The Performance Measurement Conundrum

In my research, I’ve identified four key people-related challenges that business leaders face. One of these is “getting best work” from the staff in place at any given time.  I will be speaking about this topic specifically this Thursday at the Enterprise 2.0 conference.

One of the key findings from this work is that current processes and systems that promise to “manage performance” are actually counterproductive to getting best work.  On the other hand, new approaches and technologies are emerging that focus on getting work done and improving performance.

Even those organizations, that have successful annual performance cycles, sum it up as a once a year blip in productivity and motivation; but, with hard work and focus on communications, they’re able to minimize the downside and move on quickly.

Sam Culbert’s proposal to “Get Rid of Performance Reviews” is extremely appealing to organizations that have battled with the issues above – particularly those that have had less success with minimizing the negative impact.  Many are planning or, at least considering, moving in the direction of forward-looking, development-focused performance management. And, getting rid of the backward-looking performance appraisal.

Why not get rid of performance reviews?

There’s one major thing holding these organizations back: the beloved performance score.

One HR Director summed things up perfectly:

“Everyone is discontent with ratings. Most people get a 3 and feel like a failure. After RIF’s in recent years, managers feel like they only have top performers left.  The executives talk about getting rid of ratings, but want a measurement for reporting.”

Indeed, the performance score represents a holy grail of people measurement. That one piece of data suddenly thrusts HR and people “quality” into a world of meaningful business analytics.  It is simple, easily aggregated and can overlay any set of data to provide a people perspective.  That single score holds so much promise, but so many flaws.

Is there an alternative to flawed performance scores?

Flaws of the performance score include:

  • Based on manager’s viewpoint – including personal biases and rating biases. Research shows large variation between two different managers’ ratings of the same person.
  • Many diverse attributes fitted into a single score – including results, behaviors, unique skills, market value, risk of demotivation.
  • Does not take variation or regularity of performance into account – for example, extremely good at x, but lousy at y.
  • In many cases, lacks the full picture of what a person has accomplished/is capable of because manager is new or “hands-off” from the employee to fully appraise
  • In many cases, the manager is fitting to some sort of distribution and doesn’t take ownership of the score

What are the alternatives to the single performance score?

Clearly, we need people data to inform business decisions, but the single performance score is flawed.  What’s more, it is coming from a practice that is demotivating and preventing organizations from “best work.”  What are the alternatives?

Pepsi popularized a dual rating system – one that separately distinguishes and tracks “business” results and “people” results – in the mid-2000’s.  Now, this method known as “what vs. how” is regarded as superior and more reflective of holistic performance by Edward Lawler and leading HR departments.

The what vs. how system provides a good bridge between the backward-looking performance process and one that is focused on future development.  But it still suffers from many of the same flaws as the single score.  Though the two scores provide a slightly more rounded picture of the individual, many attributes, such as variation of strengths, unique skills, key accomplishments, and impact of loss are not accounted for.

Here is where the holistic profile – one that captures unique strengths and accomplishments, potentially bestowed by peers and constituents, on a more frequent and relevant basis – could replace the single (or dual) point-in-time all encompassing score.  The combination of social feedback software (like Rypple), 9-box multi-dimensional grids (like the Sonar6 kite view and other interactive talent review tools), and the business imperative to make sound people investment decisions will propel this method forward.

To do this, people and business analytics will need to expand to include multiple dimensions about people.  A single score will not cut it.  This will require significant and sophisticated changes.

Where to go from here?

Are we ready to move away from a single (or dual) performance score to a series of performance-related accomplishments, strengths, and attributes?  Most organizations are not ready for this, nor are the software platforms that support them (not fully).  In the meantime, what can organizations do to bridge to the future?  What will help?

  • What vs. How rating models
  • More transparent calibration discussions of multiple dimensions
  • Peer-based expert identification and open feedback systems

These methods place more of an emphasis on who is good at what and why.  Knowing what people can do well and how that fits into organizational needs is ultimately what will benefit business leaders the most.  The performance score is a stepping stone to get there.

Your POV: What steps have you taken to move to more future-oriented, development-focused performance management?  What measurements do you see as key to future success?

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5 Responses to The Performance Measurement Conundrum

  1. Rich says:

    This is timely. My annual review is tomorrow. It would be interesting to see game mechanics applied to how employees get evaluated. I’d love to see a real-time view of how I’m doing with the goals my manager and I have set up. I’d also like a personal like or +1 button next to my directory profile or email footer :)

    The ability to game the system and legal issues aside, is this even being discussed as an option to more traditional perf review processes?

    • Katherine Duffy says:

      Ah yes, the impending review stress – I remember that!

      But to build on Jake’s point – rather than having info ‘potentially useful’ in a review, Rypple (also an enterprise social app) has the realtime view of goals you can share with your manager, game mechanics, and actually records it for reviews.

      And yes, definitely being discussed as a replacement for reviews – currently being used by Facebook for exactly that!

      Good luck in the review Rich.

  2. Jake says:

    Hey Rich! Enterprise social apps have the ‘like’ button that can be associated with your profile, docs you have uploaded, your status, comments, etc. A good example is Yammer that actually tracks and reports on this info. Potentially this info could be used in a performance review.

  3. Amy,
    While I do think that most organizations are not ready to move away from a single performance score, I am impressed by the way in which many of my clients are integrating feedback from multiple sources into the performance appraisal process. Companies that were once apprehensive of soliciting feedback via 360 are now encouraging all associates to voluntarily offer feedback to others. At the same time that companies are focusing on ways to measure various aspects of performance, they are also putting mechanisms in place to support open sharing of feedback and ensure that associates receive helpful feedback through the year….and at appraisal time. I am hopeful!

  4. Hi Rich! Our company, like our competitors mentioned above, is intent on imbuing the performance review with social and gaming elements. It’s clear that folks are fed up with the status quo of performance reviews, and it’s equally clear that the trend of social and gaming integration is not a fad.