Beyond the Performance Review to Motivation and Performance

Transcription

1 Beyond the Performance Review to Motivation and Performance Message It is possible to conduct performance reviews that are not de-moralizing and demotivating and that actually increase motivation and improve performance. Performance reviews are bad 87% of managers and non-managers say that performance reviews are not useful or effective. Only 30% of performance reviews lead to an increase in performance. 30% of performance reviews actually decrease performance. (source: analysis of employee feedback studies) W. Edwards Deming, quality guru: In practice, annual ratings are a disease, annihilating long-term planning, demobilizing teamwork, nourishing rivalry and politics, leaving people bitter, crushed, bruised, battered, desolate, despondent, unfit for work for weeks after receipt of rating, unable to comprehend why they are inferior. [my emphasis] Samuel Culbert, professor of management at UCLA and author of Get Rid of the Performance Review: This corporate sham is one of the most insidious, most damaging, and yet most ubiquitous of corporate activities. Everybody does it, and almost everyone who's evaluated hates it. It's a pretentious, bogus practice that produces absolutely nothing that any thinking executive should call a corporate plus. What makes reviews bad? Bad system design. Almost 60% of HR executives grade their own performance management systems C or lower. Bad execution by managers - Lack of discipline. - Afraid of candor. - Treat the review as a paperwork assignment. - Don't talk to workers about performance, then they surprise them with the review. - Ask workers to write their own reviews. - View their role more as directors and judges than as talent managers and coaches. - Are not good coaches. Negative response to ratings and labels Inaccurate and unfair and perceived that way even when they are not Rick Marolt Practical Management rick@onesharedplanet.org 1015 Lawrence Street / Madison, WI

2 The way reviews are often conducted seems to run counter to human nature and our needs and motivators. Why are reviews inaccurate and unfair, or perceived that way? Often the opinion of just one person, who may not have observed much of the work Self-enhancement bias: we over-rate ourselves, are disappointed by a lower rating from our manager, compare our ratings to others rating, become disappointed by other people s higher ratings and dissatisfied with our pay for performance Primacy effect: managers weight the first impression too heavily Recency effect: managers weight recent work too heavily Stereotypes, prejudice, bias Contrast effect: Employee B may be adequate, but gets an undeservedly low rating after the manager evaluates the work of superstar Employee A Like-me bias: managers give higher ratings to people who are like them I-hired-you bias: managers give higher ratings to people whom they hired Halo effect: managers overlook the bad work of people who seem unable, in their eyes, to do any wrong Horns effect: managers overlook the good work of people who seem unable, in their eyes, to do any right Central tendency error: managers avoid giving very low and very high ratings Leniency effect: managers give undeservedly high ratings in general (grade inflation) First-stage improvement ideas Hire, promote, and develop good managers, then train them in rating issues, discipline, candor, and coaching. And hold them accountable for good performance management. Use ratings to differentiate at the top and the bottom. Reduce the opportunities for comparisons in the middle by differentiating less there, i.e., put most people in the "average" category. Use a flattering category for "average". - But people want to know where they stand, and they don t want to be average. - So this approach may not help much. page 2 of 6

3 Rank, don t rate. And use peer review, not manager s review. See W. L. Gore. Fair? Objective? But note the power of broad, peer-based accountability. Rely on employees own evaluations and peer review of them. See Morning Star. How accurate are self-assessments? People are hard or easy on themselves. People may exaggerate their achievements. How much can we expect from a compensation committee? But how can we increase motivation? What motivates us? The job itself and the match between the person and the job Goals - Goal theory: Increase motivation by setting specific and difficult goals collaboratively with the employee, creating competition (as long as it does not interfere with teamwork), and giving people feedback as they work toward their goals. SMART goals: specific, measurable, aggressive, realistic, time-bound - Note that SMART leaves out important elements of goal theory. Needs, e.g., achievement, affiliation Confidence - How can managers help people feel more confident? The situation: relationships, working conditions, mission of the organization, et cet. Praise and recognition Autonomy (related to self-management) - Examples: Google, The Gap, Best Buy, Morning Star, W. L. Gore - Increase workers ownership of their goals. - Get feedback from more people. - Speed up the feedback cycle. - Use software such as Rypple to do some of these things. Mastery - Examples: Google, W. L. Gore Purpose beyond profits - Example: Zappos Financial incentives? page 3 of 6

4 - Not nearly as motivating as people seem to believe - Can actually cause a decrease in performance Challenges with pay for performance The self-enhancement bias and social comparisons set people up to perceive unfairness. Because people feel entitled to merit pay, raises and bonuses have even less effect on motivation over time. And lower-than-usual merit pay can de-motivate people. The problem of effort - We want to be rewarded for effort, which is in our control, but pay for performance is about results. - If we distribute rewards only to high performers, others will be de-motivated. - If distribute rewards more equally, high performers may be de-motivated. So some organizations, e.g., Zappos, Netflix, and Atlassian, do not pay for performance. Zappos rewards for skill development (mastery!) instead, which reinforces their core value of growth and learning. Case study: Atlassian Their old system - Managers focused on ratings and people s weaknesses. - 80% of the conversation was spent on people s weaknesses. - Wanted performance reviews to be more stimulating, positive, and encouraging. - The self-enhancement bias was prevalent. - Merit pay was accepted as an entitlement. Weekly one-on-one meetings between manager and staff. Ongoing conversation! Eight times per year, one of those meetings is spend on a particular coaching topic such as what people like and dislike about their jobs, 360 feedback, strengths, weaknesses, and career planning. Manager and staff determine how to help the staff person spend two more hours per week on what they love to do and two fewer hours per week on what they do not like to do. Regular refinement of the person-job match! Staff give the manager feedback too. page 4 of 6

5 Monthly, one-hour "performance check-in" about how a worker can improve and leverage strengths "Snappy" semi-annual "check-ins" replace performance reviews No numerical ratings, but visual "never-to-always" scales about behavior, how much the employee has challenged him-/herself, and results Written assessments are not required. A conversation guide for managers No distribution curve No pay for performance Peer-based kudos system Theme: Self-management Worker participates in setting own SMART goals. Communicates about status. Solicits feedback from peers and customers. - Note the effect of broadening accountability to peers, not just to the manager. Evaluates own performance. Takes responsibility for own development. Theme: Intrinsic rewards in the job Put people in roles where they can meet their needs. Put people in roles where they can use their strengths. Revise jobs regularly to make them more challenging and enjoyable. Create an inspiring purpose beyond tasks and profits. Theme: Manager as coach Guides development. Gives helpful feedback relative to goals. page 5 of 6

6 Focuses more on strengths than weaknesses. Builds confidence through support, encouragement, and training. Praises and recognizes. (But appropriately.) Theme: The system as an ongoing conversation Coaching meetings Personal development plans and reviews Evaluations Consider not using ratings. Consider eliminating "pay for performance". But how can we make these things happen in practice? Start with organizational culture and values. Example: Zappos values Hire for values. Pay people who do not fit to leave, e.g., Zappos and Netflix Shape behavior through: - Orientation, training - Communication - Rules and policies - Leaders' behavior - Stories - Rites - Space Use the performance management system to reinforce behavior. - Zappos - 50% of each performance review measures how employees are furthering the company s culture. - We will fire anyone "who is bad for our culture, even if they re doing a specific function perfectly fine." - Netflix: "No tolerance for brilliant jerks." - Bulbrite publicly recognizes the most value-driven worker every month and every year. page 6 of 6