Earlier this month I had the opportunity to attend SIOP’s Leading Edge Consortium in Boston, where the topic of interest was employee performance management. This event brought together some of the world’s foremost HR scientists and experts to discuss perspectives around performance management trends and innovations. Here are my insights from this exciting meeting of the minds.
1. Performance Management is no longer just about performance management.
Five years ago, a meeting about performance management would have focused solely on improving the annual performance review. This conference touched on that, but also explored issues around driving behavioral change for managers and employees, using goals to motivate employee productivity, and using recruiting and selection methods that attract and retain the kind of talent organizations should invest in managing.
It’s clear that performance management is no longer just an HR issue. When we talk about managing employee performance, we are no longer talking just about measuring and tracking performance, but also about integrating a variety of organizational processes to ensure our employees are performing at top level in an increasingly competitive world of work.
2. The fundamental question is not to rate or not to rate.
Viewpoints differ widely on whether performance ratings are good or bad when it comes to managing and motivating employee performance. Leading the no-ratings campaign, Dr. David Rock argued that ratings trigger a damaging threat response that reduces engagement and productivity. On the other side, representatives from Google and the FBI presented the data-based reasons their companies had decided to retain a rating system. Despite their differing opinions about the value of performance ratings, there were some notable consistencies across presenters.
First, it was widely agreed that a ratingless approach is not truly a ratingless approach. Companies that had “gotten rid of ratings” had not actually eliminated performance ratings from their organizations. Some of these companies simply rated employees and made related pay and employment decisions behind the scenes. Other companies rated in non-traditional ways (for instance, determining whether did or did not meet standards and rewarding appropriately). Even Dr. Rock acknowledged that his ratingless framework didn’t tend to work as well with the bottom 5% of employees. Which begs the question, how can organizations know who the bottom 5% are without performance ratings?
By and large, companies that proclaimed they had eliminated annual performance ratings had simply replaced these processes with a different kind of rating that pay and promotion decisions ultimately depended on. This is definitely a contrast to recent headlines in the media claiming companies are doing away with ratings entirely.
Another part of the ratings debate was the legal perspective of taking transparency and differentiation away from performance management. Institutions that require documentation of fair pay and staffing practices may need to be able to numerically demonstrate that their performance management practices are un-biased across gender, race, and nationality. This may be difficult to achieve in the absence of performance ratings.
Dr. Elaine Pulakos of PDRI, contended that “’Should we be getting rid of ratings?’ is the absolute wrong question to be asking first.” Dr. Allan Church of Pepsico echoed this advice with an excellent presentation on his own experiences with performance management redesign. He advocated that considering organizational culture and what the organization seeks to accomplish in terms of attracting, retaining, and engaging talent is the place to start when considering changes to a performance management system—not with the latest performance management trends or fads.
3. Simplicity reigns in the new world of performance management.
As we move from annual performance measurement processes toward more continuous, collaborative performance management, one concern is that we will just multiply the labor and stress of the annual performance review (see for example this Bloomberg article by Rebecca Greenfield).
Experts at the SIOP Leading Edge Consortium whose companies had overhauled their PM processes had gravitated toward different schedules, practices, and rating scales, but one thing they all had in common was their movement toward a simpler approach. While the nature of work becomes increasingly more complex, managers desire simple processes to help them get the best performance possible from their employees. Amy Grubb, senior I/O Psychologist for the FBI, shared her organization’s reliance on performance check-in documents that take fewer than five minutes to complete, reminding us that “good performance management does not mean over-engineered performance management”.
4. Organizations redesigning their PM processes are heavily influenced by “research”, but not always by real research.
When it comes to peer-reviewed, academic research around how performance management should be done, there is little room for contradiction. The research has long shown that effective performance management practices are critical for organizational performance and success (e.g., Aguinis, 2014; Baldwin, Bommer, & Rubin, 2012; Huselid, 1995; and on and on). However, at this conference companies often cited “research” as a main driver for influencing changes (or eliminations!) to their performance management processes.
When pressed to show this research, it often turned out that the research was really just some relatively informal studies or surveys conducted within their own company. While such studies are a valuable part of any organizational change process, they do not meet the criteria of what most I/O psychologists would call “rigorous studies” around what constitutes effective performance management.
Even worse, in many cases “research” meant that a company executive had read a book that presented performance management in a compelling way and designed new PM processes accordingly. Very rarely did companies draw upon well-established studies that demonstrate the value of differentiating employees based on their value in a company and providing transparent explanations for the compensation and employment decisions that follow.
Performance management remains a hot topic for today’s organizations. As companies experience changes in technology, teamwork, and even the nature of how work is done, seemingly antiquated processes like the annual performance review appear to require changes of their own. This conference brought together great minds from all sides of the issue to discuss how organizations can most effectively refocus performance management toward organizational productivity and success.