For two decades I designed compensation and performance management systems for large and medium companies. I always had this nagging thought that after two or three years the system had run its course. Those who wanted to do so had figured out the game and turned what was intended to be a fair system into their own playground.
Quantitative performance ratings drove me crazy. Leaders would figure out the overall rating they wanted, and then go back and tweak the individual ratings so that they could give the salary increase they wanted to give.
Today, the Wall Street Journal carried an article about how companies are learning to game Glassdoor. Companies like SpaceX, SAP, LinkedIn and Anthem “encouraged” people to leave excellent reviews, causing unusual spikes in their ratings. CEOs questioned about the practice said that the ratings on the site were not representative of their company, so they fixed it.
I see a pattern here – those systems that are intended to provide helpful and unbiased data can be “gamed.”
The other nagging thought I had back when I designed compensation plans was that plan sponsors wanted to substitute a system for daily leadership. How do we make sure the tellers are upselling? Put in an incentive plan. Are tellers balancing? Put it in the incentive plan. Are they being nice…? You’ve got the idea. The plan becomes so complicated that two staff analysts are engaged to “track and manage” it. The branch manager doesn’t understand it and spends more time explaining the plan than correcting behaviors.
I see another pattern here – there seems to be more value placed on systems to manage behavior than on leadership observation, coaching, and feedback.
Systems are critical in an organization. They lay boundaries, communicate values, encourage appropriate behavior while discouraging behavior that is contrary to the mission. They are not, however, a substitute for leadership. The timely and effective use of organizational systems should be a competency for which leaders are held accountable.
How can an organization build accountability into their systems so that the data and results are intentional and not “gamed?” Here are four ways to get started. (more…)
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) (more…)
Although my professional experience is in very large organizations, we now work with smaller clients. This work has helped to change my paradigm about those processes that organizations put in place to engage their workforce, and measure the progress of engagement.
This revelation – that big companies try to mandate relationships between leaders and their employees through bureaucratic programs – has been evolutionary for me. Heck, I spent my career designing bureaucratic performance management processes, chasing non-conforming managers down, and cleaning up the misunderstandings when their communication style angered an employee.
I get it, I do. When an organization is so big that those who run the organization never, ever see those who do the work, there has to be a process by which leaders are held accountable for leading without getting the organization in trouble.
But the more I work with smaller clients, the more I realize that you can’t mandate an engaging relationship between leader and employee. That must be authentic in order to truly engage. Following the myriad steps in a process without the heart or skill to be authentic results in cynicism, and does just the opposite of engaging: it tells the employee not to bother.
Take the case of a huge organization’s talent management program.In fairness, a huge organization needs a mechanism to identify and groom talent across a wide footprint. So they create a talent management process….1.) rate everyone, 2.) calibrate the ratings so that not too much cream rises to the top, 3.) go back and “share” the feedback.
Calibrate.It sounds good.I used the term myself in my corporate days to explain the process of leaders defending their ratings. Some of the reasons?Well, leaders tend to inflate ratings, and we didn’t want them giving messages of excellence when the work is really average.So we graph the ratings hoping for something similar to a bell curve.After all, average is actually good, right?
Not so fast. No one wants to be average. So we came up with a new term….meet expectations. Then, because no one wanted to just meet expectations, we added some adjectives….consistently, almost.
When I look back on the amount of time we spent wordsmithing the process to make ratings palatable to those receiving them, I do so with the clarity of hindsight, and a little help from smaller organizations.
Today, my clients are exploring doing away with ratings.Eek, you say….how do they measure and calibrate?Well, by talking. The quality of conversation becomes a key talking point up the chain of command, with as much weight and interest as budget and operational measures. We also go to the source:“are you receiving helpful feedback from your leader?” After all, if you really want to improve engagement, don’t you really want to know the truth directly from the employees?
Case in point. A big organization finished their “calibration” session for their annual talent management program. A leader was “sent back” to talk with her employee and share a rating that was less than what she actually gave the employee, based on her personal interaction and observation of the work. Why? Because there were too many with that rating.
How do you think the conversation went?“So, I’m really pleased with all of the work you did this year.You completed all your goals, and brought in a project ahead of time. Your rating is [3 on a scale of 1-5].”
“Um,” says the employee. “If I did as well as you are telling me, why am I only [a 3]?”
“Well,” stumbles the leader, “I did try to rate you higher, but wasn’t able to defend it in the calibration sessions, so they made me reduce the rating.”
So much for authentic conversation.No matter how hard that leader tries, she can’t be authentic with that employee.And the employee? Well, why should he work so hard?Why not just sail along?
There is a better way. It’s harder, and messier. It’s called real open communication and dialog with a minimum of bureaucratic process intervening.
Why do you need a rating?Is it for the employee?It sure isn’t.It is for the leadership and Human Resources folks to use to measure compliance, to force leaders to do their job and to defend claims that might arise.
Here is my challenge to anyone in Human Resources who is designing a talent/performance management process.Before you create a hierarchy of ratings, think carefully about why you are doing it.If you can’t draw a line back to some benefit for the employee, don’t do it.
Put your energy toward dialogue.Help executives recognize the value of real relationships and real engagement.Take that time you’re putting toward calibration, and put it toward honest dialogue.
The last decade has seen many companies bailed out because they’re too big to fail.Perhaps those same companies are too big to succeed?If bureaucracy is leading the company instead of authenticity, that’s a problem.
If you think I’m alone in my recent disdain for traditional performance management, watch this.
....@ the intersection of learning & performance 