--Create a "recommended" distribution of performance ratings?
--Allocate this year's merit budget different from last year's?
--Pay incentives in the first quarter of 2017?
Anyone keep her/his hand down for all three? I doubt it.
We like to say that we make all these decisions based on data and financial analysis, but sit around one of those small round tables at a professional meeting and you'll hear surprising stories told. We all do our best with plan design, but every year there's a case or two of A + B = F that we need to deal with.
To help us make judgments in a new and better way this year, I thought I'd share these quotes from an interview with Nobel laureate Daniel Kahneman and psychologist Gary Klein. When I raised my eyebrows while reading them, I decided to share them with you.
The question is, "When can you trust your gut?"
'If you mean, "My gut feeling is telling me this; therefore I can act on it and I don't have to worry," we say you should never trust your gut. You need to take your gut feeling as an important data point, but then you have to consciously and deliberately evaluate it, to see if it makes sense in this context. You need strategies that help rule things out. [The italics are mine.] That's the opposite of saying, "This is what my gut is telling me; let me gather information to confirm it."'
In other words, disprove your assumptions and challenge your judgments rather than look for affirmations that you are correct.
Let's take a familiar example out for a spin. "We're giving no more than 15% Exceeds Expectations this year." I bet this is a given, and has been for a few years at many organizations. But have you ever discussed what would happen if you gave 20% or 25% Exceeds Expectations? How about none at all? If you tried those analyses, I bet you'd learn a thing or two. Then why not try the same exercise on other intuitive leaps like 1% increases for everyone but the superstars?
Here's another important point that I think we've all watched happen -- except who could have the words to explain it this well?
"There are some conditions where you have to trust your intuition. When you are under time pressure for a decision, you need to follow intuition. My general view, though, would be that you should not take your intuitions at face value. Overconfidence is a powerful source of illusions, primarily determined by the quality and coherence of the story that you can construct, not by its validity. If people can construct a simple and coherent story, they will feel confident regardless of how well grounded it is in reality."
Time crunches are the most reliable sources of compelling stories, don't you think? If you take nothing else from these insights on instinct, try this. Quit laughing at your own jokes and patting yourself on the back for doing the undoable one more time. Get yourself a better schedule this year, create a different reality for yourself and find out how much more grounded in reality you, your department and managers can become.
Margaret O'Hanlon, CCP collaborated with Ann Bares and Dan Walter to create the DIY guide to compensation leadership, Everything You Do (in Compensation) Is Communications @ https://gumroad.com/l/everythingiscommunication . Margaret is founder and Principal of re:Think Consulting. She brings deep expertise in compensation, communications and leadership to topics like the CEO Pay Ratio, performance management and compensation implementation discussions at the Café. Margaret is a Board member of the Bay Area Compensation Association (BACA). Before founding re:Think Consulting, she was a Principal at Willis Towers Watson.