Asked and Answered * Decoupling Performance Reviews and Compensation

I expect deep, provocative and insightful thinking from the readers of this blog – and you do not disappoint. In my last post, I tackled the topic of decoupling the traditional formal performance review from compensation, asking why we hold onto old systems we are fairly confident do not work. I asked for your opinion, your experience, your knowledge. You certainly came through in the comments, making it clear to me this conversation is not anywhere near over.

If there is a through line in your comments, it is this:  There is a deep and pervasive desire to change what’s broken, but fear and uncertainty in how to do so. That fear seems tied to primarily to:

1. Legal concerns around how to defend performance terminations without the formal review as proof
2. Concern that managers won’t engage in any feedback exercise with employees without the review mechanism to force the issue

My stance (and that explained in far greater detail by Eric Mosley in his book The Crowdsourced Performance Review) is we need both informal and formal, manager-driven and employee-empowered. What we no longer need, however, is a decades old failed process simply grafted onto new technology. We need to serve our employees and our managers better.

Indeed, one commenter, Meagan Palatino, summarized the position quite well in her comment:

“Really interesting post. My team recently participated in a group discussion at the NYC HR Analytics Meet-up, and witnessed a live debate between HR professionals at companies ranging in sizes. The entire summary is here in a post I wrote after the debate. In a nutshell, this was our take on it:

“It is clear that no matter the size or experience level of your team, effectively evaluating performance and motivating employees is hard. Performance lacks a consistent definition among organizations and cultures. Humans are unpredictable and prone to bias, and these factors shape the experience of performing, and evaluating performance.

“While we agree with many of the points in the argument in favor of the annual performance review, we believe they should trend towards more frequent, real-time feedback. It is important to encourage employees to take risks. Managing that well requires more consistent discussions about performance. Employee reviews and feedback should be tied to near-term goals and objectives, where all too often we find these to be separate elements in an organization. An individual’s goals should be performance-focused and be measurable.

“While we feel that social data and peer recognition are a valuable source of informal feedback, we don’t see them as replacements for the performance review. This information can certainly augment a manager’s understanding of their team member. With the incorporation of this data, and an increase in review/feedback frequency, an organization moves closer to real-time recognition & professional development.”

One additional theme came through the comments – the need for courage. It takes courage to change a long-existing practice that seems to keep us out of potential legal trouble (regardless of the reality of that particular fear). It takes courage to not just think differently, but to step out and create new and different paths that serve ourselves, our employees, our managers, and our leaders better. It takes courage to look at the easy, that’s-how-we’ve-always-done-it approach and envision a new way, a better way.

Are you courageous? Is your organizational leadership courageous? Have you proposed a new or better way in your organization? What was the reaction?

As Globoforce’s Vice President of Client Strategy and Consulting, Derek Irvine is an internationally minded management professional with over 20 years of experience helping global companies set a higher ambition for global strategic employee recognition, leading workshops, strategy meetings and industry sessions around the world. He is the co-author of "The Power of Thanks" and his articles on fostering and managing a culture of appreciation through strategic recognition have been published in Businessweek, Workspan and HR Management. Derek splits his time between Dublin and Boston. Follow Derek on Twitter at @DerekIrvine.

Comments

[Meagan Palatino]

Thanks, @Derek for the mention. I'm glad that my comment resonated with you. We at Uppercase think a lot about redefining performance management for the modern workforce. Your image headline, "Same Process, New Technology" gets at a very important point -- newer, more modern technology alone won't change the HR Ecosystem. It will be a synergy of simplified technology and optimized processes that does it.

Performance is one of the first places where process changes can be experimented with relative ease. Frequent goal setting, regular one-on-one check-ins with your employees, and real-time feedback require little overhead, and can only bring about better communication between an employee and their manager. And better communication is the first step towards better performance.

[E. James (Jim) Brennan]

Don't believe anyone disagrees with the central statements here. While nothing you wrote should be new to HR people, executives from other disciplines still need to be convinced. Any performance judgment that is not a summary roll-up of a complete series of periodic and comprehensive interactive feedback resolution sessions is doomed to failure.

The old way is NOT the easy way. The annual-only surprise party is the most difficult and most problematic approach. Many managers today don't know how to supervise and are all too rarely required to exercise effective communication protocols with subordinates. It's much easier to blame HR. Let's break this cycle of futility, frustration and fury!