Tag Archives: Change

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Performance Reviews are Counterproductive (pt 4)

What we can do (pt 4)

What we can do (pt 4)

“Appreciate everything your associates do for the business. Nothing else can quite substitute for a few well-chosen, well-timed, sincere words of praise. They’re absolutely free and worth a fortune.” – Sam Walton

In the past several blog postings we have explored the failings and impact of the current approach to performance management through the performance review and compensation management practices in place at many companies large and small. We found that many businesses are stuck in the past using an approach that is over 35 years old and repeatedly failing to produce the results that the business needs.

We have cited study after study from leading authorities on performance management such as Harvard Business Review, Deloitte, McKinsey, Gallup and well-known thought leaders including Dr. W. Edwards Deming, Marcus Buckingham and others to clearly conclude that the current approach is not effective. After reviewing all of the evidence we presented and much more that is available through other sources, we can safely conclude that the current process is a waste of time, expensive and counterproductive.

So given that the current system is broken and we have a pretty good idea of how it should work, what do we do? In reality there are basically two approaches, confront the issue head-on and openly push for change or to live within the present system and adopt tactics to minimize the damage.

Head-on Approach

Let’s start with the head-on approach and openly push for change. First of all, let’s be prudent and recognize the current environment and risks. For many reasons it is difficult to challenge the current system while being subject to the impacts of the system. Many business leaders have thrived under this system. If they have usually been on the top end of the curve, they may not really understand the true impact that the system is having on the success of their business. If they have been part of an enterprise that was perceived as successful and the annual review and “stack and rank” process was part of that culture, they my not be inclined to change the “formula for success”.

There may be a perceived risk in changing the status quo; after all business has been doing it this way for years with little blowback and significant litigation (until recently). The current approach is packaged and sold as being fair, identifying high performers as well as those who need to find other opportunities, and staying within a budget. If we change, will that be admitting that the past practices were flawed and open to criticism and litigation? There will be all kinds of reasons that try to defend that the current practice is the best practice. The review process has been this way for over 35 years and it will not change easily.

It is important that we are smart about proposing this change. If we focus on the flaws in the current system those currently in-charge may be concerned that it reflects poorly on their leadership. In a twisted sort of way, if we are not careful it may get turned back on us as a performance issue if we are not careful about proposing a change. Exposing issues around systems and policies that impact compensation, retention, and advancement opportunities needs to be done thoughtfully.

The best way to avoid this dilemma is to take the high road. When discussing the need to change current policies and practices in this area, focus on the future state. After all the future state is a better place to be. Focus on the benefits of the new approach and explain how it will better serve the needs of the business (reduced waste, better feedback, higher engagement, true meritocracy).

When needing to point out the shortcomings of the current position, try not to pin those shortcomings on those currently in charge, but refer them to the work of experts in this area. Point them to the blog post on SkipGilbert.com and other authorities referenced in the previous posts. Let those authorities speak for you. We should help others stay focused on the positive. Remember the Change Formula, a strong vision and practical first steps. It will work well for you in this situation.

Also consider timing in proposing the change. A point in time that may have significant leverage will be just after completing the current review and compensation cycle. It will be fresh in everybody’s mind just how bad the current process is and how unfair their rating was, not to mention how they felt selling the results to their direct reports. At that point most people will agree that something needs to change and there is time to get something new in place before they have to do this again.

Another great time to introduce the subject of change is after the annual engagement survey results are received. Typically, as part of the survey follow-up process teams are asked to review their results and propose solutions to overcome the areas of concern. This is a great opportunity to raise the issue at the grass roots level. If this shows up in enough of the responses, it may prompt a greater awareness of the need to change.

Working Within the System

Most of us are not in a position to change the performance review and compensation management systems, policies and practices. But that does not mean that we are helpless victims of the shortcomings of the current process.

There are things we can do to minimize the damage to the performance of our teams.

Here are four things you can do right now to move in the right direction:

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Performance Reviews are Counterproductive (pt 1)

It's time to make a change (pt. 1)

Performance Reviews are Counterproductive

1982 – Dr W. Edwards Deming– The Father of the Quality Evolution
“Evaluation of performance, merit rating, or annual review…the idea of a merit rating is alluring. The sound of the words captivates the imagination: pay for what you get; get what you pay for; motivate people to do their best, for their own good. The effect is exactly the opposite of what the words promise.”

2018 – Marcus Buckingham– Thought Leader of the Strengths Revolution
“…the problem with performance reviews is that they are not useful. They don’t tell us anything about the employee, they don’t help the employees get better, and they certainly aren’t giving us the correct information we need to hire, fire, train, and promote our people.”

For over 35 years the approach to performance management has been broken and it is time to fix it. We are often forced to participate in the distasteful performance review process cycle as well as having been victims of its performance crushing results. The system is counterproductive, perpetuates mediocrity, is certainly arbitrary and may be illegal. It’s time to disrupt the status quo with recognition of the problem and move forward with better solutions.

In the next several postings we will explore the failings and impact of the current approach to performance management as well as offer solutions for better results. We will look at the performance review and how it perpetuates mediocrity and limits associate development. We will expose common performance management approaches for their bias and ineffectiveness. Additionally, we will come to see that “pay for performance” is really “pay for perception”. Most importantly, we will develop solutions for a better result and discuss things we can do to bend the system until more enlightened leaders and approaches are put in place.

So why do we do performance management at all? What is its purpose? Let’s be perfectly frank, businesses operate in their own best interest. It is in the businesses’ primary interest to maximize productivity and profitability while keeping expenses manageable. Consequently the actions businesses take are to further their competitiveness and improve their profitability now and in the future. The reason that businesses are involved in performance management at all is that they believe the process will yield a net benefit in line with their primary goals.

In an era of disruptive product introductions and fierce competition, businesses are under great pressure to redesign themselves while managing declining margins and creating new products to meet new market needs. Businesses, especially service-based businesses are looking for a way to sort through their resources (their most controllable expense) and optimize capabilities for their current and future needs. Said more simply, businesses are trying to figure out who is the most productive, who has the ability to meet future business needs and how to manage the remaining resources while remaining profitable.

When we hear that businesses consider their workforce to be their greatest asset or care deeply about associate engagement and associate development, it is because they have determined that these programs are necessary to maintain or enhance their competitive advantage. They are not engaging in these activities out of a deeply altruistic perspective, but as a means to achieve their profitability goals. Businesses are interested in performance management as a means to understand their return on investment in their workforce.

Somewhere along the way in their effort to patch together tools to assess, manage and direct the development of their workforce, business assembled a collection of policies and practices that are completely ineffective and backwards. They de-motivate, are biased to the point of not being able to ensure talent continuity, reward mediocre performance, and truly place the business at risk. It is time to make a change.

In the next segment we will take a closer look at the failings of the performance review process and offer some suggestions for improvements. Have I piqued your interest? I hope so. Let me know your thoughts on this in our comments section below.

 

Thanks,

 

Skip Gilbert

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Beat the System

4 Tips to Beat the System

Beat the System

“A bad system will beat a good person every time” – W. Edwards Deming

Have you ever observed an organization that recruits sharp, highly energetic and motivated talent and grinds them into submission to produce mediocre results without improving the bottom line of the organization? Have you seen high potential talent join an organization with the expectation of turning the business around only to go from a reputation of success to failure? I know I have.

When we join an organization, we become a part of the overall system that produces results. The system has a structure and a culture that defines how things gets done. The culture either enables or constrains the organization’s ability to evolve and meet the needs of the business. The success of the individual is measured by the individual’s ability to operate within the culture and adapt to the norms and expectations of the organization. The organization sets the rules and evaluates the outcomes. Anyone who does not conform to the norms is considered sub-par and is expected to either improve (conform) or leave the organization. The organization sets the standard. What happens if that standard is mediocrity?

An organization is driven by the many systems or components that all interact with each other. In this systems model, components such as strategy, structure, processes, rewards and people all interact with each other to produce an organizational result. In total an organization is a big system that is perfectly designed to get the results it gets.

Dr. Deming is often cited as being the father of the quality revolution and systems-thinking in organizational design. At a time when the U.S. auto industry was suffering huge losses due to a changing economy and consumer demands, it became clear there was a need to increase quality and profitability to survive. As a result, there was a movement to adopt the principles that Dr. Deming applied in Japan, where quality and systems-thinking became the focal point of management philosophy and practices.

Dr. Deming observed that most of the troubles and possibilities for improvement add up to something like this: 94% belongs to the system and 6% to other causes. In other words, change the system to change the results; the individual has little impact.

Organizations have sophisticated defense mechanisms and the bigger the organization, the greater the ability to resist change. Overall the organization will work very hard to constrain, minimize or discredit the results of the change. Whether through lack of management support or indirectly through minimization of the impact or results, the organization will try to move back to the comfort of the status quo. Most anyone involved with driving organization change will tell us that it is rare that a new idea achieves its full potential.

So, as leaders trapped in a system, what are we to do? First and foremost, understand our situation and then focus our efforts on changing the system. Understanding our situation is critical to being able to achieve the type of success we desire. As part of the system we will be expected to operate within the norms and guidelines of the current culture. So while we have a greater vision of the possible, we will have to operate within the current system to affect change.

The good news is that changing the system has a lot of levers, not the least being the culture. Culture can be defined at a very high level as being the unwritten rules of how we do things here. Since culture is part of the system, a change to the culture will yield changes to the outcomes. Of course, change to any of the other aspects of the system including strategy, structure, processes, rewards and people will yield a net change as well. However, culture is the center of the people system that makes the organization function. Change to any portion of the system without consideration of culture will yield limited results.

To affect change in our portion of the organization our strongest play is to change the culture in our environment and then protect that culture change. The culture as we have defined it consists of the unwritten norms on how we do things here. When we start by changing the norm of expected behavior we open the door to doing things differently. For example, if we decide that building stronger teamwork will improve performance, then we would want to start by articulating and reinforcing behaviors that elevate the team above the individual.

Once the door is open for change, we can adjust the other elements of the system to support the change we are pursuing. A well-executed change supported by an enabling culture can produce significant results. A big change without the supporting culture change will inevitably invoke a reflex reaction with the system working hard to return to the status quo.

The next step is to protect the culture and elevate the results. Once we have established a new culture in our portion of the organization the challenge will be to protect it against the instinctive tendency of the larger organization to return it to its prior state. Again, being a smart leader we know that we are most effective and gain the greatest latitude when our results exceed expectations. The key is to elevate the results of our organization and continue to deliver exceptional performance as defined and recognized by the larger organization.

In the end, the performance of our organization and our performance as a leader are within our control, even in a less than optimal environment. Recognizing that we operate inside an organization that is defined by systems and cultures will help us better plan and adjust to the frustrations of organizational change.

As a final thought, consider this from Dr. Deming:

“…anytime the majority of the people behave a particular way the majority of the time, the people are not the problem. The problem is inherent in the system.”

Here are 4 tips for beating the system:

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One Day at a Time

4 Tips for achieving success one day at a time

One Day at a Time

“Every day, in every way, I’m getting better and better” — Émile Coué

Overnight success is a myth. Almost every overnight success story is really a story of persistence, overcoming doubt, and hard work. It took over two decades for Steve Jobs to be the overnight success that produced the iPhone. J.K. Rowling worked on her first novel, “Harry Potter and the Sorcerer’s Stone” for six years and was rejected twelve times by various publishing houses before being published.

In reality, overnight success is a long story of goals and incremental execution. Success is driven by planning and then moving in the direction of the goal with small, persistent, determined activity. Each day we move forward and try to do better than the day before. We move forward in small amounts, making adjustments and keep going, building our accomplishment by combining the progress of the past with the incremental progress of today.

Our goals are important and provide a direction for our efforts; however, we execute our goals one day at a time. When we plan on achieving our goals in small amounts over a long period of time it yields an amazing result. We not only move in the direction of achieving our goal, but we get better at what we are doing with each iteration of the activity. Steve Jobs improved his ability bring consumer electronics products to market with each new idea. J.K. Rowling was a much better writer at the end of her six year journey to publication than she was at the start.

Sometimes our goals are so lofty that they feel unachievable. As an example, looking at a goal to lose 40 pounds in a year seems like an impossible task, though we know it is achievable (or we would not have set it as a SMART goal). When we consider that in order to achieve the goal we only need to lose less than one pound per week, it does not seem as impossible. In addition, as a byproduct we will also learn how to better control our diet and build our self-control.

Writing a book in a year is a reasonable goal, but also a huge undertaking. Looking at the goal in total makes it seem so impossible; it can be hard to even get started. However, when we view the activity through a smaller lens of writing just five pages per week, it becomes a less daunting task. Through repetition, we will also become a more efficient and better writer.

Consider if we focused on achieving just two percent of our total goal every week. In less than a year we would have achieved our goal and through persistent repetition improved our ability to perform that activity as well. By setting smaller repetitive activities around our larger goal we are able to accomplish a much larger goal without being overwhelmed with the immensity of the challenge. By breaking the goal down into a series of repetitive activities with a measured outcome at the end of each task, we incrementally work our way to achieving our goal and improve our efficiency along the way.

As I point out in my book “EXCELLENCE: You CAN Get There From Here!”, our journey to Excellence requires a persistence and drive to keep moving forward to achieve our goals. Our goals are important because they move us toward greater success and satisfaction. Taking an incremental approach to achieving our goals helps the impossible become possible. As the age old expression goes: How do you eat an elephant? One bite at a time.

Here are 4 tips for achieving success one day at a time:

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Make Yourself Valuable

It's about relationships

Make Yourself Valuable

Valuable

Everyday it seems there are headlines that jobs are being moved offshore, automated or eliminated. We do not have to look too far in our personal networks to find someone that has been impacted by this trend. Globalization is causing a shift in resource alignment as businesses search for lower costs and larger markets. In addition the United States economy continues to shift from a manufacturing economy to a service economy causing a continual restructuring of business resource needs.

With the trend of the commoditization of labor due to a larger global market and the reduced time employees are choosing to stay in their current positions, business is not investing as heavily in career development training as in the past. The Chicago Tribune reported on a study conducted by The Society for Human Resource Management (SHRM) that “virtually all professional and career benefits tracked in the survey declined between 2010 and 2014.”

The news is not all bad for those of us who pride ourselves on adaptability. As it turns out, many markets for domestic white-collar jobs are growing. Forbes reports “Over the past decade, business services has emerged as easily the largest high-wage sector in the United States, employing 19.1 million people. These are the white-collar jobs that most people believe offer a ladder into the middle class.”

Our challenge is to adapt to this new market. In the service business the relationship of business to its customers has never been more important or valuable than it is today. With the economy shifting to a service-based model and social media redefining the communications model, relationships have greater emphasis than ever before.

Relationships have always been the key to business. Going back as long as commerce has been around, relationships have driven the market. Whether it is the personal referral of a local contractor for home repairs or the corporate connection to other businesses, it is driven by relationships. Even in the age of online shopping, it is often the opinions expressed in the reviews of the buying community that impact the purchase decision.

So what can we do to ensure our marketability in this changing market?

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Change, Don’t Let it Happen to You, Be Change

Change, Don’t Let it Happen to You, Be Change

Be Change

“When you’re finished changing, you’re finished” — Benjamin Franklin

Change is all around us and it is never going away. All of our lives we have experienced change and as long as we continue to draw a breath, we will experience change.

This past year we have all experienced and continue to experience change. Change in the ways we conduct business, changes in our organization structure, perhaps changes in our position, reporting relationships, personal relationships and circumstances. Certainly we are surrounded by change and a lot of it.

There are really only two ways to react to change. We either embrace it or we reject it. If we embrace the change, then we find ourselves looking forward, developing new relationships, trying to understand how our new environment works, establishing our individual perspective on how we fit into the new world and ultimately, how to thrive in this new set of circumstances.

Alternatively, if we choose to reject the change, we create a never ending anxiety about how we choose not to fit in the new world and watch our new reality spin ever further away from the way it used to be. Not embracing our new reality does not stop the world from changing around us. It just creates a greater distance from where we are to where we need to be.

Consider if we were able to reverse the change, even then things would never be the same. We have new experiences and new ways of thinking that would not allow the past to ever resurface as a new today.

By doing so we are no longer the victim of the change but a living part of the change, looking forward and reestablishing our prior level of comfort. Our choice is to either not let change happen to us or to be part of the change.

Personally, I choose to be part of the change. How about you?  What are your thoughts on this?

Thanks,

Skip Gilbert

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Let Go to Move Forward

Let Go to Move Forward

“Oh, yesterdays are over my shoulder, So I can’t look back for too long. There’s just too much to see waiting in front of me, and I know that I just can’t go wrong” — Jimmy Buffett

Recently, one of my readers posed an interesting question, ” …you have to let go of now before you can pickup something new, how do you free yourself to take the leap?” How many times have we hesitated on moving forward because we were afraid to take the next step? How often have we complained about our current situation and even had an idea for the solution or wanted to make a significant change, but sat on the sidelines because it was seemed more secure? I know I certainly have.

As I reflect on my personal hesitations, I often find that I was living with the false belief that my present situation was secure and that it was a risk to move forward. Over the years I have come to discover that security is really an illusion. There is no more certainty that tomorrow will be the same as today as there is likelihood that it will be different. We could be so fortunate as to win the lottery or inherit a great wealth or so unfortunate as to lose our health or employment.

To quote Helen Keller, “Security is mostly a superstition. It does not exist in nature, nor do the children of men as a whole experience it. Avoiding danger is no safer in the long run than outright exposure. Life is either a daring adventure, or nothing.”

So what do we do? How do we live with that reality and how do we let go of today to get to a better tomorrow? There are a couple of previous Blog posts we can take a look at that may offer us some guidance and structure.

In the Change Formula blog we discussed that our motivation for moving forward (change) was a product of our level of dissatisfaction with the current situation, a strong vision of the future, and practical next steps. The formula theorized that if all of these things were strong we would be motivated to move forward (change).

In the Be Bold blog we discussed that being bold to move forward was not an act of taking a foolish risk, but about putting together a well thought out plan, being confident in our abilities, gaining the knowledge needed and then taking action. In other words moving from careless risk to prudent risk with a high likelihood of success.

So what can we do? Let’s take a look at the issue we are hesitating about and figure out how to move forward.

Here are some practical steps:

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A Simple Formula for Change

The Change Formula

Change Formula

Did you know there is a simple formula for change that we can use to plan and manage our change efforts? The formula is very straight forward, easy to understand and has been tested over many years of use. It can be useful in both our professional and personal lives and used everyday.

We are surrounded by change. Even if we try to stand still and resist the change, it keeps moving forward. Everything about our work and personal lives is in a continual state of change. The way we communicate is changing, every year there are technology changes, the weather changes, there are new breakthroughs in medicine and treatments, the way we work is changing, everything continues to change. “Resistance is futile”, to quote a popular science fiction series.

Sometimes we want to create or manage change as we envision a better way of doing something or in response to changes in our circumstances. There are other times when we are involved in a change of some type that needs a boost or adjustment in direction or energy. These are times we can apply the Change Formula to help to move the change along.

The Change Formula has been through several evolutions since its inception in the 1960s by David Gleicher. It was initially popularized by Richard Beckhard in his widely read book Organizational Transitions and re-popularized in the 1990s by Kathleen Dannemiller who simplified it [1].

(for those of you not mathematically inclined, just humor me on this, I will explain it in the following material)

The formula is this:

C = (ABD) > X
A = Level of dissatisfaction with the status quo (dissatisfied with present state)
B = Desirability of the proposed change or end state (eager to achieve the end state)
C = Change
D = Practicality of the change (minimal risk and disruption)
X = ’Cost’ of changing (perceived cost)

In other terms, it means that the power of the motivation for change is the combination of:
A) not being happy with the way things are,
B) the strength of the vision of the future and,
D) having practical first steps.

These things combined need to be more powerful than the resistance to the change.

So let’s look at these in more details so that we can understand how to apply it in our everyday lives.

Level of Dissatisfaction (A)
The first element is not being happy with the current situation also known as dissatisfaction with the status quo. This represents a measure of the current state of things. Are people unhappy with the way things are? Is there a general sense of dissatisfaction with the current situation?

Vision (B)
Is there a strong vision of the future state? Is there a clear picture of how good things will be when we get to the new place? If not, then this can be a real limiting factor for progress. A strong vision helps people focus on where we are going and the benefits of getting there. Also, if there is not a sufficient level of dissatisfaction with the current state, this can help elevate that component by comparing and contrasting the present with the future.

Practical First Steps (D)
Has anyone identified a few next steps to get us on our way? Without a practical plan we just have high frustration because we are unhappy with the present, see a great future but cannot get started on our journey there.

All of these elements need to be present and represent a lever to help move the change forward. If any of these are missing, the change will not take place. If any of these are weak, they represent an opportunity to add more energy to the process.

Let’s look at a practical example: