Research Report: Performance Management: Assess or Unleash Performance Management: Assess or Unleash Contents Executive Summary . 1 Key findings from the study . 2 Recommendations . 2 Old School Performance Management: A Practice that is Stuck in the Past . 4 Performance Management – a quick definition and a core challenge. 5 From pitching one employee against another to supporting a collaborative culture . 5 Perspectives from our survey . .. 6 The ever-changing process of performance management . 6 Components of a performance management approach . 7 The ratings: villain or hero? . 8 Mixed reviews: the end-of-year performance appraisal . 9 The importance of coaching & feedback year-round . 10 Disconnects by role . 11 Learning From the Pioneers . 12 From tweaking to trying something fundamentally new . 13 A growing wave – as more companies fine-tune the model we will learn more… . 13 One Size Won’t Fit All, But There are Some Guiding Principles . 15 Principle 1: Keep an eye on what is really happening . 16 Principle 2: Stop looking backward and begin looking forward . 16 Principle 3: It’s all about the conversation . 16 Principle 4: Balance structure and trust/skills . 18 Principle 5: New skills are required – for both managers and employees . 19 Principle 6: Empower the employee . 19 Casting the Manager as Coach . What is the Impact? . 20 A turning of the tables . 21 Manager’s belief in potential . 21 Coaching the individual . 21 Coaching for contribution and satisfaction . 21 When the manager isn’t the manager . .. 21 Moving towards a coaching culture . 22 Is the change right for you? . 23 4 Phases – Define, Set Accountability, Educate/Communicate/Support, Connect to Other Processes . 24 Phase 1: Define . 25 Be prepared for pushback . 26 Phase 2: Set accountability . 26 Phase 3: Educate, communicate, support . 26 Phase 4: Connect to other processes . 27 ABOUT THIS REPORT . 27 BlessingWhite Table of Contents | i Performance Management: Assess or Unleash Executive Summary BlessingWhite Executive Summary | 1 Performance Management: Assess or Unleash The business environment is in constant change . As it Key findings from the study evolves, so do most business processes . Recruiting now • Those who receive coaching have a more positive leans heavily on social media, sophisticated technology attitude towards the performance review, and a supports most business functions, telecommuting and more positive perception of fairness, accuracy, etc . flextime provide for better work-life balance… • Regular feedback and coaching conversations are still the exception, rather than the rule . But one business process which appears stuck in a • Incrementally, the higher up in the organisation bygone age is that of performance management . the more positive your perception of the approach (fairness, accuracy, etc ). The challenge is to This activity remains broadly disliked, cumbersome, understand how it is experienced throughout the often demotivating, and a major time drain . Moreover, organisation . it most often falls short on what it was designed to do, which is to manage performance. Individuals, managers • Traditional performance management processes and executives alike have little faith in the process when seem to place little value on career conversations or it comes to improving individual performance . development, despite these being key to engaging individuals . Today, a number of pioneering companies have • What the formal process is matters less than how it decided to take a new approach, returning to the roots is used . of the process: set expectations around individual contribution, track performance, then provide guidance Recommendations and support (and occasionally remediation) for The current movement among companies – to question improving performance over time . Rather than lean on whether the approach to performance management is forms and assessments, these companies are relying on yielding the right results – is not a fad . Building an approach coaching, development and forward-looking approaches that sustains engagement, creates vibrant collaborative to achieve high performance across teams . workplaces, and truly delivers higher performance now has a proven track record . As the benefits of the new approach are proven in the real world, boards of directors or CEO are increasingly Organisations that remain dissatisfied with their current likely to be asking if their own current process still makes performance management approach should study this trend, sense – heads of HR and OD better have an answer and challenge current internal practices . ready for when that day comes . How far down the road to go will depend on the specifics In this report, in addition to the practical lessons from for your organisation – from shifting gradually to a more such pioneers, we examine the results of a survey of over coaching-based approach to outright jettisoning of formal 1,000 employees along with feedback from interviews performance appraisals . with HR/OD leaders . For those organisations looking to travel down this road, we In conclusion: the “right” approach to performance offer six guiding principles and a four-phase process based management is dependent on the organisation; what on the lessons learned from pioneers in this space . works for one may not work for another . It’s not about what system or approach you use, as much as it is about the quality of the conversations that occur as a result . For those organisations who have concluded that performance management needs an overhaul, we detail the lessons learned by the pioneers and provide a roadmap and guiding principles to help show the way . 2 | Executive Summary BlessingWhite Performance Management: Assess or Unleash 6 Principles: Keep an Eye on Stop Looking It’s all Balance New Skills are Empower the What is Really Backward and About the Structure and Required – for Employee Happening Begin Looking Conversation Trust/Skills both Managers Putting the Organisations often Forward At the end of the Managers who and Employees employee at the have a faulty Performance day, nothing will have built up trust The current center of the impression on the management change until and skills can performance conversation has effectiveness of needs to focus productive, quality gradually move management several major performance on developing conversations are away from approach allows benefits. management – future success, taking place structured managers and it’s time for a not revisiting between an conversations to employees to stick sanity check. the past. employee and explore more to prescribed scripts her/his immediate fertile ground. – but to be more manager. effective, they will need to develop some new skills and a new mindset. 1 2 3 4 5 6 4 Phases: 1 2 3 4 DEFINE SET EDUCATE, CONNECT First do your homework ACCOUNTABILITY COMMUNICATE, TO OTHER – how is your current Make sure SUPPORT PROCESSES system performing everybody is Success takes Other important and if you plan on prepared to play support – before processes flow replacing it, take the a new role. and after cutting from performance time to define the new over to the new management approach carefully. approach. discussions. Once the new approach is in place, you will want to weave these back in. BlessingWhite Executive Summary | 3 Performance Management: Assess or Unleash Old School Performance Management: A Practice that is Stuck in the Past 4 | Old School Performance Management: A Practice that is Stuck in the Past BlessingWhite Performance Management: Assess or Unleash Performance Management – a quick 2 . The incorporation of these other processes has definition and a core challenge taken the focus away from the core focus of The term “Performance Management” is very broad, but managing performance. Knowing that the ratings at its heart is a straightforward concept and one that is and categorisation has consequences beyond critical in any organisation: that levels of performance managing current performance levels, managers need to be actively managed . tend to play the ratings . NOTE: While “Performance Management” can refer to the From pitching one employee against another performance of the organisation, a team, a department or to supporting a collaborative culture any sub-unit, for the purposes of this report we are looking at 1 Today the old-school approach to performance management individual performance . is coming under fire . By “Old-school” we refer to a process that is typically an annual cycle, manager-driven, heavy At its most basic, individual performance management on documentation and structure, and resulting in the involves a three-step process: quantitative scoring of individual employee performance . 1 .Managers define performance expectations that The main criticism is as follows: are required by each individual in order to meet goals . • The process is very bureaucratic: Manager time 2 . Employees in the company perform the work is tied up in documenting each employees’ (hopefully with ongoing support and feedback performance, which adds very little value and drives from management) . manager disengagement . 3 . At a logical interval (on reaching a milestone or at • Performance conversations are unproductive: put a set interval), performance is reviewed, assessed through a highly judgmental and critical process, and course corrections made in order to sustain employees are demoralised and do not engage in or augment performance . the process . Many employees report the process is just an