DDI’s Talent Management Intelligence

The Truth About Performance Reviews

By Bob Rogers

If you’ve read the business news in the last few days, it’s likely you’ve seen something about UCLA professor of management Samuel Culbert’s book "Get Rid of the Performance Review!” The Wall Street Journal even published a piece by Culbert titled “Yes, Everyone Really Does Hate Performance Reviews”.

The truth is that everyone doesn’t hate performance reviews. It’s all about how managers and employees handle the review—never the tool. In my 32 years in business, I believe about 20% of companies get performance management right. In the other 80% of companies, everyone hates performance reviews because of the poor implementation and skills of leaders. But the 20% that get it right all consistently follow the same steps that eliminate most complaints identified in Culbert’s article. Not surprisingly, they are almost always the best performing companies.

In my book, Realizing the Promise of Performance Management, I outline the steps that make performance management an effective process. Once adopted by leaders and employees they give companies a huge advantage in performance, morale, retention, engagement—all the things that can make any company an employer of choice.

The best performance management approach includes:

• Linking individual performance metrics to the business priorities of the company
• Training managers in how to coach and provide feedback fairly and with impact
• Giving the employee more ownership of their performance plan
• Changing the mindset of the leader from evaluator to coach
• Focusing on both the whats (accountabilities) and the hows (competencies)
• Making the discussions and reviews more developmental and forward looking

Another way to avoid pain around performance management and reviews is to have the manager and employee create the plan jointly and have mid-year and end-of-year reviews. Employees will feel ownership of the plan and great satisfaction in meeting their goals, particularly if they can see a clear line of sight to their contribution to the success of the business. 

Do companies need a performance management system? You bet they do, but for the right reasons—clear expectations, alignment of work to company objectives, developing communication and trust between leaders and employees and higher employee engagement.

If you still aren’t convinced, how about these two examples—Texas Children’s Hospital System was voted Best Place to Work in Houston and DDI was voted Best Place to Work in Pittsburgh. Both companies have very effective performance management systems and I think these awards speak volumes about how the employees feel about their organizations. What do you think?

Bob Rogers is the President of Development Dimensions International (DDI)

Performance Management Gone Wrong

By Rich Wellins, Ph.D.

Over the holidays, I was scanning the work advice column in our local newspaper. An employee was asking for advice on how to handle a derailed performance appraisal discussion with her boss. As the story goes, her boss pointed out over a lunch-time appraisal that she was often disruptive and overly critical.  She asked her boss for an example, and he blew a gasket. If she did not improve her behavior (of which he had no good examples) she may risk getting fired.

Perhaps the story is an extreme, but examples of disastrous appraisal discussions are plentiful.  Performance management is one of the most misused management processes. The shame is that if used effectively, it can be one of the most powerful.

In my opinion things have gotten worse, not better, over the past 5 to 6 years with the advent of performance management software. While these programs may help with efficiency, consistency—and sometimes effectiveness—they account for less than 20 percent of the success of the process. Nick Graber, a former HR associate at Kodak once told me that you could do a very effective appraisal on the back of a napkin. And, a very ineffective one on a three page form. His advice: “It’s the conversation that makes the difference.”

So let’s go back to the basics for a few minutes by asking yourself:

• If a stranger was to walk up to a group of employees in your parking lot, what would they say about the most recent performance appraisal? Better yet, what would you say?
• Do employees see a connection between what they are being asked to do and how it ties to the success of the organization?
• Is your performance management process executed in a reasonably consistent way throughout the entire organization?
• Is there a balance between the “whats” and the “hows” (concrete, measurable goals and the competencies/skills needed to accomplish these goals)
• Is there any sense of fairness. Are better people getting better appraisals? Are they getting bigger bonuses? If there is not reasonable distribution, there is something wrong.
• Does you system celebrate success and strengths as well as development need and “weaknesses” somewhat equally?

Sad, but true, I fear most of us would not be in the 'yes' column.

Rich Wellins is senior vice president at Development Dimensions International (DDI).

Seaworthy Performance Management

By Barry Stern, Ph.D.

My personal psychological stimulus package arrived the other day. An email from a good friend and talented ex-colleague contained the phrase “missing our quarterly bonus discussions.” These sobering times had caused me to repress the lunacy of another era and at first I didn’t get it. To what bonus discussions was she referring?

Her subsequent phone call cleared it up. She remembered a time we were part of a company that had artfully created a performance management and bonus system utterly independent of our behavior. Furthermore, while the company stock plummeted, we received what seemed to us significant quarterly bonuses. We weren’t “gaming” the system; the system was “self-gaming”.

Contrary to what you might think, while we enjoyed the bonus and felt the dollars well deserved, having our behavior “de-linked” from our rewards felt absurdly hollow. Much nervous laughter accompanied each discussion as we tried to make sense of the circumstance. Furthermore, the little “development” my direct supervisor attempted to provide was merely extraneous noise. He didn’t get me, the situation, or the true development opportunities our dire company situation presented. And so, I and those closest to me, became rudderless, disengaged ships at sea. When the opportunity arose, many of us jumped ship. Some, with no apparent performance based rhyme or reason, were eventually asked to walk the plank.

Today’s performance management connectivity challenge is decidedly different. As companies enter Q4, hordes of talented folks are burdened with goals that through today’s lenses feel unachievable. Yet, these times call upon us to develop more mental and sometimes physical muscle – and fast. Performance management and bonus discussions conducted in this unique time will deeply color perceptions and longer-term allegiances. How will you leverage this unique opportunity?

Some critical questions to ponder:

• What are the unique business conditions your company has experienced and how will they impact performance management and bonus discussions?
• How confident are you that those discussions will reflect your company’s core values?
• What have you done differently this year to prepare your leaders for these discussions?
• What unique opportunities for development does this time represent?

In today’s roiling business waters, navigating the performance management course tests the skills of even our most adept leaders. While the waters are treacherous, the organizational and development payoffs are more than worth the voyage.

Barry Stern is vice president, Consulting Services and Delivery for Development Dimensions International (DDI).