Where even the tallest cup of joe will not perk you up? That was the feeling I had before walking into Tamra Chandler’s talk on Radically Rethinking Performance Management for the 21st Century at a recent Society For Human Resource Management (SHRM) conference. 90 minutes into the PeopleFirm’s CEO’s presentation (coffee untouched, eyes glued to the podium) I knew I was listening to something special.
Tamra challenged the audience to change their thinking about performance management (PM) and have the courage to design a system that actually help employees perform better, not just to document their current performance.
This month Tamra has released a new book How Performance Management Is Killing Performance–and What to Do About It. The book is a deep dive into how to even start rethinking your PM system and how to implement something that works for your organization. I had the opportunity to ask Tamra a few questions about her book and why this topic is so important to successful organizations.
What led you to focus on performance management?
As Chief People Officer at Hitachi Consulting, I created a performance management process for our global consulting team. We started with a clean sheet of paper – and while in the end we had some very nice features, including a robust role and technical competency model that underpinned the approach, my solution still looked pretty much like a tradition model. It worked fine, but many of the problems that I write about in the book were still present. Several years later when the CHRO of the Bill and Melinda Gates Foundation asked me to write a white paper for the executive team on performance management, I saw this as a chance to take a fresh look. Once I dug in, I realized that many people had been writing about the problems with traditional approach to PM, and more were joining the chorus every day, but no one seemed to be putting forward alternatives that addressed the problems in a comprehensive and actionable manner. At the same time I had clients asking for help. Those needs came together and I decided we needed to create a solution. And once we had a solid solution, it seemed right to share it with a world that was struggling with this problem.
You list eight mind shifts companies need to embrace in order to become a high performance organization. What shift do you feel is the most difficult for most companies to make?
Oh gosh, I don’t know that there is one answer to this question as it is so dependent on where they are coming from. For example, an organization that is using PM as a “controlling mechanism” may struggle with shifting to the idea of “stop policing, and start empowering.” An organization that spent years fine-tuning one system for all employees might struggle with the idea of abandoning uniformity and creating more flexibility in how they address PM across varying employee segments. I guess in the end what I’ve seem most organizations struggle with is the idea of moving away from the ratings process (Fatal Flaw #5, “We are not Machines”) then applying several of the key shifts in a manner that creates a great experience for their people, while also achieving the goals of the organization. For example, I’m thinking the powerful mix of Shift #2, “Give the steering wheel to your employees,” Shift #3, “Change your focus,” and Shift #5, “Welcome more voices.” All of these shifts require two things: that we abandon our false beliefs about motivating people and driving performance, and that we place significantly more trust in our people — both employees and managers. If the organization that is trying to move forward can’t do those two things, it will have difficulties making any of the shifts.
You have seen companies before and after they have overhauled their performance management system. Did companies have unexpected outcomes? Did you see cultural impacts that surprised you?
I think what most organizations are surprised to see is the employee and manager response. At times I’ve seen true joy when teams leave behind the check-the-box, annualized, rating-based approaches. This assumes, of course, that you manage the change process and create the solid supporting tools and content to make this as smooth a transition as possible. Why joy? Many leaders haven’t tuned into the true disdain their people feel for their current PM process and systems, and they underestimate the negative impacts their approach is having on their people. These elements can become quite notable when performance management is changed significantly for the better.
Regarding culture shifts, I think we’re still early days to call this for sure as not that many organizations have made the shifts and attained what I would call a steady state. That said, the early signs are strong that we’re creating healthier, more transparent, and growth focused cultures. Ultimately we are creating safer places for people to do their best work – and at times that might mean reaching too far and failing, but knowing they can learn and trying again.
Bonus: You point to Reward Equitably as one of the three goals of performance management. I love your phrase “pay for capability and reward for contribution.” What is the first step you recommend companies take to move in that direction, especially when many companies are dealing with tight budgets and entrenched compensation systems?
I’m glad that phrase resonates with you, as it is one of my favorite ideas in the book. Further, your question is perfect because moving to pay for capability and reward for contribution is not something you can leap to without some planning and, frankly, a little hard work. The concept is founded on the idea that you need to peg the roles in your organization to market. When working with many of my clients, I find they’ve had what I call role proliferation over the years, meaning they have had too many roles defined across the organization and no clear framework or construct that holds them together or differentiates one from the other. If this is the case, then that’s where you need to start. Define a clear role framework, and create specific definitions of the skills, capabilities, and expectations for each role. Once this is done you can map your people to the defined roles, and get your house in order, so to speak. This also gives you a significant amount of information to share with your people, like what are the roles, what does great performance look like by role, and how might a person move from one to the other. Once you have clear roles defined, you can easily map them to market-based pay year in and year out. Then turn your attention to what contribution means for your organization, and how you will recognize contributions in a manner that fits your business model, team, and culture.
Tamra’s presentation sparked XPLANE’s recent performance management overhaul. I encourage you to pick up her book and start the conversation around how your organization handles performance management.