Monday, March 16, 2009

A No Bull- #$%! Performance Review Process

From a reader:

“A colleague of mine referred me to your website. Thanks for taking the time to share.
I’m looking for some guidance on making our performance review process better.

Thank you in advance!!"
- Human Resources Advisor

HR Advisor, you have my sympathy. You’ve just been given the assignment that just about every HR professional gets to take on at some point in their career – fix the performance review process!

Of course, before we launch into a solution, we’d want to find out what’s wrong with the current process. Having led or been a part of performance review improvement initiatives at three different companies, I think I can guess why you’ve been asked to take this on. It’s probably one of more of the following:

- You have a new HR Manager
- You have a new CEO
- Employees have complained about the current process
- Managers have complained about the current process
- HR is complaining about the process, i.e., “Managers aren’t doing them; they don’t know how to write comments, etc…”
- You did an employee survey (another version of #s3&4)
- A consultant told you it needed to be improved
- You read a book, or an article, or went to a conference and heard about what other companies say they doing and you’re not doing

If I’m sounding cynical, it’s because poor performance review processes are rarely the real cause of any legitimate business performance issue – like increasing revenue, market share, reducing costs, etc… and they don’t really contribute to employee satisfaction of productivity (other than generating a lot of complaints). The reality is most employees don’t like getting them and most managers hate doing them. I hardly meet anyone other than HR that wouldn’t rather just do away with them. And actually, a lot of HR managers and employees hate them and aren’t good at them either. Don’t believe me? Try auditing your HR department’s performance appraisals.

To make matters worse, when initiatives are launched to improve performance review processes, they often consume lots of time and resources, and when faced with the new and improved processes, the complainers end up regretting they ever complained.

Why is the solution usually so painful? Well, if you search the web, read books, go to conferences, and learn about the “right” way to do performance management, you might end up with a system that looks something like this:

- Position profiles, job descriptions, or comprehensive competency models for every job. Don’t have them? Well, time to get working on them!

- Some version of complicated goal setting, management by objectives, balanced scorecard, SMART goals, or some other way to quantity every detail of each employee’s work aligned with company objectives. You’ll have to teach everyone how to write these, and do a lot of inspecting to make sure they’re doing them

- A career and development planning process – at least 3 pages for this part

- Some kind of structured ongoing feedback and coaching – with forms and sign-offs

- A long performance appraisal form to rate and comment on every behavior, score and assess every goal and measure, and perhaps even a multi-rater component. 14 pages minimum

- Lastly, because the system is so complicated and requires so much paperwork, you’ll want to automate the process with some kind of purchased or home-grown software system

I have to admit, I’m guilty of designing systems similar to these. In theory, it all makes sense, and it’s hard to argue against any one of the components. Unfortunately, what often happens is that these things are designed by committee, and they end up looking like pork-laden legislation filled with everyone’s favorite earmarks.

I guess one good reason to do them is to protect the company from lawsuits – to justify terminations. But that only applies to a small percentage of your employees. HR might tell you we need them to administer merit reviews…. but do we really? Most managers could easily determine how much of a raise their employees should get without a stack of paperwork.

Don’t get me wrong… I think we should still have a management system for setting goals, development planning, assessment, feedback, and coaching. The key is to keep it simple and real. So here’s my advice:

A No Bull- #$%! Performance Assessment Process

- A half page for goals, quotas, performance standards, or any other way that describes an employee’s accountabilities. It should pass the “would my mother understand it?” test

- The other half page has no more than 6 qualitative competencies or critical behaviors required to be successful in the role. Managers could pick from a menu or use the same ones for every job

- A one page development plan

- Managers and employees review these two pages at the beginning of the year, and periodically throughout the year

- At the end of the year, the manager would assess each goal or standard, and provide a simple rating for each competency or behavior, along with a 1 paragraph overall performance summary. All on the same two pages. And then have an authentic, constructive, give-and-take discussion

- If you can afford a reasonably priced piece of software, or build one yourself, I’m all for automating things as long as it makes a manager’s job easier and the employee would truly benefit from it. It sure will make it easier to track and report, if that's important to you.

Readers, please weigh in with your opinions on performance review processes. Am I being too snarky? I take a lot of pride in trying to keep this blog upbeat and positive…and I’ve re-read and edited this for the last couple of days, but it keeps ending up the same (actually I’ve toned it down).

If you disagree, what advice would you give the reader instead?

11 comments:

BomiM said...

Hi Dan,

My views to this reader is as follows:

And the award goes to ... Looking at lessons from the 2008 Fortune 500 List of Best Big Companies to Work For Google, the No.1 on the list does not being the highest pay master nor does it offer paid sabbaticals but 60% of the employees surveyed said they were happy with their "Job growth". 3,089 out of their US 8134 employees got new job opportunities.

Apple, the No.1 in 2009 list also ranks No.1 in the industry list on the three of the Nine Key Attributes of Reputation. Industry rank No.1 on Innovation, People Management and Quality of products/services.

So, what's the magic with these guys on their performance management systems? Dan has most certainly said that Position profiles, job descriptions, or comprehensive competency models for every job will be needed. Innumerable hours of teaching and training on goal setting and aligning to company's objectives will have to be undertaken. A structured ongoing feedback and coaching along with career development planning are a must. Here lies the beginning of the end.

I've often invested many hours to explain to many a modern day manager that sitting in a three sided glass cabin does not build transparency in an employer - employee relationship. Frequent (a minimum of once a month), open and honest two way communication (not a one way feedback on a post mortem of what was done wrong) will go a long way to building the reputation of the manager as well as the process. Many of today's Generation "Y" and beyond are over confident lot with little respect for experience or hierarchy, intelligent and informative. They thrive on multi-tasking, certainly technical savvy but many have little regard for ethical standards and are brought up in an environment that leads them to be utterly individualistic and a low or no tolerance for virtues or values. They'd love to take the CEO's seat within weeks, not months or years of joining an organisation.

During and after this feedback session, elaborating on Dan's point, comes the coaching (and mentoring) on building the competencies that would qualify the individual for the next job position that he or she is aspiring for. Be brutally honest in sharing that 70% of building those competencies depends on the individual's effort, 20% on the coaching and mentoring with just 10% from formal training with or without the sabbaticals.

Cheers,
B

Dan McCarthy said...

Bomi -
Thanks for sharing the data and your experience. You never fail to add value.

Pawel Brodzinski said...

You're afraid of being too snarky. I'd say your opinion is very balanced. Actually you could go way further and I wouldn't be surprised at all.

Personally I don't agree that every company needs formal written (although short) development plan or competency matrix I see a reason for creating these things. If you asked me I prefer as little formalism as possible including short list of roles employee can fulfill but giving managers a wide range of tools to work on motivation of their teams.

When two guys develop code they're both developers. If one of them is 4 times more productive than other (which is possible in that area) I see no problem in paying the better performer 4 times as much as the other guy. Now they still develop code. They're both developers for me. The very same role.

However in majority of organizations it won't be possible to call both guys with the same title and have such difference in remuneration. You have to call one a junior software developer and another senior software specialist. And you have to develop a bunch of documents showing which qualities a person should have to become one or another.

Of course you still can have great performance appraisals as far as a manager do a good job in that area but usually this formal process is used as an excuse for not doing good job here. "Listen, you're only a junior software developer, I just can't double your salary. You know, procedures."

By the way strict procedures can be a pain in the neck for managers too.

Nothing can substitute open, honest and fair communication with the manager about employee goals and performance.

Dan McCarthy said...

Thanks, Pawel!

Sean Conrad said...

Hi Dan - full disclosure: I work for a performance and talent management vendor. We work with thousands of HR professionals who consistently ask us the same type of questions. Across the board, it's about all involved - execs, HR, managers and employees - deriving more value from the process. We've written a series of best practices reference articles that your readers might find beneficial. They cover everything from why reviews are critical, different methods to assess and rate competencies, getting useful data from and improving engagement with the process and development planning.

Hope these help.

http://www.halogensoftware.com/resources/reference-library/

Dan McCarthy said...

Sean –
Thanks, that’s great. The reader, and I’m sure others, would appreciate the articles. And I’m familiar with Halogen, a company worth taking a look at as a performance management software provider.

Wally Bock said...

Congratulations! This post was selected as one of the five best business blog posts of the week in my Three Star Leadership Midweek Review of the Business Blogs.

http://blog.threestarleadership.com/2009/03/18/31809-midweek-look-at-the-independent-business-blogs.aspx

Wally Bock

Dan McCarthy said...

Wally -
Thanks! I'm honored, given that Three Star Leadership is one of my favorite no-bull blogs.

Anonymous said...

The problem with all these development plans and goal setting activities that supposedly will prepare an employee for the next level is that all performance is relative. So if by some miracle or the genius of your management skills all your employees achieved all their goals they would all be exactly in the same relative position as when they started !

Chris Young said...

Great post Dan! This issue seems to come up around this time every year, and I'm glad you've weighted in and insisted on a No Bull to this important topic.

I've featured your post in my weekly Rainmaker 'Fab Five' blog picks of the week (found here: http://www.maximizepossibility.com/employee_retention/2009/03/the-rainmaker-fab-five-blog-picks-of-the-week-3.html) to share your thoughts with my readers.

Be well Dan!

Dan McCarthy said...

Chris -
Thanks!