What You Need to Know to Master the Performance Management Revolution: An Interview with Elaine Pulakos & Rose Mueller-Hanson

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Photo by Ariel Besagar on Unsplash

Performance management hasn’t always been the most popular of topics.

Laden with bureaucratic layers and endless paperwork — many PM strategies have devolved into a shadow of what they could be. In fact, for many organizations PM simply became something they had to endure.

That is wrong. So very wrong.

However —  a revolution of sorts has begun. Organizations such as Deloitte and The Gap have been dishing out some pretty incredible PM changes. Their strategies have very disruptive. Very new age.

However, there is an aspect of all this revolution that you may be missing — and it essentially boils down to this question: Are the strategies being discussed in the mainstream media, the right strategies for your organization?

Whether your organization has decided the precise way forward or if you are simply struggling to translate the revolution into a thoughtful course of action — you’ve come to the right place for the real story. (Hint: Losing ratings isn’t the only agenda item to consider.)

At The Office Blend, we thought it wise to seek out an expert, and we are fortunate to have two  — Dr. Elaine Pulakos & Dr. Rose Mueller-Hanson. Both have been living in and researching the PM space for more than a decade. Their unique take on PM is built upon an evidence-based foundation — which can help HR professionals like craft a tempered response to the PM revolution that works for the specifics of their own company.

I’m all ears.

You should be as well.

BTW, their latest book Performance Management: An Evidence Based Roadmap has just hit the shelves. Click on the cover below for more information.

Let’s start at the beginning.
What is the backstory behind the book — and why did you feel the need to approach this topic at this moment in time?

Dr. Elaine Pulakos (E.P):
Organizations have been knee deep in PM reform for the past few years. This started with the formal performance review being taken to task as a heinous process that demotivates employees. Ratings were likewise maligned as demotivating and have no impact on performance.

Unprecedented numbers of organizations have been transforming their PM processes, including well-known brands such as Microsoft, Accenture, Gap, and Deloitte, among others.

The main idea is to replace formal PM steps — like ratings and formal reviews with informal feedback, coaching, and expectations that would better enable performance in real time. Research by CEB and Google has clearly shown the benefits of “real time” PM on both engagement and business outcomes.

Since 2010, we’ve been at the forefront of arguing for more effective, real time PM practices that focus on driving performance, noting the importance of behavior change to embed regular, informal feedback and coaching that helps employees succeed on the job.

Many organizations, eager to remove the burden of traditional PM, focused their initial efforts on quick fixes that did not end up moving the needle enough to drive real change. There was also an obsession with the question of “what to do with ratings.” This became the focus of PM reform, which was an unfortunate distraction, because it over-emphasized a small and relatively unimportant piece of the PM transformation puzzle – to the detriment of holistic reform.

Initial steps taken to reform PM resulted in less impact than expected, especially among organizations that focused on eliminating ratings. CEB, now Gartner found that employees reported higher levels of dissatisfaction after ratings were removed than when ratings were part of the PM process. This was counter to expectations but not surprising. Removing ratings without having effective feedback and coaching in place risks even less communication of performance information than before – which is exactly what happened.

Companies that focused on regular, effective feedback and coaching generally saw better results. The Center for Effective Organizations examined companies that implemented ongoing feedback, rating-less reviews, or crowdsourced feedback. The combination of all three practices yielded the most positive impact. Ongoing feedback and crowdsourced feedback together were more impactful than either ongoing feedback alone or ongoing feedback and rating-less reviews. These results supported the importance of regular feedback in achieving positive PM outcomes.

We’ve just begun scratching the surface of how organizations need to transform PM to drive performance. As we enter the next stage of PM transformation — we know that quick fixes and removing ratings alone won’t be enough.

The impetus for the book stemmed from being at a point where we can take stock of what we’ve learned so far, to advance the PM transformation journey. Our goal was to capture what organizations’ have experienced and what the research has shown about PM reform — to create a roadmap for Phase 2.0 of PM reform. This would reset our efforts where needed and double down on what’s been shown to work best to drive high performance.

Dr. Rose Mueller-Hanson (R.H.):

I would add that a lot of media stories had been shared about performance management that raised more questions than answers.

Organizations were bombarded with best practices from big organizations. However, the problem with ‘best practices’ is that you can’t just transplant one idea from one company to another. Each company is different, and PM needs to reflect the unique culture of that company. We wanted to provide a truly useful guide that organizations could use to transform their approach. We wanted to offer principles grounded in research that could be tailored to an organization’s environment and culture.

On a personal note, I have been both the victim and perpetrator of performance management. Perhaps no other HR process is as hated as PM. It has a profound impact on people’s lives and happiness at work. I truly believe that PM has the potential to help people perform their best and help organizations succeed. But too often it is used as a substitute for trust. Lack of trust leads to too much control. Which leads to over-engineered rules, processes, and tools. Our hope is that organizations can fundamentally shift PM from the burdensome chore it is today to a powerful driver of performance.

How does your vision of PM differ from what might be going on in organizations currently?

E.P.:
Some organizations are still fixated on the question of ratings.

Although some have successfully removed ratings, the prevailing opinion is that we probably cannot give up ratings in most organizations, especially without robust climates for feedback and coaching in place. The reality is that decisions about ratings do not matter as much as other factors – like the culture for informal feedback and coaching — in achieving effective PM. Although the question of ratings is not the best place to focus PM reform, many organization remain fixated.

A blocker to effective PM is that organizations still think of it as a separate HR process that sits outside of the work. We need to re-ground the idea that managing performance is an integral part of getting work done and shift our focus — and investments — from formal PM processes to embedding effective PM behavior in how daily work gets done.

Setting clear expectations, measuring progress, coaching and providing real-time feedback are critically important, especially in the face of today’s fast-paced change. To succeed and respond effectively, PM behaviors need to be incorporated into the fabric of the organization’s culture as the way work gets done, so they become contextualized and routinized in service of achieving important work goals.

Finally, most organizations have yet to make the shift to view PM as a strategic tool for driving the organization’s goals. So, they neglect to treat PM transformation as the comprehensive change that it really is. Conceived of and leveraged properly, PM drives higher performance for individuals, teams, and organizations. But organizations under-utilize its potential by continuing to treat it as a bureaucratic HR process. We’ve lost our way as a result of over-engineered PM processes that have pulled PM away from work.

R.H.: I would emphasize this last point and add that PM needs to start with the goal of organizations trying to improve performance.

Everything needs to flow from this goal. If organizations use that as a litmus test, it will drive a lot of positive change. For each PM rule or process, organizations should ask “is this going to help us improve performance.” If the answer is ‘no’ they shouldn’t do it.

What do you see as the most important shifts — and where should organizations begin?

E.P.: We identified seven key shifts that are important to driving high performance. Incorporating all of these within a comprehensive PM change effort, will move the needle markedly in enabling high performance.

Shift 1 is that we need to move away from PM that serves too many purposes – like rating, rewarding, providing feedback, defending decisions, and so forth – to PM that is squarely-focused on driving high performance. Too many purposes yields process-heavy systems that don’t end up serving any well.

Shift 2 is that we need to capture PM opportunities within the dynamic workflows when they occur — and not wait for scheduled PM activities later on. This requires giving up control and allowing PM to occur in real time as needed.

Shift 3 is that we need to move from using general competencies standards to job-relevant definitions of success. Competency standards are almost always too high level to drive real performance. Instead, we need to manage performance to nuanced work and role expectations in the given context.

The 4th shift is that we need to move from performance evaluation to performance measurement. Evaluation is a judgment after the fact, while measurement is the ongoing collection of information to track and adjust performance. To drive high performance, measurement needs to be the focus because evaluation comes too late to do any good.

Shift 5 is to decouple expectations between PM and outcomes (e.g., pay, advancement) by explaining how pay and other talent decisions are impacted by factors beyond ratings (e.g., the economy, organizational performance, etc.). This helps avoid disappointment and confusion that occurs when outcomes do not align fully with ratings.

Shift 6 acknowledges that we’ve under-estimated the importance of the environment in traditional PM processes, especially with increasing reliance on teams to deliver products and services. We need to fully examine situational and process barriers to success before blaming to individuals for performance failures.

Shift 7 is one we’ve already discussed. It’s about moving from PM that sits outside work in a separate process to PM inherently embedded in how work gets done.

R.H.: One theme that runs across many shifts is the need to change mindsets. PM is driven by mistrust in organizations. The belief that left to their own devices — managers and employees will fail to do the right thing. They won’t have meaningful conversations, hold people accountable for progress, etc. This mistrust then leads to heavy-handed rules and requirements. Everything must be documented. Everything must fit a certain format so that it can go in the online system. These rules, policies, and requirements lead to a system that is not flexible enough to keep up with the changing demands of a new work environment.

For example, many PM systems have specific rules around goal setting and documenting goals within the IT tool. Goals then must be approved by managers and are “locked down” by HR so they can be used as the basis of ratings. This is all done in the name of holding people accountable for results.

But, it then makes goals hard to evolve to keep pace with new priorities. Organizations need to fundamentally let go of all these rules and control and instead allow people the freedom to set goals, monitor progress, etc. to fit the work.

Thanks to both Dr. Mueller-Hanson and Dr. Pulakos for their time and trouble. I know that I feel better informed.

Please leave any comments below.

Dr. Marla Gottschalk is an Industrial/Organizational Psychologist. She is a charter member of the LinkedIn Influencer Program. Her thoughts on work life have appeared in various outlets including Talent Zoo, Forbes, Quartz and The Huffington Post.

 

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