World Monitor Mag, Industrial Overview WM_November_2018_WEB_Version | Page 81

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system decoupled the question “Should
you stay here?” from the question
“How can you grow here?” This meant
that among those designated as
J-Players, the conversation could focus
on the individual’s professional and
personal growth, without the anxiety of
wondering whether he or she would be
ranked poorly.
A third trend we are seeing is the
effort, at many companies, to reframe
the entire PM process as something
else. “An engineer in our Bangalore
Excellence Center,” says Steven Rice
of Juniper, “pointed out that our
performance management process was
a violation of our values, because the
forced ratings didn’t enable leaders
to authentically provide feedback or
truly trust their judgment to administer
rewards.” That led Rice to realize
that they could not fix the system
piecemeal; Juniper had to imagine a
whole new kind of practice, one that
“delivers the benefits without the
unintended negative consequences.”
Since 2011, Juniper has not given
ratings to employees or kept
documents of ratings. It also
eliminated forced rankings. The new
method focuses heavily on regular
quality conversations between
managers and employees, using
the structured conversation model.
Overall, Juniper has seen participation
and satisfaction skyrocket among
employees and managers. On the
semiannual day of evaluation (known
as “Conversation Day”), more than 88
percent of the participants reported
that their conversations were “helpful”
or “very helpful.” “We have increased
differentiation and alignment of
rewards against relative contribution,”
Rice says. “Eighty-seven percent of
the employees reported that they
were willing to give extra discretionary
effort, and 79 percent believe they can
do their best work at Juniper.”
At Gap, managers conduct monthly
conversations in a new performance
management process called “Grow,
Perform, Succeed.” (Its abbreviation,
GPS, is also the company’s stock
symbol.) By redesigning its PM system
and giving it a new name, the company
repositioned the process as less of a
threat. That in itself is an important
step to better conversations.
Sharon Arad, a Cargill executive,
describes how the company made this
kind of shift after reviewing its PM
system a few years ago: “We found
the system failed to generate quality
conversations, leaving employees with
a [ranking] that many viewed as a
deficiency statement. In the end, the
ratings given were not a trustworthy
indicator of the actual status of
performance or engagement.”
Many Cargill leaders wondered whether
removing the ratings would bring
about more desirable results and
better conversations. So they set up
a no-rating pilot of several thousand
employees for three years. Every
year Arad’s team compared the pilot
group’s feedback to that of a random
sample of rated employees. “Overall,
90 percent of the no-rating pilot
participants reported, year after year,
that their experience was positive,”
Arad says. This was in stark contrast to
the feedback that people normally gave
about their performance management
experience. Finally, this year, Cargill
adopted the no-rating approach for its
entire organization.
The results of no-rating systems
are dramatically better than their
rating and ranking counterparts—
in satisfaction, retention, and
engagement scores, which have been
shown to correlate to organizational
performance. We believe the number
of companies operating this way will
increase dramatically, to become the
majority. It would be nice to think that
eventually the ideal of labeling people
numerically will be seen as a blip in the
history of HR. Giving people a rating
might be a useful tool in a company
with a lot of “fat,” where it makes
sense to shake people up and create
competition, but in many of today’s
lean businesses that demand a great
deal from their employees, we need a
better model. We need to improve the
quality of the conversations we hold
with workers. It’stimetokillyourperform
anceratings.
Resources
1. Corporate Executive Board Corporate
Leadership Council, “Breakthrough
Performance in the New Work Environment,”
2012: The CEB study cited on fairness and
goal setting.
2. Satoris Culbertson, Jaime B. Henning, and
Stephanie C. Payne, “Performance Appraisal
Satisfaction: The Role of Feedback and Goal
Orientation,” Journal of Personnel Psychology,
2013, vol. 12, no.4, pp. 189–95: On the
negative reactions to numerical rankings.
3. Carol S. Dweck, Mindset: The New
Psychology of Success (Random House, 2006):
Primary source on the fixed and growth mind-
sets.
4. Kurt Eichenwald, “Microsoft’s Lost Decade,”
Vanity Fair, Aug. 2012: Includes reporting on
the impact of forced ranking.
5. Leslie Kwoh, “‘Rank and Yank’ Retains Vocal
Fans,” Wall Street Journal, Jan. 31, 2012:
Quotes executives who love, hate, and tolerate
conventional performance management.
6. Jennifer A. Mangels et al., “Why Do Beliefs
about Intelligence Influence Learning Success?
A Social Cognitive Neuroscience Model,”
Social Cognitive and Affective Neuroscience,
Sept. 2006, vol. 1, no. 2, pp. 75–86: Source for
“the problem with feedback.”
7. Elaine D. Pulakos et al., “Performance
Management Can Be Fixed: An On-the-
Job Experiential Learning Approach for
Complex Behavior Change,” Corporate
Leadership Council, 2014: Source of statistics
about dissatisfaction with performance
management.
8. David Rock, “Managing with the Brain in
Mind,” s+b, Autumn 2009: Early publication of
the full SCARF theory.
9.For more thought leadership on this topic,
see the s+b website at: strategy-business.
com/organizations_and_people.
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