A Need-Payoff Question Could Also Be Called A Value Question The End of the Performance Review: A New Approach to Appraising Employee Performance

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The End of the Performance Review: A New Approach to Appraising Employee Performance

Its 9am Monday and Bob is sitting across the desk from Terry in Terry’s large office; the early morning sun is streaming through the half closed louvers and casting some shadows across Terry’s big black shiny deck. Its annual performance review time around the office. Everyone is on their best behaviour. There is a degree of tension and apprehension around the office.

Sitting in the chair opposite Terry, Bob looks like he is sitting in the airport lounge, having just been told that his flight has been delayed an hour and it is already 10:30 at night. Terry – Bob’s boss – isn’t feeling the best either. He is a little apprehensive about appraising Bob’s performance. As Terry is reading through Bob’s self-appraisal behind his barricade, Bob sat with a look of disinterest on his face, chewing a piece of gum, arms folded and staring straight ahead into the distance.

“I notice you have put administration down under your strengths,” says Terry, reading out Bob’s response. “Yeah,” replies Bob unenthusiastically. “But administration is your job isn’t it Bob?” asks Terry. Bob nods indifferently, staring straight ahead. “No Bob, I am looking for what you think your strengths are within your administrative job.” “What are your strengths as an administrator? Is there anything else you could have put there?” Terry probes. “Don’t know really, isn’t it your job to tell me?” replies Bob continuing a steady chew on his gum.

“OK, under weaknesses you have put hay fever,” a deadpan Terry says reading from the self-appraisal form. “You’ve left this section completely blank, Bobby.” “You haven’t done the section on career goals, challenges Terry. “I thought you’re suppose to fill that part in,” Keith mumbles looking at the floor. “No, no, no, this is aimed at you, for heaven’s sake, it’s your career, not mine.”

“On a scale of one to five to what extent do you believe you have the necessary skills to carry out the job?” Terry asks reading the next question on the appraisal form, looking exasperated as he reads out the six possible responses. “One, not at all; two, to some extent; three, reasonably competent, four, competent, five, very competent, or you can tick, don’t know.” “What would you tick?” After a pause Keith replies, “Don’t know”.

“OK,” replied Terry as he ticked the box and takes a deep breath. “Do you believe you have received adequate training to use the new CRM software system installed recently?” asks Terry still reading from the blank form. “What are the options?” says Bob. “One, not at all; two, to some extent; three, reasonably competent, four, competent, five, very competent, or don’t know.” “They are always the same,” a clearly frustrated Terry responds. “Don’t know,” comes the deadpan reply.

“Do you feel empowered to complete your work?” asks Terry referring to the next appraisal question. After a long pause Terry asks, “Do you want the options again?” “One, not at all; two, to some extent; three, reasonably competent, four, competent, five, very competent, or don’t know.” “Don’t know,” comes the predictable reply.

“Bob, just imagine for a moment that you didn’t have the option of selecting don’t know, what would you select?” Terry tests. “What are the other options again?” replies Bob. “One, not at all; two, to some extent; three, reasonably competent, four, competent, and five, very competent,” says Terry in a forced, but controlled voice. “I bet you can’t remember the question Bob,” Terry says sarcastically.

Somewhat exaggerated perhaps, but nevertheless disengagement in the annual performance review process is happening across the world in every industry for an high percentage of employees and managers. When I mention the term performance appraisal or performance review what comes immediately to your mind? Of course I don’t know what you thought, but I am pretty confident that the thoughts you have are not necessarily favourable.

Incidentally, I will use the terms appraisal and review interchangeably throughout this article.

Most managers are locked into the belief that they need to conduct annual or bi-annual performance appraisals with their staff. Yet they acknowledge that the system is not working. HR professionals are caught up in this dilemma: they have to train people to conduct their reviews competently, but acknowledge that the old approach is defunct.

Not surprisingly we witness a plethora of opinions about the traditional way we appraise employee performance. Performance management is increasingly being spoken of in articles, blogs, and management books and is a dominant topic of conversation at HR, HRD and management conferences all over the world. Most of the commentary is critical of the status quo; people in the people development business – with increasing impatient – are seeking answers to the perennial challenges of getting the best from people in their role at work.

A new approach I refer to as The Five Conversations Framework attempts to respond to this disillusionment, particularly in relation to offering a comprehensible alternative to the old performance appraisal regime. As we appreciate the value of human capital in the modern workplace more and more, I hope you agree: fresh insights and new approaches to developing people at work are worth considering.

The conventional appraisal system is faulty on several accounts. My assumptions were confirmed after interviewing 1,200 managers and HR professionals over the past few years across all industries in Australia and New Zealand. I simply asked them to identify what – if any – shortcomings they had about their current appraisal approach. Responses varied as you might expect, but essentially I identified eight themes from my research. The eight shortcomings in summary are:

• Appraisals are a costly exercise; • Appraisals can be destructive. • Appraisals are often a monologue rather than a dialogue. • The formality of the appraisal stifles discussion. • Appraisals are too infrequent. • Appraisals are an exercise in form-filling. • Appraisals are rarely followed up. • Most people find appraisals stressful.

These results confirmed to me that a completely new approach is needed.

I am not against performance feedback. In fact I believe it is one of the most important things a manager should be doing. Organisational psychologists tell us time and time again about the importance of feedback and its link to performance improvement and motivation. You would be hard pressed to find a book on management and leadership that doesn’t extol the virtues of timely, tactful and specific feedback on performance. Performance management is fundamentally important.

But the appraisal process is not working. In effect, the Five Conversations Framework it is based on five conversations once a month every six months between the manager and his or her employees. Month 1 is a Climate review which is based on a conversation around job satisfaction, morale and communication. This is followed in month 2 by a Strengths and talents’ conversation. The underpinning question here is: How can the organisation more effectively deploy the strengths of an employee in his or her current and future roles? Month 3 is an Opportunities for growth conversation. Following this, month 4 is a Learning and development conversation to assist the employee to grow and develop. And finally, month 5 is an Innovation and continuous improvement conversation focusing on ways and means of improving the efficiency and effectiveness of the individual, team and organisation. After a month’s break, the cycle of conversations is repeated.

Let’s look at each conversation briefly.

Climate Review conversation

A climate review is about determining the current atmosphere in a particular workplace. It is mainly concerned with employees’ job satisfaction, morale and communication. Although people’s opinion about these matters can – and often do – fluctuate over the course of a year, it can be useful to take a snapshot of the business occasionally. By having a conversation with direct reports about the state of the current climate, managers have a handle on the current state of the business, and what needs to be done to improve the fundamentals of satisfaction, morale and communication. Listening and responding to this feedback is a good place to start.

Strengths and Talents conversation

Most appraisals are fixated with what is going wrong; in other words, they focus on weaknesses and by-pass strengths and talents. Tom Rath in the # 1 Wall Street Journal bestseller: Strengths Finder 2.0 underscores the value of a conversation on this subject: Society’s relentless focus on people’s shortcomings has turned into a global obsession. What’s more, we have discovered that people have several times more potential for growth when they invest energy in developing their strengths instead of correcting their deficiencies. Apart from being an edifying place to start discussing performance after the organisational climate, this conversation capitalises on people’s innate talents. As the positive psychology movement has preached for two decades: Building upon strengths has a higher payoff then working on overcoming weaknesses.

Opportunities for Growth conversation

This conversation invites an opportunity for employees to consider how they can improve their own work performance in key result areas. By doing so, the potential for both to gain a common perspective on areas for improved performance is possible. A dual understanding of current and expected standards performance is an important first step. The second step is to discuss and agree upon some tangible ways and means of improving the employee’s performance to match expectations. Thirdly and finally, this conversation is important in aligning performance expectations will the strategic direction of the business. Some opportunities identified can be put into practice straight away. And others can be adopted with more L & D support later.

Learning and Development conversation

Conversations about learning and development capitalise on the previous two conversations. The core question here is: What leaning experiences can assist in building upon strengths and lifting performance in critical areas. Learning experiences can be either technical, personal development or problem-based. All three dimensions are important for an eclectic approach to HRD.

Innovation and Continuous Improvement conversation

This conversation is about practical ways and means of improving both the employee’s own efficiency and effectiveness and the business in general. What can I, and what can we do to improve? is the focus here. Imagine for a moment the power of this conversation occurring across an organisation during a particular month. Some of the ideas that surface will undoubtedly be too costly or impractical. But some would also be worth considering.

Each of these five conversations ought to take about 15 minutes. Some go longer. Being thematically-based, they are focused and therefore need not take a considerable amount of time.

Being more relaxed and conversational compared with the rigid appraisal regime, this new approach minimises the power dynamic of the manager-employee relationship. The manager still asked questions to guide the conversation. But in this framework, the manager’s role is converser and facilitator, not appraiser and assessor.

Implications for Human Resources

One of the criticisms of the traditional appraisal system is the mountains of associated paperwork it generates. I think the truth is this: Documentation is as much about compliance as anything else. Each of the five conversations are recorded, but with simplified templates. These completed templates are then collated by HR and guide and inform immediate and long-term learning and development opportunities.

More specifically, the climate review report is a useful snapshot of the organisation-at-large. These data can then be dissected to determine pressure points in the operation. Growth opportunities to enhance job satisfaction and morale and improved communication can then be addressed by L & D interventions. Information from the innovation and continuous improvement conversation is aggregated into a report highlighting some of the inevitable good ideas and improvements generated across the organisation.

Once these fresh concepts are captured they open up great opportunities for new learning and development across the organisation. The conversation on strengths and talents is the catalyst for shifting the reliance of L & D to meet base-line organisational competencies to building potential by capitalising on people’s innate talents. In other words, this new approach means the role of L & D is primarily one of organisational development rather than organisational conformity.

This is considerable chatter in the blogosphere about whether the performance appraisal should be abolished or refined. And if it is eradicated, what replaces it? If managers are giving consistent, regular, clear and constructive feedback to their charges, then the old review process becomes less relevant, if relevant at all. This is more the case if we assume that primary purpose of the review is a developmental tool for performance enhancement.

Several organisations have replaced their old appraisal system with The Five Conversations Framework. In applying the framework, each manager in these enterprises is committing to 10 conversations with each of his or her direct reports every year. This is probably more dialogue than most managers are currently committing to most organisational settings. And in these circumstances: Why continue with the standard appraisal approach?

This alternative approach has worked successful across many industry groups from manufacturing to professional services firms. Feedback from both managers and employees has been generally very positive. It also opens up fresh opportunities for HR professionals.

Managing performance is a complex issue. By-in-large appraisals are not efficient or effective. We need to be prepared to try different approaches and remove processes that don’t work. If we don’t, it diminishes the relevance of HR.

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