Performance Management, to do or not to do?
What is the most rigorous law of our being?
No smallest atom of our moral, mental of physical structure can stand still a year.
It must grow; nothing can prevent it.
Mark Twain –
Recently, Performance Management as an HR Practice has been under the microscope as high profile organisations elected to stop the practice – removing ratings and putting the focus back on improving the quality of performance conversations.
Surveys conducted across industry sectors indicate the following:
• HR Professionals:
• 90% feel that ratings are not accurate
• Only 23% rate their Performance Management process as ‘above average’
• Business Managers:
• 95% are dissatisfied with Performance Management process
(Rock, Davis and Jones. “Kill your ratings”. Strategy and Business. August 2014)
There are two primary reasons for considering a change to performance management philosophies and systems:
- The changing workplace and workforce dynamics demand a fresh approach
- The need to continue growing in challenging and uncertain contexts
Performance management systems need to support the development of a highly engaged, motivated workforce that aligns with company growth strategies. Existing Performance Management systems do not seem to achieve this. There is poor ROI and a misalignment with organisational objectives in terms of encouraging team collaboration and a growth mindset.
WHAT DOES THE RESEARCH SAY?
Neuroscience is currently significantly increasing our insight into what drives human behaviour and is a tangible and concrete science that can inform future performance management strategies and systems. The two major insights that research in this field provide are the following:
- Performance ratings trigger a threat response in the brain.
When stressed, people often find themselves in the midst of a natural “neural hijack” where a centre in the limbic system declares an ’emergency’ and recruits the rest of the brain for its agenda. In the brain’s architecture, the amygdala is like the alarm that sends urgent messages to every part of the brain – triggering the release of “fight or flight” hormones and mobilising the centres of movement. Anatomically, the emotional system can act independently of the neocortex, meaning that emotional reactions can be formed without any conscious and cognitive input – consequently our responses can often be “irrational”, based on no real threat or danger. Our brain does not only set this response in motion during times of physical threat, but also (and mostly) when we perceive a social threat.
Being “rated” can trigger this social threat on many levels. A focus on past performance and ratings activates the “threat” responses in our emotional system, whereas a focus on the future and supportive conditions activates “reward” responses and analytical/thinking system in the neocortex.
- Performance ratings are informed by unconscious bias
From a Neuroscience perspective, bias is actually a cognitive ‘shortcut’ to save energy. Although our brain is fast and agile, it comes at a high energy cost, and therefore its capacity is finite in terms of how many threads of logic it can manage at any given time. The brain is much faster when presented with information that “matches” established patterns of thought, than when the new info does not match. When that capacity is stretched and energy needs to be expended to create new neural pathways,, the release of hormones from the amygdala causes actual physical and psychological discomfort. Therefore, the brain prefers to conserve energy by automation and habit formation so that we don’t have to think about what we are doing (which also implies that stressing about things can become a habit).
As soon as the pathway is established, the brain will attempt to conserve energy by avoiding “cognitive dissonance”. Neuroscience has proved that even when a person is confronted with ideas that conflict with preconceived ideas, we experience anxiety and stress. We avoid this feeling by deleting, distorting or generalizing information to ensure that it “fits” with pre-existing pathways. It has been found that avoiding cognitive dissonance is as desirable as food, water, and safety in terms of brain priorities and responses. People can possess attitudes, stereotypes and prejudice in the absence of intention, awareness, deliberations and/or effort, e.g. when someone is part of what is considered the “in group”, empathy is activated, and not otherwise.
- Performance ratings encourage the development of a fixed mindset
A fixed mindset translates into behaviour where individuals feel the need to “prove themselves”, whereas a growth mindset fosters behaviour where individuals are supported to “improve themselves”. The following table from the Neuroleadership institute illustrates the difference between the two mindsets:
SO WHAT DOES THIS MEAN?
Organisational growth and agility means internal resource growth and agility. The objective of Performance Management systems thus needs to be to encourage collaboration, energise teams and enable growth. The current trends amongst organisations (e.g. Deloitte, Accenture, Microsoft, Cigna etc.) that have moved away from performance ratings include the following:
- The “rebranding” of performance management to “check-ins”
- Performance Management facilitated through regular coaching conversations
- Conversations are about growth and a focus on goals (“on track” vs. “off track”)
The results at this stage indicate the following:
- Increased quality and quantity of conversations between managers and employees
- Greater collaboration towards goal achievement
- Increased engagement
- Only 1 in 52 companies surveyed are inclined to revert back to the old approach.
- 360 Leadership Survey
- Career Path Appreciation (CPA)
- Change Management
- Employee Engagement
- Flow and Engagement
- Organisational Design
- Performance Management
- Personal Development Analysis (PDA)
- Structural and Talent Analytics
- Talent Management