Reinventing performance management how to do it right

of companies surveyed think performance reviews are worth their time - Deloitte of HR executives say yearly evaluations are useful.. “When asked what would shake up the HR world most in

The Law of Inertia

We tend to be carried forward

in life by the inertia of our past

@rustylindquist

of companies surveyed think performance reviews are worth their time - Deloitte

of HR executives say yearly evaluations are useful – Deloitte

generated in the process - CEB

3%

“Performance appraisals are perhaps the most reviled standard practice in all of management”

Peter Cappelli

Wharton School of Management

“Why we love to hate HR” HBR

It’s time to blow up HR and build something new Rethinking HR

Why we love to hate HR What will it take to fix HR It’s time to split HR

HR faces a crisis of credibility in the boardroom

HR is our “favorite corporate punching bag”

A Little History

Performance Problems

“You rate me on ‘Marcus makes decisions quickly’ and your rating reveals simply whether I make decisions

more quickly than you do

If you rate me on ‘Marcus is a good listener’ and we learn only whether I am a better listener than you

All of these questions are akin to you rating me on

height Whether you perceive me as short or tall,

depends on how short or tall you are."

Marcus Buckingham

Harvard Business Review

• Faulty memory syndrome

• Quantification of past behaviors is

ineffective

• We tend to let it stand for more than

it should

• Negative psychological impact

(defensive and demotivating)

• Too many variables

• Too often rater is unqualified (doesn’t understand job)

• Shown to decrease morale

• Found to create infighting

• Leads to “gaming” and politics

“When asked what would shake up the HR world most in

2016, 44% of companies said shifting from traditional performance reviews in favor of real-time feedback”

—2016 BambooHR Comp Best Practices Report

Performance Review Process

Adobe (2012)

Annual performance reviews

were eating up a ton of time

And it wasn’t giving the

business return for that time

Stopped doing annual review “in favor of regular check-ins allowed Adobe to have a lightweight

process that served—rather than distracted from—people doing their best work.”

http://www.businessinsider.com/adobe-abolished-annual-performance-review-2014-4

Accenture (2015)

CEO Pierre Nanterme said that

sharing only once a year what

you think of your employees

“doesn’t make any sense.”

Performance is an on-going

activity, and people want to

know if they’re doing things right

on an on-going basis It should

be “instant performance

management.”

Accenture “plans to implement a more fluid system that would allow for immediate employee feedback on an ongoing basis.”

https://www.washingtonpost.com/news/on-leadership/wp/2015/07/21/in-big-move-accenture-will-get-rid-of-annual-performance-reviews-and-rankings/

GE (2015)

Removed stacked rankings, firing

the bottom 10 percent each year

(10 years ago) They’re now

removing performance reviews

completely because it “leads to a

tendency for HR to focus

excessively on process over

outcomes.” And doesn’t make

sense for their current workforce,

who want feedback more

“frequent, faster, mobile-enabled.”

They’re transitioning from curve management to focusing on their people who are more

bell-motivated by connection, inspiration and developing people

http://qz.com/428813/ge-performance-review-strategy-shift/

70% of companies are now reconsidering their

performance strategy

—Bersin

Done Well

THE RIGHT WAY

Frequent Feedback

Increase communication touch points

• Stack ranking

• Annual review cycles

• Encourage ownership thinking

• Provide frequent feedback

• Build skills

42% of millennials want feedback every week

Source: Ultimate Software & the Center for Generational Kinetics

Motivating Employees

Preferred Frequency by Generation

https://www.tinypulse.com/blog/difference-in-perception-between-generations

Increase Cycle Time

Intended Direction Actual Direction

Don’t wait till here

Catch them here

And here

OrganizationalWaste

Signal to Noise Ratio

THE RIGHT WAY

Ask Simple Questions

1 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 to the organization on a fiv e-point scale from “Strongly agree” to “strongly disagree”].

2 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 on the five-point scale]

3 This person is at risk for low performance

[identifies problems that might harm the customer or the team on a

yes-or-no basis]

4 This person is ready for promotion today

[measures potential on a yes-or-no basis]

Performance Questions Now Asked By Deloitte

Ask Simple Questions

1 If Allison got a job offer elsewhere I would

a Do everything I could to keep Allison We’d be in trouble!

b Convince Allison to stay Allison would be difficult to replace

c Need to think about it Allison does a decent job.

d Wish Allison well I’ll be able to find a better replacement anyway

e Be relieved It’s not likely to work out anyway.

2 How engaged is Allison at work?

a High engagement and a great attitude.

b Good engagement and a mostly positive attitude.

c Medium engagement and an okay attitude.

d Low engagement and is burned out.

e No engagement and is checked out.

3 What are some things Allison does well?

4 How could Allison improve?

Performance Questions Now Asked in BambooHR

Connecting Performance

with Pay

• Performance management aligned to

business goals & cycles

• Paying for results

• Getting creative about both

performance and pay

Modern

Pay for Performance

• 50.1% based increases on performance

*of those giving bonuses

How are companies linking

“Employees won’t believe there is a link between pay and performance

unless they can see it.”

— Margaret O’Hanlon re: Think Consulting

Culture and perks that reward high performers

Higher increases for top performers Results-based incentive plan

Performance-based rewards & recognition

• Bonus vs Incentive

• Match incentive cycle to work cycle

• Alignment: individual, team, organization

• Additional structure considerations

• Self-funding – variable costs

• Keep it simple

Incentive Pay

Base pay increases are determined by performance and position in market-based range using a Merit Matrix

Exceeds

Meets

Does not Meet

Base Pay

Employees and employers are in a relationship where they agree to things

What’s your Deal?

• Exchange of value

• Mental math – does it add up?

Getting Creative

• Passes to sporting events

• Catered lunches for winning teams

• Days off after big deadlines

• Choice of work assignment

• Development opportunities

• Lunch with the CEO

• Remote work

Get Creative

It’s not a best practice

if it’s not best for

your organization

Thank you !

BambooHR

Receive a free job posting on our ATS and full HRIS for one week.

We will contact everyone within the next few days to set this up.

Download a free ebook around pay for performance.

PayScale

http://bit.ly/29UBsHO