Traditional performance and the annual review have reached their sell-by date and it’s time employers followed leading organisations in ditching them. Instead they should adopt the “six conditions” of thigh performance, argues Hannah Priest, behavioural psychologist at Mind Gym.
This summer, consultancy firm Accenture’s 330,000 employees breathed an almost audible sigh of relief as annual reviews were ceased across the organisation.
And they are not the only ones. Netflix, Microsoft, Adobe and Deloitte have all ditched performance management as we know it and caused a lively debate in the process.
But all the statements and subsequent debates about rankings, reviews and performance pay may be missing the point. Believing that any kind of process, with or without rankings and reviews, will improve performance is misguided.
Performance management resources
A performance-management system – however a company decides to devise it – is essential for tracking trends, ensuring fairness and meeting legal requirements.
But that is as far as it goes, because the key to performance does not lie in a process, it lies in encouraging the right behaviours to build a high-performance culture. It also lies in setting up and maintaining certain psychological conditions that keep people performing at the top of their game. We call these the “six conditions”:
“Why am I doing this?” is a question most of us have asked ourselves. The richer our answer, the more likely we are to perform at the top of our game. There are three types of “purpose” that directly affect performance:
- Task purpose: knowing our work counts and is not futile.
- Collective purpose: seeing how our work combines with that of others to create something none of us could achieve alone.
- Social purpose: recognising that our work makes a worthwhile contribution beyond the success of our organisation.
Whether we work in the back office of a bank or the front line of a charity, we can derive purpose from a task well done, by achieving goals as part of a team, and by paying attention to our social impact.
We perform best when we are suitably challenged. The question is how much challenge is reasonable?
There is much more to this than simply setting goals and measuring performance. The most performance-enhancing goals are:
- Just out of reach – if you believe your goal is just about possible but cannot currently see how you would achieve it, it is probably the right level of stretch.
- Aligned – individual goals that are aligned to strengths, motivations as well as the organisational strategy.
- Always up for review – the world around us changes fast and so goals need refreshing too.
A six-year study of 229 entrepreneur CEOs concluded that business growth was largely driven not just by stretching goals but by helping employees believe they could achieve them. In building this belief, the manager’s responsibility is to help the individual appreciate the goal is “just about possible”. The individual’s responsibility is to take on this challenge.
The feedback that makes the biggest difference is:
- Saying what you see someone do has more impact than evaluating it.
- Comments given frequently as part of conversations are easier to digest and allow time for reflection.
- Managers have awareness of what everyone is doing.
The simple act of noticing and saying what you noticed can be the most powerful feedback. Employees who think their manager always knows what they are up to and how they are doing are far more likely to feel appreciated and raise their game. The key to paying attention is lightly and often. A quick observation, delivered informally can have more impact than a formal conversation.
Frequent feedback is best, at the very least once every two weeks. And be sure that it is descriptive, not just evaluative.
We grow faster when we have:
- A growth mind-set – believing we can get better.
- A role that plays to our strengths and skills.
- Sight of better prospects. We can see that by getting better now, we’re more likely to attain something that matters to us in the future.
Those who cannot see how their working life can progress get stuck. They have lowered aspirations, diminished self-esteem, are less engaged, perform worse and are ultimately more likely to leave.
When promotions and pay rises are scarce, “moving” needs to mean more than moving up the hierarchy. Progress may include new skills, project opportunities, lateral moves, job rotations, secondments, shadowing, leadership opportunities or even a sabbatical outside the company, all of which help people “unstick” and get moving.
We feel most appreciated when recognition is:
- Based on clear criteria and applied consistently across the business.
- About “me” – not the person giving it.
- The difference between how the best and worst are recognised is proportionate and based on objective, performance-related criteria.
One of the largest predictors of satisfaction is social comparison: employees who look around them and perceive they are not being recognised fairly do not perform as well. And so, although we might tell ourselves that the question which matters is “Is it worth the effort?” we’re actually more affected by the answer to “Am I being treated fairly?”
Recognition done well delivers a significant boost in performance. In service organisations this can be by as much as 15%, rising to 30% when combined with feedback. Managers should understand each team member and what they are motivated by, ensure process and communication is fair and consistent, and watch out for their own personal biases. End-of-year reviews (if they take place at all) should feel part of an ongoing conversation, not a surprise. They should be an opportunity to take stock of the past year, and look forward to what is coming next.
We keep performance high when we:
- Create support networks by building a strong network of technical, emotional and practical support.
- Adopt an optimistic outlook, interpreting challenges as short-term, specific and insightful.
- Focus on what’s in our control by drawing on inner strength and grit to maintain effort and interest over time to sustain performance in spite of setbacks.
Together with leaders, managers can reflect on where it is possible to give people autonomy and ownership to maximise their choices. When discussing plans they should explain the choices people have in how to implement them. Managers and leaders should be open with their teams, sharing mistakes, risks, successes, challenges and opportunities – reframing failure as an opportunity to learn and sharing examples of their own.
Mangers can be responsible for creating peer networks so everyone has a variety of support to call on when things get tough.
So skip the discussions about rankings, annual reviews and flashy new HR software, because creating the right conditions for everyone to perform at the top of their game is the performance-management approach of the future. And key to it is understanding the psychology of human behaviour.