The past few years have put a spotlight on the one “human resource” process that is both the most important process, as well as the most hated. Everyone is jumping on the bandwagon to move from static, snapshot-based annual review to frequent two-way conversation. It’s the right time; with today’s operational and human complexities, we need to be communicating up, down and across to make sure that everyone is working toward the same end.
But this isn’t a simple “flip the switch and tell them to do it differently.” A change such as this is major organizational change, and this kind of change needs a holistic plan, a purpose and goal, and a change process. We know the statistics: 70% of change initiatives fail (Google: 70% of change initiatives fail)
I’ve watched it over and over and have formed my own conclusion: we fail to take into account the people involved. We gain “buy in” by getting input, build the plan and launch. We may train skills, but we miss the predictable human reactions and challenges and fail to confront them.
Performance management was invented to allocate merit budgets fairly, based on performance (I know this because I was there.) That meant scoring, and common “review” dates so that HR could calibrate and allocate. Made great sense with a 15% merit budget; today’s merit is 3%. Not much you can do to differentiate and reward performance, but we continued the façade to the point where it was an exercise in futility.
So it’s time for something new, and forward-thinking organizations are eliminating scoring and even ratings, creating a more frequent two-way dialogue and intensifying the focus on developing talent. It’s hard to argue with that. We have made the logical and empirical case that engaged employees have a significant positive impact on business performance, and we have researched the positive impact that more frequent dialogue has on employee engagement.
But think about the average manager today who is overworked, hasn’t had the opportunity to learn and develop leadership skills, and has several direct reports. Their perspective is (and will be until intentionally changed) that a change to more frequent reviews has just added time they don’t have, has taken away their excuse for the merit increase they are awarding (HR said…) and they’re now expected to have a meaningful dialogue rather than simply providing their “evaluation.” Yikes.
If you are thinking about a major change to your performance management process, here are some steps you might want to add, to give yourself the very best chance for your new process to succeed.
What do you really want to do?
Step one: Develop a purpose statement for your program. To do this, do some research on what business issues can be improved by enhancing the quality of the performance dialogue. Do you want actually to improve performance? If so, how will you measure it? Do you want to increase engagement? What is a reasonable improvement on your engagement scores, and how long will it take to realize it?
Having a purpose adds meaning, and a meaningful process is more likely to be successful. The purpose becomes your “stake in the ground,” your reason that you are paying leaders and employees to participate fully in the process. After all, you want work done by employees and leaders to add value, right?
Delegate the purpose to your leaders
Delegate doesn’t mean tell them to “do it.” It means to ensure that they are keenly aware of the purpose and expected results, that they understand it is a key part of their leadership role, and that they have the will and skill to execute.
As I work with organizations and their leadership teams, I find more often than not that those in leadership positions don’t understand their role. They see things like performance management as HR work they have to do, instead of recognizing that their role is to create a vision and shepherd their employees toward that vision, making sure that they have the knowledge, skills, and resources to perform well. To make matters worse, departments like HR, Finance, Marketing, Legal all put additional work on their plates to the point where they no longer have time to do what is important.
Part of delegating to your leaders is making sure that their role is well defined, and that they have the capacity and capability to do this important work. Otherwise, it becomes just another administrative burden.
Empower the employees
Employees walk into annual review meetings apprehensively, waiting for the bottom line – their rating and their raise. They need to learn (and believe) that the new process has a specific purpose, and that they have an important role – to dialogue interactively with their leader about how they are progressing, in results and in growth.
Hold the leaders accountable
This kind of open and two-way leader_employee dialogue is difficult and counterintuitive, and many will wait until prompted to make it happen. If the quality and timeliness of their leadership in performance management is an open and honest part of their performance, they will have to do it, and hopefully will become interested in doing it well.
But it can’t be HR who forces accountability. It has to come from the leader’s boss authentically. And the leader’s boss has to model the behavior.
It is the right time to change
The old method of performance management needs to be put to rest; it is a dinosaur. But your new way has to be purposeful, meaningful and deliver results that fit your organization. Until you know definitively what you want to accomplish, your leaders and employees are doing work that may or may not matter to the organization. And what organization has the luxury of wasting time these days?
But also, recognize that change doesn’t happen overnight. It is a process of trying, succeeding or failing, learning and continuing to change.