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Jan 19, 2015

A lot of companies preach today how their most important asset is their people.

We are seeing this more and more as organizations realize that having happy, engaged employees creates innovation, speed to market, improved customer service and all those aspects in between to generate a strong bottom line.

Performance Management initially was about companies identifying and protecting their most important asset: superstar performers.

Unfortunately “performance management” has been twisted, through many systems and ratings and metrics, as a way to punish or eliminate underperformers. Thank you Industrial Revolution for the gift of measuring “workers” by output!

Having leaders as coaches

That brings to mind one of our clients, HGST, a Western Digital Company who develops and manufactures advanced data storage solutions with more than 41,000 employees worldwide. HGST has relied on a traditional approach to performance management which included bi-annual written performance evaluations and a numbers-based rating system to provide feedback to employees on their performance. This process also feeds into decision-making on employee compensation.

HGST realized that their methods of evaluation and fixation on performance ratings had become an activity that occurred twice a year and a distraction from the performance-based conversations and relationship between leader and employee. This led to an evaluation of internal processes to see which supported that philosophy and those that could be changed or eliminated.

They found the biggest overhaul was needed in the way they managed performance management, which was based on ranking employees in a bell curve; this generic approach fostered little in the way of mentoring, or putting employees on a path toward better performance.

The decision was made to remove the rankings and culturally change the company to have leaders as coaches. This is not a small undertaking.

Performance reviews as a handicap

These changes impact how a person receives feedback, what their career trajectory may be and how they will be compensated. All of these aspects are very important to any individual and it’s imperative that the management, all of the management, is clear on how to implement the new way of working/managing/mentoring/setting expectations.

This underscores why in general, performance reviews aren’t about promoting a high performer or documenting the lows; instead they have become a handicap for managers because, when looked at as a negative exercise, and similar to the case of HGST, the “review process” eliminates what it was intended for in the first place: coaching, managing and helping to grow people inside the company!

It’s true though that daily mentoring, discussions, and providing feedback are hard. It takes real thought, investment and time, likely time that a lot of managers feel they don’t have.

That said, with just a little bit of tweaking companies certainly can turn performance reviews from the pejorative to the positive, especially if mentoring is done in an ongoing manner. When mentoring is ongoing, then there aren’t big surprises, people expect the raises or the performance improvement plans they receive because the conversations are happening.

Then why do businesses still rely on dated performance management processes that have proven to be ineffective? A recent report by Deloitte found that 58 percent of corporate executives believe that current performance processes do not drive high performance and are not an effective use of “anyone’s time.”

Time for a change

It’s time to rethink traditional methods of conducting annual or bi-annual reviews that are mostly ineffective, and serve only to foster disconnect between manager and employee, with the added confusion of both parties not really sure when a raise may be denied or granted, or that a performance improvement plan should be put into action.

If the above sounds familiar then it’s probably a time for change.

Each day you’re losing ground. Start thinking about how you can implement a Performance Management program that truly can put your employees on a better path to high performance, and do it on your team.

7 ways to a more efficient program

Here are seven (7) things to consider as a way to jump-start a more dynamic and effective program:

  1.  Conduct on-going coaching conversations, which means every time you have a one-on-one with your manager, not every six months!
  2. Ensure feedback is constructive and job relevant. Establish policies that encourage open communications for both the manager and employee.
  3. Communicate strongly that these conversations are for both the employee and the manager to bring topics to the table. No more being blindsided by a lack of raise or bonus!
  4. Implement a plan to galvanize employees to have a stronger alignment to the company’s business goals, values, and mission, and then encapsulate that with what it means to ‘live that’ within their company role
  5. Push advancement opportunities, continuing education, and other activities for employees to grow within the company. Don’t have one? Form a committee, because time’s a wastin’!
  6. Properly document and outline performance expectations and what good performance looks like. Not just in terms of WHAT is being done, but HOW it’s been done. Gather feedback from employee’s peers to help assess the “how.”
  7. Establish clear guidelines on what is being rewarded versus not; hammer home how to be successful within the company.
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