World Monitor Mag, Industrial Overview WM_November_2018_WEB_Version | Page 79

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Only one person typically feels
neurologically rewarded by the PM
exercise. It’s not the high performer, but
the senior executive who oversees the
ranking system. The feelings of status,
certainty, and autonomy that occur when
one is presiding over a forced ranking
system are intrinsically rewarding. Even
the act of categorizing information into
groups, according to one study, activates
the reward center of the brain. That’s
why part of the education effort must
include senior executives, who may not
see the problem because the PM process
reinforces their own cognitive reward
while diminishing rewards for everyone
else.
RethinkingEvaluation
An increasing number of organizations
have been listening to their
employees’ complaints and taking
a more sophisticated approach to
performance management. They are
replacing year-end appraisals and
ratings with in-depth conversations,
often drawing on the myriad data
points now available about employee
and company performance, such as
sales information, organizational
climate survey results, and employee
engagement data. A few firms have
begun to experimentally shift away
from the conventional PM approach.
The companies that have joined this
trend, either in pilots or full rollout,
include Adobe, Cargill, ConAgra, Gap,
Intel, Juniper Networks, Medtronic,
and Sears. One noteworthy example
is Microsoft, which revamped its
entire approach in 2013. It now
focuses evaluation on results that
people deliver together, leveraging
and contributing to one another,
emphasizing continual learning and
growth. The company completely
retired traditional PM tactics, including
ratings, distributions, and annual
reviews.
How do these organizations transform
their destructive performance
ranking practices into a system that
can develop talent consistently and
pay people fairly? They do it by not
throwing out the old approach entirely.
In the CEB study, goal setting was
shown to increase performance by 36
percent. Even feedback, which is often
destructive to learning, can be designed
in a productive way (see “The Problem
with Feedback” ). The structure of
bonuses and the calculation of salary
can also be improved.
As firms make the courageous
transition to a no-rating system, they
tend to choose one of two options.
The first is highly structured types of
conversations regarding employee
performance. The HR department
might lay out five or six topics to
discuss in an annual review, such
as career growth, contribution,
collaboration, or innovation. The
companies also provide guidance on
how to talk about each topic.
The second option is a guided
conversation. Instead of topics, the
company provides a general framework
(and often some training for
managers). The conversation focuses
on the goals people set for themselves
and how they are progressing
toward those goals, along with their
contribution, past and present, to the
company.
In either a structured or a guided
conversation, one key element is to
prime people—both the employee and
the boss—to induce a growth mind-
set. This improves how people listen
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