Performance Management for the 21st Century E-Book

David Smith

• Herausgeber: Grosvenor House Publishing
• Kategorie: Fachliteratur
• Sprache: Englisch

Seitenzahl: 89

Veröffentlichungsjahr: 2018

Beschreibung

David Smith's 3rd book : this one describing the latest changes to Performance Management. Essential reading if you want an approach to managing performance which works. If you are experiencing problems with your Annual Performance Appraisal process, but don't know how to replace it, this book has the answers for you.

Leseprobe

CONTENTS

1. Preamble

2. The Future of Performance Management

3. The History Of Performance Management

4. The Question Which Sits in Everyone’S Head

5. Feedback is both Necessary and Wanted

6. Facing Conflict in Managing Performance

7. Talent Management is all about ‘Pushing Your Talent’ to Achieve their Potential

8. The Emerging Concensus

9. Managing Performance – It’S All About Leadership

10. This is Not a Fad : It’S a Seismic Shift – What is Your Reaction?

Copyright

DEDICATION

To my two sons: Simon and Mike – both of whom give me a real sense of pride and pleasure in equal measure.

1. PREAMBLE

WHY WRITE A 3rd BOOK?

“The superior man is distressed by his lack of ability”

Confucius – Chinese Philosopher

‘Asda Magic’ – the beginning of my story

My first book was an exploration of the turnaround of the Asda retail business after near bankruptcy in the early 1990’s. Living through 15 years of cultural turnaround and change management – and seeing the resulting high performance gave me superb learning and insight.

I experienced first hand what worked, and importantly what didn’t work, in order to build a high performance culture. The resulting book ‘Asda Magic – the 7 principles of building a high performance culture’, charts that turnaround case study. En route, it enabled Asda to become Britain’s No1 Best Place to work in the Sunday Times survey.

I have been delighted by the comments I have received from readers of Asda Magic – which encouraged me to write a second book.

‘Culture trumps Strategy’ – the ongoing story

Following my move out of 35 years of corporate life to start my own business, I was encouraged to write a second book about what I had observed in businesses since my years at Asda. ‘Culture trumps Strategy’, my second book, uses my 7 principles of building a high performance culture, but the examples and stories are drawn from a variety of businesses. Some of these businesses I have worked with, some are based on CEO interviews, and some are stories I have picked up along the way. All are great exemplars of businesses seeking to build high performance cultures.

So…………………why write a 3rd book?

Performance Management – the perennial ‘Achilles heel’ of the Leader

In my business, I run Masterclasses on a variety of subjects for clients and CEO groups. By far and away the most frequent requests from CEOs are for my Masterclass on the topic of Performance Management.

Why is this? Most CEOs openly admit that Performance Management is their greatest weakness within their organisation. Executives are aware that they avoid managing the performance issues occurring with individuals who work for them. This might be for a variety of reasons. For some, they have a close personal relationship with some colleagues. They may even have started out in the business together, but the job has outgrown their partner executive. It’s extremely challenging to have a discussion about issues of underperformance with a friend and colleague with whom you socialise.

In other cases, it’s more about the prospect of the sheer amount of time to be taken in performance management discussions. There are many demands on time for an Executive – many of which are both urgent and important. It is therefore all too easy to avoid a time consuming performance discussion (which we are dreading having to face into) using the excuse “I’m just too busy at the moment”.

If Executives are honest, and many are brutally honest when they talk to me about this topic, they just don’t like facing into conflict. That may be caused by worries about getting the procedure wrong, and subsequently being taken to an Employment Tribunal. I am staggered by how few Executives have ever been to an Employment Tribunal, yet they have this major fear of the unknown. Employment Tribunals are open to the public, and I regularly advise Executives to spend an hour of their time just sitting at the back of another employer’s Employment Tribunal. It is informative and educational, and takes away the irrational fear of the unknown. It can also give an Executive the know how to avoid the pitfalls seen in the case they observe!

For some Executives, the fear of conflict is not about legal challenge, nor the potential costs/PR damage – but the interpersonal aspect of the conflict itself. Some of us hate argument; disagreement; the potential ruining of a working relationship and the ensuing ‘ripples’ of perceived ‘damage’ within the organisation. My own view is that when there is an underperformance or behavioural issue in the organisation, the workforce are usually desperate for the Executive to intervene. They are silently willing somebody in leadership to do something about the problem. Far from objecting, they will actually applaud any leader who tackles the issue.

Facing into underperfomance is not actually as hard as we first believe. More of that later in this book.

If you are an Executive who lacks skill or will in this area of performance management, then this book is for you – and let me assure you that you are by no means alone. You probably align with many fellow leaders.

Another even shorter book

My second book, ‘Culture trumps Strategy’ was deliberately shorter than my first book. This was due to reader feedback. Executives told me that busy people tend not to have the time to read books. They like a short and pithy read. I was told “say what you have to say – and then shut up”. I think it’s a worthy mantra, and I’m trying to listen to the feedback of my readers!

So here is my 3rd book – which will be shorter again than my 2nd!

2. THE FUTURE OF PERFORMANCE MANAGEMENT

2016 McKINSEY & Co REPORT : WHAT HAPPENS AFTER COMPANIES JETTISON TRADITIONAL YEAR END PERFORMANCE EVALUATIONS?

“Performance Management isn’t dead. The old way of thinking about it is.” Anita Bowness

“Executives owe it to the organisation, and to their fellow workers, not to tolerate non performing individuals in important jobs.” Peter Drucker

“Wow, I’m so excited for my performance appraisal today! (said no one………… ever)” Kevin Cruse

Ahead of the Curve – 2016 – Mckinsey & Co

I was very taken by the 2016 McKinsey report ‘Ahead of the Curve’, which talks about the very latest developments, indicating the potential future of performance management.

It correlates with what I am beginning to see in a variety of businesses, and what I read about from a number of sources. It’s no secret, according to McKinsey research, that the yearly ritual of evaluating the performance of people in work has become one of the abiding absurdities of organisational life.

Those being appraised, and those doing the appraising find the process time consuming; often subjective; frequently demotivating and ultimately unhelpful!! According to the 2016 McKinsey report, it does little to improve the performance of employees, and more often acts as a demotivator.

None of this research conclusion is new. The latest view is that………….as work has become faster moving and more fluid – so the annual ritual of performance appraisal has become more outdated as a means of managing people. McKinsey liken it to resemble conducting a modern financial transaction via carrier pigeons! I love that metaphor!!

It seems incredible, that McKinsey cite 9 out of 10 companies worldwide which are still continuing to generate annual performance scores for their employees – using them as the basis for compensation decisions. So, despite this process being viewed as out-dated, clunky, and generally derided by all – managers and companies are reluctant to change it. This is only natural. They are not sure what a re-vamped performance management system would look like. They worry that people might ‘ease back’ on their performance if the system changed. Moreover, they are concerned to have a fair basis for annual pay reviews to replace the process they currently undertake.

McKinsey quote companies such as G.E. and Microsoft (who both previously supported a stack and rank approach) are abandoning their annual approach to performance management, replacing it with continual feedback and coaching methods. McKinsey also report that Netflix doesn’t measure its people against annual objectives – because its objectives are quite fluid, and can change rapidly.

McKinsey talk of ‘Emerging Patterns’ in Performance Management

There are examples of many companies collecting more objective performance data, via systems which automate ‘real time’ data analysis.

McKinsey research also reveals that performance data is being used less as a crude instrument for setting compensation.

A further identified trend is for companies to use fact based performance and development discussions to look forward (rather than the old fashioned backward looking annual performance appraisals).

McKinsey conjecture that these emerging patterns will play out in different ways in different companies and sectors. Despite change in pace across organisations and sectors, the bottom line is that the performance management frameworks of yesteryear need radical and seismic change in order to meet the needs of business going forward.

McKinsey’s research on rethinking performance management

The outdated performance management models of today are outmoded because they date back to the work of Frederick W. Taylor in the early 1900s. Since that inception, performance management has embraced concepts such as the K.P.I.’s of the balanced scorecard, but these processes have merely served (according to McKinsey) in adding layers of complexity to a simple mechanistic principle. Companies have been trying to adapt an ‘industrial era’ process to ever larger and more complex modern work situations in a much faster moving world.

Managers have struggled valiantly to attempt to rate employees as best they can, using cumbersome and inaccurate information. They have been forced to adhere to distribution guidelines, which McKinsey find to be usually based around a bell shaped or normal distribution curve. Those guidelines assume that the vast majority of employees cluster around a mean, with a few over or under performing.

McKinsey contend that bell curves may not reflect reality. Their research suggests that talent and performance profiles look more like power-law distributions or Pareto curves. These resemble a hockey stick graph. One 2012 study found that the top 5% of employees outperform the average by 400%.

Google quote this particular research in influencing their own performance and talent practices. They pay top performers 500% more than average. This probably means getting rid of ratings for all but top performers. Indeed, the work of researchers Bob Sutton and Jeffrey Pfeffer have shown that it makes sense to remove ratings which demotivate and irritate employees. G.E.; the Gap and Adobe Systems have all dropped ratings systems for performance management on the back of such research. They all concentrate on building fluidity of objectives; frequent feedback discussions with individuals, and forward looking coaching discussions.