all things, it’s practice that’s make perfect.
- With increased frequency, comes the opportunity for more timely content. Goals set with the expectation of quarterly feedback ensures a higher degree of engagement. In addition to asking Managers to rate employees, pose open-ended questions to promote conversation. You might be surprised - in a good way - by some of the feedback you get back. One of my favorite questions to ask is, “who on the team deserves recognition and why?”
- Finally, invest in coaching. Feedback 101 training and managers as well as employees: how to give and receive constructive feedback, active listening strategies, is money well-spent. If we can increase the quality of communication throughout an organization, there’s no may be no limit to what we might accomplish. And, at least one thing’s for certain…
- There won’t be any more surprises come review time.