It seems that each week we see a news story related to do with an ancient HR process called performance management. You see, it appears that this aged practice, as we know it, is finally reaching end of its life and not too soon for anyone. Whether the headline reads something about abolishing ratings or increasing the frequency of the review process; whether the newsbyte is related to the performance management practice not really increasing performance to an outright attack on HR for trying to do something yearly in a world that measures daily; it is clearly time for a change. We must take a minute to realize that the process that many of us are questioning now was born during the manufacturing economy when people ran machines vs. the knowledge economy we live in today where the true value of an organization and its competitive advantage is its people. We must realize that we are calling something performance management that was designed to justify a compensation increase and fulfill an obligation to unions versus truly understanding, developing and retaining our most important asset, our workforce. We must realize that, just like all things, change happens as the world continues to evolve and now is our time to work together to make this change real and now.
The latest news story related to this topic is from an often publicized company in the world, Yahoo!, link here! You see, it seems that someone at Yahoo! Is saying the “emperor has no clothes on” and that it is time for a lawsuit. While lawsuits happen all the time and involve HR and labor relations, this particular suit is especially important as it calls into question how we in HR do most things related to a CEO’s strategic priority, talent management. A core fundamental of most talent management processes is the “rating” and we are now realizing based on both academic and professional studies that our process of managers rating their employees once a year on their performance is flawed, produces bad data and poisons most of our talent management processes and tools that we use today. This is one of those moments that we will look back on 10 years from now and say “remember when we did that yearly?”, “remember when we asked managers to rate employees?” and “remember when we used that data to make promotion and compensation decisions?”. All of this said, an avalanche of change is upon us and organizations that leapfrog others and truly “rethink” their performance process leveraging the right data gathered at the right frequency from the right audience will have a tremendous advantage over their competition in the war to retain and develop talent.
The 3 “right’s” mentioned above; the right questions asked to the right audience at the right frequency, while seem easy to understand have been at the center of the problem with our processes today. If we add “what is the purpose of measuring and improving performance” which has nothing to do with giving a compensation increase of fulfilling a union requirement; we have a pile of explosives about ready to change the way HR and business professionals work. Simply stated, the right questions come from asking people questions that they are qualified to answer. If someone is asked to rate me on time management but they don’t know what good or bad time management is, how can we even begin to use their rating as valid. The argument around getting rid of ratings is wrong; the prescription should be to make sure our ratings are valid and meaningful. Getting to the right audience is difficult based on how work has changed, but we must make it happen. As work has become more decentralized and virtual, so has the concept of teams. We do most of our work in teams, not how we look on an org chart. That being said, we must focus our efforts on building tools and processes for team leaders, not the HR function and not just line managers. Lastly, the world along with our goals and objectives change way to fast to be measured once a year. We must think of our work in 52 weekly sprints and understand how people are feeling, what they are working on and how we can help. If we do this and get rid of a cyclical, once a year process; not only will our leaders be more connected with their teams (which is the ultimate goal in increasing performance), but our data that we can leverage as a HR function will be good, real-time data based on real-time work instead of something dictated by a form on a cyclical basis.
We as working professionals know that performance appraisals and management as we know it today is broken. There is not a company, firm or organization that you talk to that say “we really value the performance management process”, instead you hear most line leaders and the workforce saying “it is another thing from HR that we have to do, so let’s get it done.”
This is my issue and my call to the function to do something about it NOW. Lets as a function not let inertia stop us (this time) and use the perfect storm of a new era of leaders, an emphasis on good data, litigation such as the Yahoo! case and technology to reinvent performance management once and for all. HR, it is our time to show we can do and be better and truly design processes for the business, not just for us.
Another infusion of knowledge…