What is the Most Effective Performance Management Approach?

In an evolving workplace, there is a growing trend suggesting end-of-year performance reviews are no longer effective. To remedy this, some companies have decided to utilize software to improve their process. Other companies have elected to eliminate reviews altogether.

What is the most effective performance management approach?

Sarah Haynes

Performance reviews are often the subject of much scorn and mockery in the corporate world.  In my 15 years of consulting with dozens of clients, I’ve only encountered ONE that actually considered their performance management process to be integral to employee development, and truly valuable to their company.  For the rest, it was a forced exercise that did not appear to be linked to results, aside from bitterness and regret. According to a Deloitte Insights survey, 58% of the companies polled reported that they view their current performance management process as not being an effective use of time and only 8% reported that their process drives high levels of value. Why is this?

Performance reviews are almost always linked to compensation.

Reviewees are motivated to score themselves as highly as possible in order to secure the best possible raise for themselves.  Reviewers (the managers) are pushed by the company to average out the performance rating across all individuals in a given cost center. So, for every employee considered “exceptional”, there must be one considered “underperforming”.  It’s a terrible trade-off, and one that often pits managers against staff. I’ve actually had a boss ask me if I’d be OK with a sub-par rating, because he really needed to give a large raise to my co-worker in order to keep him from quitting.

In order to make performance reviews effective, the direct link between reviews and compensation must be broken.  This is the only way to create an environment for an honest conversation, where employees do not have to feel like they’re fighting for dollars and cents.  Secondly, managers should be coached on how to provide effective feedback to employees.  It’s not easy, and many managers will do anything to avoid an awkward conversation.  Lastly, performance feedback should be provided on a regular basis, at least once per quarter.  If you wait until the end of year to provide feedback on annual objectives, it’s way too late to correct course.

Only one of my bosses throughout my career actually cared enough to provide me with constructive feedback, during performance reviews, that I could use to improve my performance.  I truly valued the insightful feedback he provided. Of the others, some were not involved enough with my work to be able to provide feedback, and the rest – well, I guess they just didn’t want to get into it.  I know I would have appreciated it and felt more valued as an employee, if they had.

Ted Hessing

The Science of Encouraging High Performance

We humans are funny creatures. We don’t always act in our own best self-interest. And when we get into groups we don’t always make better decisions. Sometimes we build entire organizational practices that are nonsensical, counterproductiveanachronistic, and/or that we ourselves would not want to be subject to. Case in Point; Performance Management.

let’s take a user perspective rather than a managerial perspective. After all, they should be the same thing, right? It’s always a good idea to start with the client in mind and, under this perspective, the contributors we are seeking to encourage to high performance would be our clients. This perspective can be best understood by the concepts of Servant Leadership. Here’s an overview of servant leadership if this term is new to you.

What’s My Motivation?

Most performance management techniques revolve around 2 axis; rewards or penalties. On the rewards side we can call it salary, bonus, compensation, or whatever. But generally people are incentivized to high productivity via rewards. The flip side are penalties which could range from reduction or absence of rewards to reduced or eliminated security, status, and stability.

But is that carrot and stick approach the best system to use? Turns out the science says ‘no.’

Autonomy, Mastery, and Purpose

In Daniel Pinks excellent book Drive: the Surprising Truth About What Motivates Us (and eponymous TED Talks), he reveals that the research say unequivocally no. Rather than re-state Pink’s message (see above 10 min video for a great overview); Rewards don’t work the way you’d expect them to.

It turns out that after a certain amount of compensation, rewards are actually counter-productive in terms of increasing performance in any endeavor requiring a modicum of cognitive skill. After that magic level of compensation, people require other attributes to be present in order to Got that?

In other words, if you want higher performance, you have to pay people enough where they aren’t worried about money but then you have to enable 3 other key attributes; autonomy, mastery, and purpose.

Thus,the overwhelmingly most popular way of incentivizing performance, reward vs penalty, is wrong. if you want to maximize performance, it turns out that you must optimize for motivation.

So, how does one do that? What’s the right way to handle performance management? If rewards are wrong (or at least only part of the story), then it seems we’d best change our performance management process to the other key factors Pink identifies; Autonomy, Mastery, and Purpose.

Let’s take each one step by step.

Purpose

Per Pink, Purpose is each team member being able to say  “I know why I am here and what I contribute with (as an individual or as a team)” How do we maximize a sense of purpose? So, as managers with a strong background in quality and strategic deployment techniques seeking to maximize performance, how do we maximize a sense of purpose?

I like Simon Sinek’s approach of ‘Start with the Why. Again, if you haven’t seen this Ted talk, you’re missing out.

To my mind, conveying Why is all about alignment. Alignment between the strategic direction of the company and the front-line personnel executing the vision. Some techniques quality leaders can use that we can use to achieve, communicate and measure that alignment are:

If we want to maximize performance management, it behooves us to make the alignment of why behind what people are being asked to do explicitly clear.

Often, when we make that alignment clear we find that much of the resources of time, talent, and energy that people are currently expending

are in pursuit of things that don’t matter or don’t matter as much as other goals they could be working towards. And that is clearly a waste.

Mastery

If the next attribute in results is Mastery, then it makes sense to incorporate this into our performance management techniques. How can we best help people pursue and achieve mastery of their professions?

Some tools we can use to monitor and maximize mastery are visual management principles and gauge R&R techniques. Perhaps the two that I like best are Skill Matrix boards – an excellent

visual management of team skill mastery and credibility as described by Ray Dalio in Principles. However, there are countless adaptations of each that we can apply to skill acquisition.

Also, it is helpful to recognize that every member of a company has a profession (what they do) and an industry they perform it in (where they do it.) It makes sense from a performance management standpoint to help contributors to develop a strong understanding of both the skills and context for their role and their industry at large. T shaped employee management is an excellent framework for this/

Autonomy

Now that we’ve addressed how to manage clear alignment and skill acquisition – the why’s and what’s of a role – let’s move on the how’s.

Again Pink helped us by illustrating how autonomy and empowerment are crucial pieces of the performance management puzzle. And we helped ourselves by showing the alignment of the highest strategic goals of the company

Now, autonomy is scary for many managers. To overcome this hurdle we could use a ‘trust but verify’ model of cascading dashboards and assigning responsible parties for work streams. And the autocratic manager will be happy with this. But autocratic leadership has it’s limits.

Sources: Business Case Studies and Cleverism

Perhaps the best way to encourage autonomy to meet our desired performance management goals is to favor the empowerment of a Team of Teams model such as the ones favored by General Stanley McChrystal (and others) in his book Team of Teams.

Autonomy is best served by employee empowerment. There is a link between employee desire to participate on autonomous teams and having a significant sense of ownership in team outcomes. Simply put, members of autonomous teams desire the ability to make decisions in an entrepreneurial climate without too much managerial interference. And arguably employee empowerment is best achieved through managers leading by illustrating a clear vision and then getting out of their way.

 Bringing it All Together

As leaders it is important for us to recognize that performance management is itself a process. It’s subject to an equation Y=f(x) where f(x) is often more complex than we think. But fortunately, like any other process, it can be measured, faults found, and hypotheses tried, tested, and improved upon.

Luciana Paulise 

The current performance appraisal methods have been hardly criticized in the last years, especially in the era of agile companies and continuous innovation. In the following article we will share some ideas and tips on how to adapt to your specific company culture.

Performance appraisals are the most common performance measurement strategy. A performance appraisal is a systematic and periodic process that assesses an individual employee’s job performance in relation to certain objectives.

Neverthless, several studies have been showing that the effectiveness of the current methods is not clear, as employee’s habits and company cultures have been changing and need different incentives to work better.
What are the main cons of a performance appraisal?

Frequency: Performance appraisals are usually done annually or quarterly. The frequency of feedback should not be defined by a standard, should be defined based n the specific need of the employee and his/her supervisor. Periodic evaluations usually generate more frustration that satisfaction to the employees because as it’s based on past performance and it’s general, it doesn’t help to actually change behaviors in the future. Millennials expect continuous feedback on each situation that helps them improve performance on the near future.

Specificity: appraisals tend to be general as they are the only opportunity throughout the year to formally discuss how we are doing. Clearly many items cannot be discussed, so supervisors tend to choose only a couple of hot topics, very good or very bad based on the general evaluation. So they really don’t tackle specific strategies for improvement, but simply try to confirm what we already know: we are in the top 10 percent, or just out of it. So 90% of the employees just get frustrated, while the other 10% get anxious about keeping the top for themselves on the next review.

All the employees have the appraisals at the same time, so instead of a real opportunity to improve, it becomes another item on the supervisors To Do lists, which they have to do as quick and neat as possible. While for the employee, it may be the opportunity they have been waiting to showcase their results or received some praise for their work.

A performance appraisal is usually focused on individuals, without considering the system or the team. Agile organizations are more prone to work in teams, so individual measurement may be counterproductive. It may impact team collaboration and promote competition instead, to achieve the individual results agreed in the individual discussion.
Subjectivity: No matter how well defined the dimensions for appraising performance on quantitative goals are, judgments on performance are usually subjective.

There are always winners and losers: When salary increases are allocated on the basis of a curve of normal distribution, which is in turn based on a rating of results rather than on behavior, competent employees may not only be denied increases but may also become demotivated. Performance appraisals turn to be unfair trying to fit everyone in the bell curve.

New strategies to have a successful performance appraisal
As peter Scholtes says in Total Quality or Performance Appraisal: Choose One, “Improvement efforts should focus on systems, processes, and methods, not on individual workers. Those efforts that focus on improving the attentiveness, carefulness, speed, etc., of individual workers — without changing the systems, processes, and methods — constitute a low-yield strategy with negligible short-term results”.

Continuous feedback

Annual performance appraisals are pretty standardized, not very much open to discussion and done only once a year. They are usually time-consuming and generate a stressful situation supervisor-employee, so doing it just once a year “looks great”. But real coaching for behavioral change should be short, continuous and spread throughout the year based on the need. It can be positive or negative, but for sure it should be based on recent situations that allow the employee to take action immediately. Innovative companies should count on that to be able to adapt quickly to the changes in the environment.

Leadership training

Many leaders say they don’t have the time in this high-pressure economy for the tedious work of teaching people and helping them grow. On the opposite, the one main task for leaders should be to facilitate their employee’s growth, and there should be no specific time for it, should be part of their day-to-day. Leaders tend to have a lot of work when they have an over dependent team. become demotivated work should not be done by them even if they can do it better, they should help their people to learn and do it better, that is their job. Leaders should be trained to develop habits that make their team owner of the tasks, autonomous and therefore more engaged. RECOMMENDED COURSE: Leadership

Fact-based

Continuous feedback doesn’t need to be based just on impressions or feelings, it can also be based on facts and data. Depending on the type of operation, leaders can use different tools to help employees ask for help or solve problems on the go, instead of hiding issue to avoid bad appraisals. Manufacturing companies can use run charts and graphics to evaluate trends and identify issues. Charts can show if the issues are systemic (all the lines are having delays due to inadequate maintenance) or individual (an employee is not well trained). In some companies, we suggest to do monthly audits with scores and detail action plans, to provide not only a fact-based measure but also a means to improve.

On demand

The best way to provide feedback is making sure the employee knows it before the supervisor, and before it’s too late. Timely feedback can be done when the information and the performance are online and accessible to everyone involved. Measures can be done by the employee himself, or through IT. For example, online retail agencies can provide to employees with online information about customer satisfaction, delays or errors so that employees can adjust the service accordingly. Many companies have 5 stand-up minutes to talk about issues and potential solutions.

Win-win

Performance measurement should be a tool to improve the team and organizational performance, not to blame employees or justify layoffs. It should help to know why a process is failing and what can we do about it, no matter who. So every measurement should not be used along with a root cause analysis and follow-up method.

Feedback at the gemba

A performance appraisal tends to be so formal that is never done on the work floor but inside an office or meeting room. As it is not the normal workplace for the employee, it can be more stressful. If it is done on the workshop, it allows for a more direct discussion. It allows for a psychological safety for the employee, which promotes more innovation and reduces the sense of failure. You can even find more solutions on the floor than in a meeting room or a cold management report. As Edwards Deming would say, successful companies must also manage what cannot be measured (the data-invisible elements).

A performance appraisal or any type of measurement is not bad per se, what matters is what you do with them. Good luck!!

Robert Mitchell

As a Baldrige Examiner, I like to begin my roundtable discussions with a review of the Baldrige Criteria. Category 5 of the Criteria focuses on the Workforce. The Workforce category asks how the organization assesses Workforce Capability and Capacity needs and builds a workforce environment conducive to Engagement and High Performance. The Baldrige Criteria defines High Performance as ever-higher levels of overall organizational and individual performance, including quality, productivity, innovation rate and cycle time.

High performance results in improved service and value for customers and other stakeholders. High performance stems from and enhances workforce engagement. Some characteristics about workforce high performance:

  • It involves cooperation between management and the workforce; cooperation among work groups and teams; empowerment of employees and building personal accountability.
  • It may involve learning to build individual and organizational skills; creating flexible job design; decentralized decision making and making decisions closest to the front line.

My career experience, and observations of applicants to state and national quality programs using the Baldrige Criteria has revealed six key processes necessary to effectively encourage high performance:

  1. A Formal on-boarding as part of the New Employee Orientation process
  2. Providing immediate, open and honest feedback
  3. Regular, periodic “pulse” surveys to measure employee satisfaction and engagement
  4. Frank, two-way skip-level meetings between management and its people
  5. A Career Pathing process to manage employee progression
  6. A Learning & Development System that supports organizational needs and employee development
  7. Systems & Structures supporting compensation, benefits and policies, rewards, recognition, as well as incentives to encourage continuous improvement, intelligent risk-taking, innovation and customer focus.

For more information about these key business and workforce processes, I highly recommend learning about the Baldrige Excellence Framework and attending Baldrige Evaluator training.

A Day With the Future of Quality

Edwin Garro is an ASQ Fellow and founding member of ASQ Section 6000, Costa Rica. He pioneered ASQ certifications in Central America. Currently he serves in ASQ’s awards board. He is an ASQ CQE, CQM/OE, CQI, CQA, CSSGB and CSSBB. He is the CEO of PXS, a leading consulting firm with offices in Costa Rica and Colombia. He has a B.Sc. in Industrial Engineering from the Costa Rica Institute of Technology, and a M.S. in Manufacturing Engineering from the University of Massachusetts, Lowell.

In August of this year, I visited a junior high school class at the San Rafael de Poás Technical High School, in the mountains of Alajuela, Costa Rica. This is not a typical junior class; these 15-   and 16- year olds will graduate in 2017 with a technical degree in Quality and Productivity.

It was not my first visit to the class.  Ever since I discovered this new Quality and Productivity program, I have been fascinated by it.  These remarkable teens will certainly play a role in the future of our profession.

The Quality and Productivity Technical Program

As a whole, the cluster of medical devices companies is the largest exporter in Costa Rica. All the big names are here, Baxter, Boston Scientific, Abbott, Hospira, Hologic, Moog, just to name a few. Over the years, many Costa Rican professionals have specialized in “all things FDA,” and being ASQ certified is a formal requirement in many of these firms.

One area in which there is still a shortage of manpower is quality technicians. The Costa Rican Investment Promotion Agency (CINDE) took the  concerns of the customer (general managers of the medical devices cluster) and worked with the National Education Ministry (MEP, Ministerio de Educación Pública in Spanish) to create  this very innovative program.

Instead of reinforcing the existing associate degrees, they decided to create a high school technical degree in Quality and Productivity. Over a three-year period, students will receive 2,880 hours of education in management fundamentals, process improvement, quality control, quality enterprises and English. Five technical high schools started the pilot deployment last year; Colegio Técnico de Poás started this academic year. Seven more schools will start in the next two years.

Take a look at the objectives of the program, and keep in mind that the students will still be teenagers when they graduate:

1. Prepare technicians in accordance with the demands of current and future markets.

2. Promote the values and attitudes of quality.

3. Encourage the development of creative and critical thinking structures, which will allow students to deal with the continuous changes in social and economic systems.

4. Stimulate a quality and productivity mindset.

5. Promote quality through Statistical Process Control, local and international standards, the study of waste and the effective use of raw materials, seeking sustainable development with the environment.

Even though there are no graduates yet, companies are already lined up to receive these  students for their technical practice (the last three months of their senior year).

I myself am the product of a technical high school, having studied graphics arts and printing at Don Bosco Technical High School in the early 1980s. I know the impact of this kind of education. My printing background led me my first general manager position, and for the last 16 years, I have owned a successful lithography business.

My meeting with the quality and productivity teens

Every time I arrive at the school, I tell the students and their teacher, Yesenia Alvarado, an industrial engineer by profession and high school teacher by vocation, how much I admire them. They are part of the first truly global generation.  When they enter the job market, their quality knowledge will be a great advantage, even if, as many of them have told me, they go on to college and study something completely different.

During my August visit, I honored a promise I had made last time I came to the school. I told them I would bring all kinds of souvenirs from WQCI in Tennessee. They took my “loot” coming from the booths at exhibit hall, everything from pens to USB memories.

Second I gave them a quick lecture on the future of quality, which is kind of a paradox because they are the future of quality.

Third, and here comes the important part, I made an exercise with them. I asked them about their worries, about how they see the future. We made an affinity diagram exercise (see picture left) and after that a multi-voting session. These teenagers, many of them the sons and daughters of coffee production families, are already thinking about their future jobs and their opportunities in life.

Their three main concerns were:

 Lack of good English language skills for the global market

 Unemployment

 Low salaries

At age 15, they are more worried about the global job market than about prom night or first dates.

To encourage them, I told them that it is precisely their quality education and near future technical degree that will guarantee their full employment and market rate salaries, plus I urged them to pursue full college degrees. It was uplifting to see the students demanding better English classes because they know the current four hours per week is not enough to master a second language.

I don’t know what the future will be for these teens, but I do know that their odds are better with such a good education this early in life. The Costa Rican quality and productivity teenagers give hope to our profession.   I view their generation with a lot of optimism and I would be interested to know if there are similar project in other countries.

Encourage the Next Generation of STEM Professionals

A version of this blog post was originally published by www.biztimes.com.

We all know how important it is to get students interested in STEM—science, technology, engineering, and math. But we also know that STEM doesn’t always have the best reputation among teens—with perceptions ranging from science being “hard” or boring. And yet, the news is not all bad.

Case in point. Every year ASQ surveys teenagers about various STEM topics. In our 2015 survey, 80 percent of teens said they admire engineers’ problem-solving abilities and 68 percent think engineers get paid a high salary. Only 38 percent, however, think that engineers can easily get a job.

To us at ASQ, the survey underscores that teens have at least some interest in STEM, but worry about the job market. Are their fears unwarranted? According to various sources, the U.S. may have a STEM skills shortage, and many such jobs are going unfilled. You can read more about the state of STEM jobs in the U.S. News and World Report and The Bayer Facts of Science Education XVI survey.

(And by the way, if you’re based outside of the U.S., I’m interested in the state of STEM in your country–are young people pursuing this field? Why or why not?)

So, what to do about this problem?  Note that unfilled STEM jobs slow down business growth, lower productivity, and lead to lower revenues–whether you’re a STEM business/employee or not. (Source is this infographic.) In ASQ’s 2014 Engineering Week survey, we asked our members to give engineering students some advice. I believe their advice is applicable nearly worldwide, and is also helpful to businesses that may be employing  students as interns or staff.

Be a mentor. Consider becoming a mentor, formally or informally.  For students, the “the best way to learn about leadership is by seeing it demonstrated in real life, not out of a book.”

Build relationships. Do you have a relationship with a local school, university, or STEM program? This can be a source of potential future interns, apprentices, and employees.

Consider STEM-related sponsorships. For example, a local doctor’s office might support students with a sponsorship to a Science Olympiad team or a small manufacturer might partner with students who are participating in a robotics club. You could also look into opportunities to speak about your own STEM-related field during career days at school.

Provide a business education. Students who go into STEM benefit from understanding business basics and how to communicate with the C-suite. Even if your business is not in the STEM field, any potential science student will gain from your knowledge and experience.

Educate yourself as a parent. Frequently, parents with no background in STEM fields are not aware of the opportunities in those areas, and consequently do not educate their kids in the vast career opportunities available. If your child shows interest in math or science, it’s time to read up on the different career paths available. Does your child want to be a mechanical or civil engineer? What about a career in nanotechnology, biomechanics, or astrophysics?  There are so many choices available and you should start educating yourself so that you can have informed conversations with your children.

Businesses can play an important role in helping to encourage the next generation of STEM professionals. It’s time to step up to the plate.

January Roundup: Quality Inspirations

Do you have a quality role model or inspiration? This was the topic for ASQ’s blogging group, the Influential Voices, in February.  A quality role model could be anyone from a guru to a mentor to a person who is not “in quality” at all, but still embodies quality principles. Here are the main inspirations for ASQ’s Influential Voices:

Family: John Hunter was deeply inspired by his father, a statistician, as well as statistician George P.E. Box. Jimena Calfa writes about being inspired by and learning about quality from her kids. Luciana Paulise remembers the quality lessons she learned from her mother.

Professional mentors: Manu Vora remembers various mentors and thought leaders he encountered during his career.  Lotto Lai blogs about first research supervisor.  Bob Mitchell found inspiration from leaders at 3M. Chad Walters is inspired by fellow lean blogger and onetime ASQ Influential Voice Mark Graban, while Nicole Radziwill is inspired by a psychologist and an activist. Aimee Siegler finds quality inspiration in both her professional and personal life. Rajan Thiyagarajan learned four lessons in quality from his inspiration, a professor.

Icons and beyond: Jennifer Stepniowski is inspired by Steve Jobs.  Edwin Garro writes about quality lessons learned from a famous pediatric surgeon. Sunil Kaushik blogs about finding quality inspiration in an anonymous online forum and TED talk.  And Pam Schodt wrote the intriguingly titled post 5 Keys to Quality Problem Solving I learned in a Pizza Delivery Store.