oes your performance management system have a "bail out" rating that allows
managers to avoid confrontation? Don’t answer this question too quickly—it probably
does.
Ever notice how Paula Abdul can’t be negative about any contestant
on American Idol? Human nature follows this example when it comes to performance
reviews. After all, who among us wants to confront and tell the contestant (oops,
make that the employee) on the other side of the table that they are average—or
worse yet, below average? Unfortunately, managers give reviews solo. There’s no
hard-core bad guy (like Simon Cowell on American Idol) at the table with them as
they cover a review with an employee.
A great opportunity to become more strategic and affect business
results exists in the area of performance management. I speak from experience, since
we are in the process of implementing a new performance management system at my
company.
In addition to the setting of individual objectives for each
position in our company, we are evolving from the standard five-point scale (1=Does
Not Meet, 2=Sometimes Meets, 3=Meets, 4=Sometimes Exceeds, 5=Always Exceeds) to
a three-point scale (0=Does Not Meet, 1=Meets, 2=Exceeds). Our reason for simplifying
the scale was basic. We wanted more direct and honest dialog between managers and
employees about what type of behavior/performance was required to be an "Exceeds"
employee in our company. After all, the true "Exceeds" employees in any organization
are the ones driving the most innovation, value and profit.
Why did we feel the need to strip down the rating scale to
force this dialog? Our focus was to eliminate the "bail out" rating of "4" (Sometimes
Exceeds), which serves as a crutch, allowing managers to avoid deep performance
conversations with employees. Here’s how the "bail out" works:
Your average performer comes due for a review, so the manager
breaks out the performance management form using the 5-point scale. In moving through
the format, the manager gives mostly "3s" (Meets), but sprinkles enough "4s" (Sometimes
Exceeds) in the process to make the overall review average out to be a 3.3 or a
3.4. With that in mind, the overall score falls somewhere between a "Meets" and
a "Sometimes Exceeds" in the employee’s mind.
The result is that the average employee is satisfied with
the overall numerical rating and generally won’t challenge the specific ratings
provided on an item-by-item basis. Not only is the employee content with the overall
score, but she usually goes away thinking that she "Sometimes Exceeds" the expectations
for her role with the company (which is not correct; by all practical measurements,
she’s an average performer). This scenario also means the manager never had to engage
in tough conversations with the employee to differentiate between current performance
and performance that truly "Exceeds" for the position in question. Most managers
will do anything to avoid this type of conversation, since telling someone he merely
"Meets" their objectives doesn’t feel good. Don’t we all think we are superstars
on some level?
The business impact of this scenario is that the necessary
conversations to drive performance and improved business results never happen. And
that is where questionable practices like forced ranking come into play. Forced
ranking is the big nasty that often emerges in organizations where managers don’t
have real and candid performance conversations with all employees.
The logic of forced ranking is simple: If the manager won’t
have tough performance conversations to drive improved performance, the organization
will just force change through a mathematical approach mandating a certain percentage
of "Does Not Meet" ratings, with those rated in the lowest category often terminated
as a result. While the "up or out" system has worked well at places like General
Electric, others trying to follow GE’s example (Ford comes to mind, as well as others)
have found themselves locked up in litigation as a result.
Of course, there is a better way. Rather than attempt to drive
improved business results through practices like forced ranking, simplify your performance
management system. Move to the simple three-point scale I’ve outlined, then train
managers on identifying differentiators on performance that truly drive business
results. The primary challenge with the three-point scale is not only to create
individual goals and objectives, but also to set the bar for "Meets" versus "Exceeds"
performance. Make the usual measurements like quality, quantity, accuracy, timeliness
and achieving deadlines the starting point for a "Meets" rating, then communicate
early and often to employees that items like innovation, creativity, collaboration
and leadership must be added to that mix to achieve an "Exceeds" on any objective.
A commenter on my blog captured it best. When choosing a Web
designer for her business, she’s always disappointed when the designer being evaluated
doesn’t have a fresh idea on what to do with her site, opting instead to ask her
what she had in mind. The point? In any position, simply cranking out the task and
executing well is "Meets" performance, while the innovators bring their own ideas
to the table and "Exceed" expectations. Establish the performance differentiators
for your organization and watch innovators you didn’t know existed rise to the surface.
Innovators always command a higher price on the market and
bring increased revenue to their companies. Make sure your performance management
system differentiates the rewards for those truly exceeding expectations.
Workforce Management Online, July 2007 -- Register Now!
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