World Monitor Mag, Industrial Overview WM_November_2018_WEB_Version - Page 79

additional content Only one person typically feels neurologically rewarded by the PM exercise. It’s not the high performer, but the senior executive who oversees the ranking system. The feelings of status, certainty, and autonomy that occur when one is presiding over a forced ranking system are intrinsically rewarding. Even the act of categorizing information into groups, according to one study, activates the reward center of the brain. That’s why part of the education effort must include senior executives, who may not see the problem because the PM process reinforces their own cognitive reward while diminishing rewards for everyone else. RethinkingEvaluation An increasing number of organizations have been listening to their employees’ complaints and taking a more sophisticated approach to performance management. They are replacing year-end appraisals and ratings with in-depth conversations, often drawing on the myriad data points now available about employee and company performance, such as sales information, organizational climate survey results, and employee engagement data. A few firms have begun to experimentally shift away from the conventional PM approach. The companies that have joined this trend, either in pilots or full rollout, include Adobe, Cargill, ConAgra, Gap, Intel, Juniper Networks, Medtronic, and Sears. One noteworthy example is Microsoft, which revamped its entire approach in 2013. It now focuses evaluation on results that people deliver together, leveraging and contributing to one another, emphasizing continual learning and growth. The company completely retired traditional PM tactics, including ratings, distributions, and annual reviews. How do these organizations transform their destructive performance ranking practices into a system that can develop talent consistently and pay people fairly? They do it by not throwing out the old approach entirely. In the CEB study, goal setting was shown to increase performance by 36 percent. Even feedback, which is often destructive to learning, can be designed in a productive way (see “The Problem with Feedback” ). The structure of bonuses and the calculation of salary can also be improved. As firms make the courageous transition to a no-rating system, they tend to choose one of two options. The first is highly structured types of conversations regarding employee performance. The HR department might lay out five or six topics to discuss in an annual review, such as career growth, contribution, collaboration, or innovation. The companies also provide guidance on how to talk about each topic. The second option is a guided conversation. Instead of topics, the company provides a general framework (and often some training for managers). The conversation focuses on the goals people set for themselves and how they are progressing toward those goals, along with their contribution, past and present, to the company. In either a structured or a guided conversation, one key element is to prime people—both the employee and the boss—to induce a growth mind- set. This improves how people listen supported by EUROBAK 77