Sunday June 9, 2013
When it came to succession planning to drive the business forward and managing performance to keep standards high and innovation at the fore, the smart organisations started looking for a more robust, consistent and professional approach. Gone were the days of long lunches in the pub with ‘the boss’, putting the world to rights over a couple of bottles of wine agreeing a lot of stuff that never actually happened. In the early 2000’s it became about competitive advantage through people; measurement; KPI’s; balanced scorecards; putting people in boxes and assigning them scores. This continues, and for many successfully, today. Both Google and Salesforce are still using a ‘traditional’ model of measurement and it’s working for them (or so say the numbers).
However there are methods that companies will now need to consider in order to be able to cope with managing the new generation of workers and leaders; Generation Y and the ‘i’ Generations. We believe that performance reviews and the way succession and development are handled will evolve dramatically over the next decade. We want to be ahead of the game (people told us 10 years ago we were too early though that’s a place we like to be).
Traditionally performance reviews have consisted of an annual meeting between an employee and his or her manager to discuss what has been achieved over the last twelve months and to set goals for the next twelve. Having worked with hundreds of organisations on their performance review processes, we know that automating the system is the way to go; however, as many organisations have realised, simply putting a paper version of an existing system on line isn’t going to work for rapid growth entrepreneurial organisations if people still don’t access it in between reviews. Instead of becoming a fun and motivating experience, it is anxiety fuelled, rarely enjoyed and one that sits more or less completely outside the day to day running of the business.
So what is the answer? There are three factors the most successful businesses are implementing right now:
1. Continuous Review
Why should employees only talk about their performance once a year; and why should this happen in a formal review setting? We have asserted for years that an appraisal should have no surprises because issues should be dealt with day to day rather than saving them up. If performance; career path; aspirations and a person’s views on their employer are only being talked about once a year,then there are going to be instances where unexpected issues arise.
Atlassian, a fast growth software organisation has recently stopped having formal performance reviews altogether and have started using one weekly meeting a month to update performance; each month has a different theme; all are coaching led and twice a year there is a ‘check in’ recorded on line. Lexington Catering (a Sunday Times Best places to work company) do the same, having regular ‘coffee chats’ which are logged on line and ensure that continuous discussion is always taking place.
Like many organisations, Atlassian and the world's leading internet television network; Netflix, believe that tying pay to performance is outmoded, choosing instead to pay competitive market rates and through company performance related bonuses; meaning they can move away from a numbers based scoring system and the subjectivity of managers dictating scores to their people. Certainly within Talent Toolbox (our own award-winning talent management system), for some organisational cultures, we are seeing less stringent measures and more focus on the individual. Information flow is a key factor in how generations to come will expect to work, they will want praise this week not next year. Thus the annual review (if there is one) becomes forward focused – an opportunity for individual and organisation to plan for their future needs strategically. This is what it should be about! Fast growth businesses no longer have a five year plan, they have a rolling six –twelve month plan. Reviews therefore have to fit in with this and keep up with the pace of work and information that we are experiencing in this decade.
2. Fit for purpose rather than best practice
To really understand if an organisation is living up to the culture and values it showcases on its website or on a plaque on the wall at head office, look at performance review content. It always surprises us that there are organisations spending considerable time their consumer brand but their employee brand appears to be an afterthought; we have seen so many cool and growth organisations with values such as ‘fun’ and ‘exciting’ whose reviews are anything but. Research, by Purple Cubed and others, proves time and time again that for people to be engaged, productive and profitable they require great two-way communication; a clear career path; inspirational leadership; continuous development and shared values with their employer. All of these fall into, and can be implemented by a successful review process. Fail to deliver on any of these areas and people will see the company as inconsistent and eventually leave (or stay in sabotage mode which is worse). Above all, however reviews are structured, they should be a cultural fit with the organisation. Just because it worked in one company doesn’t mean it will work in the next, it is vital that leaders are ensuring any review is consistent and ingrained in the culture and not just an HR initiative borrowed from a competitor. This is why we eschew best practice in favour of ‘perfect fit’.
3. From the top
Long gone are the days when the c-suite was a mystery; CEO’s are tweeting, they are out in the business and certainly within fast growth businesses are ‘on the floor’; understanding what is going on in the business at all times. If ‘leadership at all levels’ isn’t implemented early on then the result, according to Pietro Micheli, Professor of Organisational Performance at the Warwick Business School, is a culture of performance measurement where people will be so focussed on performing to the measures that they forget about the underlying goal. If a CEO views performance review as a boring annual task implemented by HR then so will the rest of the organisation. A great leader will continually discuss and review performance with his or her team, and this is why we often hear that the board ‘don’t need reviewing’ they do; they are just doing this as a matter of course, unfortunately this usually isn’t recorded, the business thinks that the board don’t view reviews as important and as a result it becomes a tick box exercise.
What are you doing to ensure the business critical review process is continuous and vibrant; representing your culture and led from the top?