Tag Archives: performance management

Reinventing Performance Management to Reduce Bias: Strengths, Future Focus, Frequent Feedback

Steven Scullen

Steven Scullen

Most performance management systems set goals at the beginning of the year and determine variable compensation by rating accomplishment of those objectives.

These evaluations typically are considered in lengthy “consensus meetings” in which managers discuss the performance of hundreds of people in relation to their peers – sometimes called “stack ranking,” or more cynically “rank-and-yank.”

Michael Mount

Michael Mount

These year-end ratings don’t provide “in-the-moment” and “real-time” feedback about actual performance as it happens, so may be less useful in improving performance.

Assessing skills produces inconsistent data based on raters’ own skills in that competency and the value they attach to each performance objective, leading to unconscious bias.

Maynard Goff

Maynard Goff

This risk to performance rating validity was demonstrated by Drake University’s Steven Scullen, Michael Mount of University of Iowa, and Korn Ferry’s Maynard Goff, who considered 360 degree performance evaluations by two bosses, two peers, and two subordinates for nearly 4500 managers.

They found that three times as much rating variance was explained by individual raters’ idiosyncratic evaluation choices, rather than actual performance.

Manual London

Manual London

Sources of bias include halo error, leniency error, and organizational perspective based on current role, suggested by SUNY’s Manuel London and James Smither of LaSalle University, and validated by Scullen’s team.

These findings led the researchers to conclude “Most of what is being measured by the ratings is the unique rating tendencies of the rater. Thus ratings reveal more about the rater than they do about the ratee,” replicating similar findings by University of Georgia’s Charles Lance, Julie LaPointe and Amy Stewart.

Ashley Goodall

Ashley Goodall

To mitigate these biases in Deloitte’s performance management system, Ashley Goodall of Deloitte Services LP engaged Marcus Buckingham, formerly of The Gallup Organization, to analyze existing practices and develop an empirically-validated approach.

Goodall and Buckingham calculated the total annual hours required to conduct performance ratings using the existing process and found that managers invested 2 million hours a year.
This finding confirmed that one goal in revising the process was to increase speed and efficiency.

Marcus Buckingham

Marcus Buckingham

In addition, Goodall and Buckingham sought to increase the meaningfulness of performance management by focusing on discussions about future performance and careers rather than on the appraisal process.

They concluded a performance management system should be characterized by:

  • Reliable performance data, controlling for idiosyncratic rater effects,
  • Speed to administer,
  • Ability to recognize performance,
  • Personalization: “One-size-fits-one”,
  • Considering actions to take in response to data,
  • Continuous learning and improvement.

Deloitte logoDeloitte conducted a separate controlled study of 60 high-performing teams including almost 1300 employees representing all parts of the organization compared with an equal number of employees from an equivalent sample to determine questionnaire items that differentiate high- and lower-performing teams.

They found that performance and related compensation allocations could be more accurately based on managers’ statements about their intended future actions toward each employee rather than asking about team members’ skills.

Several items accounted for the vast majority of response variation between top performing groups and others, particularly At work, I have the opportunity to do what I do best every day.”

Now Discover Your StrengthsBusiness units whose employees said they “strongly agree” with this item were substantially more likely to be more productive, earn high customer satisfaction scores, and experience low employee turnover.

Other powerful predictors of performance were:

  • I have the chance to use my strengths every day,
  • My coworkers are committed to doing quality work,
  • The mission of our company inspires me.

Deloitte’s revised performance management system asks team leaders to rate four items on a 5-point scale from “strongly agree” to “strongly disagree” or yes-no at the end of every project or once a quarter:

  • Given what I know of this person’s performance, and if it were my money, I would award this person the highest possible compensation increase and bonus [measures overall performance and unique value],
  • Given what I know of this person’s performance, I would always want him or her on my team [measures ability to work well with others],
  • This person is at risk for low performance [identifies problems that might harm the customer or the team],
  • This person is ready for promotion today [measures potential].

These responses provide a performance snapshot that informs but doesn’t completely determine compensation.
Other factors include project assignment difficulty and contributions other than formal projects, evaluated by a leader who knows each individual personally or by a group considering data across several groups.

In addition, every team leader prioritizes once-weekly “check-ins” with each employee to ensure that priorities are clear and progress toward them is consistent.

Strengthfinder 2.0

Strengthfinder 2.0

Goodall and Buckingham opined that “radically frequent check-ins are a team leader’s killer app to recognize, see, and fuel performance,” in addition to using a self-assessment tool that identifies each team members’ strengths and enables sharing with teammates, team leader, and the organization.

These three “interlocking rituals” of the weekly check-in, quarterly or project-end performance snapshot, and annual compensation decision enable a shift from retrospective view of performance to more “real-time” coaching to support performance planning and enhancement.

Deloitte’s approach seeks a “big data“ view of each person’s organizational performance and contribution rather than the “simplicity” of a small data view summarized in a single stack-rank number.

-*How do you develop a “Big Data” view of people’s performance?

-*How do you enable continuous, “in-the-moment” performance feedback instead of once-a-year retrospective view?

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Will the ROWE Revolution Reach Yahoo? Results-Only Work Environments, Productivity, and Employee Engagement

Cali Ressler-Jody Thompson

Cali Ressler-Jody Thompson

Why Work SucksJody Thompson and Cali Ressler proposed compensating employees based on outputs, rather than elapsed time, in a “Results-Only Work Environments (ROWE)” policy.

This management strategy evaluated “performance, not presence” practices at Best Buy and has been implemented at another large retailer, Gap.
Is this is a return to a “piece-work” approach of decades ago?
Or is it a performance management practice that emphasizes achieving targeted results?

Why Managing SucksROWE  is being considered at such tech giants as Cisco Systems, in direct contrast to Yahoo’s recent call for employees to be present in offices.
The underlying goal of Yahoo’s “presentism” policy may be to increase innovative performance outputs, although the explanation provided to employees emphasized presence as a prerequisite for effective collaboration.

Widespread negative reaction to Yahoo’s on-site work policy, based on complaints that the policy:

  • Conveys lack of trust in employees
  • Undermines opportunities to manage complex work-life responsibilities
  • Places emphasis on “face time” rather than results
  • Leads to employee resentment and disengagement.
Erin Kelly

Erin Kelly

In contrast, University of Minnesota sociologists Erin Kelly and Phyllis Moen with University of Delaware’s Eric Tranby documented the positive impact of ROWE practices in their survey of more than 600 Best Buy employees before and after the program was implemented.

Phyllis Moen

Phyllis Moen

The researchers found turnover was reduced by 45 percent after they controlled for gender, job level, organizational tenure, job satisfaction, income adequacy, job security and turnover intentions.

Participants reported reduced stress and improved work-home interfaces by increasing employees’ schedule control, and reduced the “opting out” of the workforce due to personal commitments for both men and women.

Eric Tranby

Eric Tranby

Kelly, Moen, and Tranby opine that ROWE “moves us away from the “time cages” developed around the work day…ROWE challenges these taken-for-granted clockworks…our mantra is ‘change the workplace, not the worker’.

Rachelle Hill, also of University of Minnesota collaborated with Moen and Kelly in a related study that documented ROWE moderated turnover effects of negative home-to-work spillover, personal troubles, and physical symptoms.

-*What impacts – positive and negative – have you seen in “Performance, not Presence” workplace policies like ROWE?

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