World Monitor Mag, Industrial Overview WM_November_2018_WEB_Version - Page 81

additional content system decoupled the question “Should you stay here?” from the question “How can you grow here?” This meant that among those designated as J-Players, the conversation could focus on the individual’s professional and personal growth, without the anxiety of wondering whether he or she would be ranked poorly. A third trend we are seeing is the effort, at many companies, to reframe the entire PM process as something else. “An engineer in our Bangalore Excellence Center,” says Steven Rice of Juniper, “pointed out that our performance management process was a violation of our values, because the forced ratings didn’t enable leaders to authentically provide feedback or truly trust their judgment to administer rewards.” That led Rice to realize that they could not fix the system piecemeal; Juniper had to imagine a whole new kind of practice, one that “delivers the benefits without the unintended negative consequences.” Since 2011, Juniper has not given ratings to employees or kept documents of ratings. It also eliminated forced rankings. The new method focuses heavily on regular quality conversations between managers and employees, using the structured conversation model. Overall, Juniper has seen participation and satisfaction skyrocket among employees and managers. On the semiannual day of evaluation (known as “Conversation Day”), more than 88 percent of the participants reported that their conversations were “helpful” or “very helpful.” “We have increased differentiation and alignment of rewards against relative contribution,” Rice says. “Eighty-seven percent of the employees reported that they were willing to give extra discretionary effort, and 79 percent believe they can do their best work at Juniper.” At Gap, managers conduct monthly conversations in a new performance management process called “Grow, Perform, Succeed.” (Its abbreviation, GPS, is also the company’s stock symbol.) By redesigning its PM system and giving it a new name, the company repositioned the process as less of a threat. That in itself is an important step to better conversations. Sharon Arad, a Cargill executive, describes how the company made this kind of shift after reviewing its PM system a few years ago: “We found the system failed to generate quality conversations, leaving employees with a [ranking] that many viewed as a deficiency statement. In the end, the ratings given were not a trustworthy indicator of the actual status of performance or engagement.” Many Cargill leaders wondered whether removing the ratings would bring about more desirable results and better conversations. So they set up a no-rating pilot of several thousand employees for three years. Every year Arad’s team compared the pilot group’s feedback to that of a random sample of rated employees. “Overall, 90 percent of the no-rating pilot participants reported, year after year, that their experience was positive,” Arad says. This was in stark contrast to the feedback that people normally gave about their performance management experience. Finally, this year, Cargill adopted the no-rating approach for its entire organization. The results of no-rating systems are dramatically better than their rating and ranking counterparts— in satisfaction, retention, and engagement scores, which have been shown to correlate to organizational performance. We believe the number of companies operating this way will increase dramatically, to become the majority. It would be nice to think that eventually the ideal of labeling people numerically will be seen as a blip in the history of HR. Giving people a rating might be a useful tool in a company with a lot of “fat,” where it makes sense to shake people up and create competition, but in many of today’s lean businesses that demand a great deal from their employees, we need a better model. We need to improve the quality of the conversations we hold with workers. It’stimetokillyourperform anceratings. Resources 1. Corporate Executive Board Corporate Leadership Council, “Breakthrough Performance in the New Work Environment,” 2012: The CEB study cited on fairness and goal setting. 2. Satoris Culbertson, Jaime B. Henning, and Stephanie C. Payne, “Performance Appraisal Satisfaction: The Role of Feedback and Goal Orientation,” Journal of Personnel Psychology, 2013, vol. 12, no.4, pp. 189–95: On the negative reactions to numerical rankings. 3. Carol S. Dweck, Mindset: The New Psychology of Success (Random House, 2006): Primary source on the fixed and growth mind- sets. 4. Kurt Eichenwald, “Microsoft’s Lost Decade,” Vanity Fair, Aug. 2012: Includes reporting on the impact of forced ranking. 5. Leslie Kwoh, “‘Rank and Yank’ Retains Vocal Fans,” Wall Street Journal, Jan. 31, 2012: Quotes executives who love, hate, and tolerate conventional performance management. 6. Jennifer A. Mangels et al., “Why Do Beliefs about Intelligence Influence Learning Success? A Social Cognitive Neuroscience Model,” Social Cognitive and Affective Neuroscience, Sept. 2006, vol. 1, no. 2, pp. 75–86: Source for “the problem with feedback.” 7. Elaine D. Pulakos et al., “Performance Management Can Be Fixed: An On-the- Job Experiential Learning Approach for Complex Behavior Change,” Corporate Leadership Council, 2014: Source of statistics about dissatisfaction with performance management. 8. David Rock, “Managing with the Brain in Mind,” s+b, Autumn 2009: Early publication of the full SCARF theory. 9.For more thought leadership on this topic, see the s+b website at: strategy-business. com/organizations_and_people. ReprintNo. 00275 supported by EUROBAK 79