Episode 22

 

[00:00:00] James: hello, I'm James.

[00:00:04] Jimmy: Hi, I'm Jimmy.

[00:00:05] James: Welcome to A Job Done Well,

[00:00:08] Jimmy: the podcast about the world of work and how to improve the daily grind

[00:00:12] Jimmy: Afternoon, James,

[00:00:13] James: how are you doing?

[00:00:14] Jimmy: I'm doing well, doing well. So today

we're going to discuss the dreaded performance appraisal systems.

[00:00:22] James: favourite topic.

[00:00:23] Jimmy: My one job for the next half an hour is to keep you tightly leashed. Otherwise we'll be here for two

[00:00:30] James: We've

[00:00:31] Jimmy: to you rant.

[00:00:32] James: decided that Jimmy is going to edit this episode so that my and another thing which goes on for 40 minutes gets cut down to 20 seconds.

[00:00:40] Jimmy: Anyhow, we are going to explore the negativities surrounding some of these systems. If they're so negative, why do many organizations persist with them? How they can be evolved. And if you are caught up in the middle of one, how to survive or maybe even thrive? Maybe.

[00:00:59] James: yeah, so what we've been up to

[00:01:01] Jimmy: Well, I was away in Northumberland last week on holiday.

[00:01:04] James: right you have to take your passport or were you okay?

[00:01:06] Jimmy: Well, I , nearly got a nosebleed. And you know, most people understood what I was saying. So that was all successful. How about you? What have you been up to?

[00:01:13] James: I bought mrs. Law that a French, baking course bbc maestro recommended to anybody who's interested in french and Baking, but i'm just getting fat and happy. It's fantastic She's baked all sorts of things, but it really is quite interesting It comes back to the whole job done well thing, but it's all about savoir faire, isn't it?

Do you know how to do or do you not know how to do it and the tricks and tools of the trade? So then go on then talk to me why are we talking about performance appraisal?

[00:01:39] Jimmy: Well, in all the organizations we worked in, a huge amount of effort goes into the process, right from, you know, discussing and setting objectives, reviewing performance. 360 feedback, writing epic self

[00:01:56] James: I was quite good at epic self appraisals. Pages of it.

[00:02:00] Jimmy: three

[00:02:00] James: Yeah.

[00:02:01] Jimmy: identifying your strengths and development areas, comparing performance,

[00:02:06] James: validation sessions. That's my

[00:02:08] Jimmy: validation, calibration, whatever you call it, deciding on people's ratings, their pay, their bonuses, writing and delivering and reviews

[00:02:17] James: and you have on Yeah. And generally pissing off all your stuff.

[00:02:22] Jimmy: We'll come to that in a moment. But, I think the key question is, all of the effort, does it give any return on investment? Do

[00:02:29] James: Do they motivate and improve in performance? Because I suppose that's what it's there to do.

So there's lots of articles and research about it. But this is just our take on the subject. We have between us worked for, I don't know, 10 organizations, something like that. All of whom have done it slightly differently. Yeah, and so there are good things we've seen and bad things. So that's what we are going to talk about.

Then also I suppose there's the question, if you had a blank piece of paper, And you were redesigning your own performance system. How would you do that?

[00:02:58] Jimmy: So, yeah, I think it's something that we feel strongly about, but we're not HR experts. But we believe that it can be worked with and you can maximize the positive impact that a system can have and minimize the negative impact.

[00:03:14] James: Think some of the HR experts who put these in they're not experts either mate, but anyway

[00:03:19] Jimmy: fair point. But, we did a little bit of research and looked at the history and background . And it was quite interesting really, because did you know James, that some historians credit the 3rd century Wee Dynasty to E. , they were the first to employ performance rating

[00:03:37] James: But, we what they

We've got the Chinese to 9.

[00:03:41] Jimmy: what they did is they had a nine point scale to rank family members performance in everyday life. That's what, that's what the emperors did.

[00:03:49] James: I've tried that. I've tried that with Mrs. Lauder. Yeah.

[00:03:53] Jimmy: bet that went well.

But they really then grew in prominence after World War II.

And it's interesting, we've seen quite a few things, , performance proposals or corporate jargon that came out of , the workplace after World War II. But they really had their heyday GE was led by Jack Welsh and they had a really rigorous system, a 20 70 10 split.

[00:04:14] James: split.

[00:04:15] Jimmy: That was 20 percent of the people are top performers and stars. And you reward them. 70 percent of the people aspire to be top performers, you just leave them alone. And then 10 percent of the people are the bottom performers, and you get rid of them. And theirs was a very draconian way of doing things, but, whilst I don't think either of us would subscribe to it, they did grow over that period of time from being a 12 billion company to a 410 billion

[00:04:43] James: Yeah, I wonder how big they could have been if they hadn't got the system.

[00:04:47] Jimmy: know, 410 billion dollars ain't bad. But, research says that

A

third of companies say that their performance appraisal system makes performance worse. Only a quarter actually say their systems are effective of those people who are subject to this, only 14 percent of people say that it really improved their performance. So, , you've got to ask yourself, , where's the value?

[00:05:15] James: Yeah, also it makes you wonder who's concocted those statistics.

[00:05:18] Jimmy: Certainly not somebody who's in favor of performance appraisals. Maybe it's coming from your stable,

So what, is the problem you have with performance appraisal systems? Why do they get So much bad press?

[00:05:29] James: the problem I have is that the idea is to improve

[00:05:35] Jimmy: the

[00:05:35] James: That is the whole purpose of the performance appraisal system. However, I honestly think it destroys performance rather than improving it. Particularly When you try and bundle everything together, so when you get into the whole feedback and Rating and paying people and targets and the whole nine yards.

I think it just drives a whole load of dysfunctional behavior

 It's a great point, they're trying to be the panacea for everything to do with , managing performance and managing people, And it's just nonsense to think that you can , do it that simply.

[00:06:15] James: I wonder why anyone would think that giving somebody a ranking or a rating and then paying them accordingly Why would you think that would improve performance? That's the real issue for me.

I read a lovely story the other day. It was about a kid who had he was at school in the States and they have their annual science fair. And apparently, when they get to their fifth form or whatever it is now they had to do their, their science presentation.

But any other child in the school could have entered it. And so this kid , he was first year old money. What would that be? Year six is it now? I forget. Yeah.

[00:06:54] Jimmy: First year Old Money, first year. And then, he got really quite excited about this. So

[00:07:02] James: So old money, first year. And He got really quite excited about this. So he did his science project and he entered his science project into the into the fair.

and then he went to see and he found that lots of the projects had got ribbons and prizes and being rated as extraordinary and whatever.

And then he looked at his, and obviously because it was a first year, his wasn't terribly good compared to the others, and he'd been given the inconsistent rating.

[00:07:27] Jimmy: any rating.

[00:07:29] James: he just stopped. He never entered another one at all . And so for me this whole thing about ranking and rating people just just demotivates them.

[00:07:37] Jimmy: And it tends to be quite arbitrary, , you don't really think about it once a year. You come round to the appraisal times and all of a sudden you start to think about it and ranking people against each other and all that sort of stuff.

[00:07:50] James: And my personal experience is, you know, I have gone from being Mr. Golden Balls to the son of Satan. Within about six months, and I didn't change, my performance didn't change, it's just I had a different boss. So really it's all about perception, isn't it? It's not about performance at all.

[00:08:06] Jimmy: , we touched on when you get into situations where you compare performance and you have these big meetings with lots of senior managers sitting around talking about

[00:08:15] James: can see daylight and performance there.

[00:08:16] Jimmy: Yeah, exactly. And, and, but it does become more about the, , your ability to perform in those situations than, , the actual person's performance that year. If your manager can deal with that

[00:08:28] James: Yeah, yeah.

[00:08:29] Jimmy: slightly gladiatorial,

[00:08:31] James: Arena.

[00:08:32] Jimmy: arena, then, , you do better.

[00:08:34] James: Yeah. And then I think the final thing is, and we touched on it earlier, , the whole thing is linked together and underpins all the incentives and pay systems. And I just think it causes more damage than good.

[00:08:46] Jimmy: I think, , you look at effort versus return.

, lots of effort goes in, . Can you imagine, , if back to the stats, if, if only 14 percent of people say that all that effort is worth

[00:08:56] James: Yeah.

[00:08:57] Jimmy: you know, really,

[00:08:59] James: percent of people are just wasting their

[00:09:00] Jimmy: exactly. So if you put that effort in elsewhere, where would your company be?

[00:09:05] James: And when you think about it, it's probably a good couple, three weeks worth of effort every year.

[00:09:10] Jimmy: However, James, let's try and find some positives

[00:09:13] James: Well, yeah. Okay. And there are some positives I think. Yeah.

[00:09:17] Jimmy: because I think the principles that sit behind managing performance, the desire to improve performance, the setting expectations in advance and agreeing what success looks like, investing time yourself on your managers in, , performance and your development, your staff's development.

[00:09:38] James: Getting 360 feedback I think is really valuable.

[00:09:41] Jimmy: Really hearing , how you're doing in other people's eyes. And understanding what's valued in performance terms and what are the standards around here. And the other thing, which I know doesn't always work

perfectly, but often systems do focus on the how you go about doing things as well as the what.

So not just the results, what are the ways of working, the competencies are about the how. .

[00:10:03] James: And my personal opinion is that having a conversation about what you're trying to achieve, how well it's going, what different people think, what you can do to reset, I think that is all hugely valuable. It's just when you weaponize it with a whole load of carrots and sticks, that's when I think it becomes very demotivational.

[00:10:22] Jimmy: .

It's ultimately in the execution of these things rather than the principles. Which is, , as we've touched on this podcast in the past, that's a common theme. You know, the principles make sense.

People execute in a way that doesn't really support those

[00:10:38] James: Yeah, not looking and understanding what the outcome is of what you're trying to achieve.

[00:10:43] Jimmy: that's probably why, , many organizations are moving away from traditional performance appraisal structures. So,

I think if you're in a position where

, you can influence the overall structure of an organization as, you know, as we have been in the past.

It is worth thinking about certain things. , big organizations like Microsoft, Accenture, Deloitte, even Netflix, even GE, who were the they were the flag bearers of this. They've all moved away from traditional systems.

[00:11:15] James: And

so I think the first question is, imagine you own the system and you were going to brown paper this and start from scratch, what are the things you would do differently?

 For me, it starts with purpose. What are you trying to achieve?

[00:11:31] Jimmy: then it's ensuring leaders are, , really managing performance effectively and consistently. So are they getting the best out of their people?

[00:11:41] James: So really, it's about

having a conversation about performance. Yeah. Yeah. Providing feedback.

Deciding what could be done to make performance better. Investing in

[00:11:55] Jimmy: so people's development,. So these are all sensible leadership tasks, essentially.

[00:12:00] James: Yeah. And so that review process really, I think, is very, very strong and important. Yeah. think the problem becomes when we start to tie a whole load of other things to it.

Yeah.

But if you don't do it, then you do need to have ways of managing, yeah, so what's your comp and bends policy, for example.

Yeah, so these things need thinking about, and then maybe decoupling. Yeah,

[00:12:24] Jimmy: and

certainly when I worked in a, an organization where we actually as, as an exec team decided that we were going to radically change this. So to your, saying, brown paper it, I'm not sure I really want to know what that's all about, but put that image aside. Some other things that we found it was certainly, it was all about the quality of leadership.

So what were the conversations that took place between Individuals and in teams and therefore did the leaders have the right capabilities to be able to have those conversations, you know, really talking about people's performance, really helping them understand, really coaching them to improve. That was really pivotal.

The other thing they try and solve everything with the performance appraisal system. So if you try and create the perfect system.

, it doesn't exist. , so you'll never get there. So it was about progress, not perfection. So we started making changes, not knowing the answer to absolutely everything that we were going to ever do with performance management, but really getting rid of some of the key things that caused issues, , trying out some stuff, testing some things, seeing what works and what doesn't work.

[00:13:39] James: Yeah, so what sort of things did you get rid of?

[00:13:41] Jimmy: result? A great example We changed , the way that you rated performance. So you didn't have the big end of year fuss. It was an ongoing, you know, appraisal of, of, of people's performance. You didn't get the ratings at the end of the year

One of the things that was really powerful was how people got a bonus and it wasn't based on their individual performance, it was based on the organisation's performance and we were quite transparent about what good looked like for the organisation's

[00:14:12] James: real pet peeves with performance management and the way it is, is it just tends to make things One of my real pet peeves is it just makes things way you want to run a

[00:14:25] Jimmy: yeah, yeah. And we went from purpose of the organization. Here's what it looks like. And here's what means this year. Here's how we can know we're doing a good job. And the measures that we put up for, you know, what could look like. Everyone in the organization was interested in how we were performing.

And interesting in hearing how everyone contributed towards it and thinking about what they could do to contribute towards it. made a massive difference because all of a sudden you're working towards one agenda and your bonus is going to depend on how we do rather than how I do.

[00:15:01] James: ? So did it work? How do you know if it worked or not?

[00:15:04] Jimmy: Well,

certainly I guess the the things I'd look at one is the feedback of the people involved so it people's feedback was positive

[00:15:13] James: there was

[00:15:13] Jimmy: there was a whole lot of time freed up from doing all the bureaucracy around performance appraisal systems. Ultimately, the organization's performance improved, which is, , the proof of the pudding is in, in the actions.

Now, that would be through lots of

[00:15:28] James: key things

[00:15:29] Jimmy: but one of the key things would have been this, without a doubt. And

[00:15:33] James: doubt. And I think for me, that's all important. , you get a lot of business processes are enforced, but nobody actually measures to see if they've worked or not.

Yeah. So if you don't measure it, how do you know whether it's a good thing or not?

.

[00:15:45] James: so if you want to change your performance management system, really it's a question of defining what you want it to do.

Getting the feedback, evaluating the parts of it, and then deciding how you're going to do it differently.

[00:15:59] Jimmy: parts of

[00:16:02] James: out.

[00:16:04] Jimmy: then deciding how you're going to do it. How do you work within your organization's existing system? So, have you got any ideas around that?,

[00:16:20] James: before we go into that, we should hear from our sponsor

[00:16:23] James: We cover a whole host of topics on this

[00:16:26] Jimmy: Purpose to corporate jargon.

[00:16:28] James: but always focused on one thing, getting the job done well.

[00:16:31] Jimmy: Easier said than done. So, If you've got Unhappy customers or employees Bosses or regulators Breathing down your neck

[00:16:40] James: of control and your costs are spiraling and that big IT transformation project that you've been promised just keeps failing to deliver. So

[00:16:50] Jimmy: Can help if you need to improve your performance, your team's performance, or your organization's.

Get in touch at jimmy at jobdonewell. com

[00:17:00] James: Or james at jobdonewell. com.

[00:17:03] James: So where were we

, I can give you some good advice, advice that I didn't

[00:17:08] Jimmy: take. Well, that's probably, probably a

[00:17:10] James: so it's like that song, isn't it? Don't fight the law because the law will win. Yeah, and I invariably fight the law.

. But it's just a waste of energy. Yeah, if that's what your organization wants to do more for them, that is pointless. You're trying to fight it. I think the question is, how can you work with it , to the best of your ability?

[00:17:29] Jimmy: best of your ability? Also, as we touched on, the principles behind some of these things are positive. So, can you find value in the system?

Can you make it work for you? , ultimately, you're going to invest time, your time, and your team's time in development.

So, how do you do that

[00:17:50] James: I think,

[00:17:51] Jimmy: And , in my experience,

I think it is just being a really good leader of teams and , are you doing the right things by them, regardless of the process. Are you talking to your team about their performance?

Have you got a feedback culture? Are you investing time in one to ones, huddles, coaching your teams, all those good stuff.

[00:18:11] James: and all these things are really good. I mean, I have worked for people , where they seem to do performance management by telepathy, and nobody knew what the hell was going on. So having those open, honest conversations, I think is really powerful.

[00:18:22] Jimmy: And I think if you go back and listen to some of our leadership podcasts that we've done with Amanda as well, that helps. , what does great leadership look like and some leadership styles you can try, but just do that within the confines of the system you're working with.

[00:18:37] James: looking

[00:18:39] Jimmy: I think another way of looking at it, which I think my strategy was slightly different from yours, whereas you fought it, I looked at how I could, , gain the system. So what are the ways , to get your advantage out of it? If it is about your performance in the arena.

To make sure your performance is, is, good ,

[00:18:57] James: know,

[00:18:57] Jimmy: , you had a good example where,

you know, effectively you were cheating the

[00:19:02] James: cheat it, something rotten. Well, when you've got hundreds of people working for you, and there

[00:19:07] Jimmy: working for

[00:19:08] James: a fixed proportion that are going to be told they are below standard and, and, and, and you know you're just going to upset them, how can you get around that?

Now, I think it's important, if you have got people who are below standard, you should address that. But, don't wait until the end of the flipping year to address it, you need to have the conversation now, yeah? So we were very clear about people who were in that position, and there were the conversations held, but then, , we used to do all sorts of games to move people out of buckets one way or another, you know, if somebody's left, they go into the below standard bucket, if somebody Was promoted within the year they go into the below standard bucket because they can't be the standard for the next year All sorts of things just to take the sting out of it

[00:19:52] Jimmy: , once you are managing performance effectively, then working out how you can game the system is just, it's the obvious thing to do, isn't it?

, other things you can do when you change organizations check That you're not jumping out of the frying pan into the fire because different organizations do play these game very differently And I am guilty of going from one place where they were they played it But they played it very softly to somewhere where they were very stringent and it just yeah, I shouldn't have moved It was a mistake on my part.

[00:20:21] James: So i'd check it out

[00:20:23] Jimmy: very softly to someone else.

How I was treated through the process easy for me to say But I definitely learned that you know, it is it is a process It isn't personal to you and how can you , get your mindset in the right way To that enables you to be okay with what's going on around you at the end of the day

If it's that bad that offensive and causes that many problems that much stress that much hassle

You leave

[00:21:05] James: And, yeah, you've got to ask yourself your point about don't take it personally. Who are they to say what standard you are? What do they know?

Yeah, so

I really, yeah, treat it like water off a duck's back.

.

[00:21:18] James: . Right then, so maybe , we rambled a wee bit about that.

I think I did quite well because I'm not dribbling too much, it's frothing at the mouth.

[00:21:24] Jimmy: you kept remarkably calm,

[00:21:27] James: so let's summarize that then.

[00:21:30] Jimmy: we've had some examples of where performance appraisal systems generate

real discontent, but equally, , you can find some value in the principles that sit behind them, particularly The leadership examples that we talked about.

[00:21:45] James: Yes, I think having a good conversation about performance and getting the feedback is all important. However, when you start putting subjective ratings, forcing distributions and linking it to payments, then I think you're trying to do too much and it just causes mayhem in an organization.

[00:22:03] Jimmy: we should be clear that this is, a system. And ultimately systems can be improved.

[00:22:10] James: Yeah.

And although that's maybe not the easiest of things to do it is worth a go. Sit down and work out what you want this system to do for you and then change it and test it. Measure to see if it's getting better.

[00:22:24] Jimmy: if you can't change the system, figuring out how you work effectively within the system to make sure you get the right outcome for you as an individual But also the right outcomes for your team and make sure that you minimize the negative impact the system has on your team.

[00:22:41] James: Yeah, I think you should manage the people who work for you the way you would like to be managed yourself. So be a good leader.

[00:22:48] Jimmy: And we've got some helpful hints and tips in previous podcasts to go back and have a listen . .

Ultimately, though, it is a system, and quite often systems operate in very suboptimal ways, so don't take it too personally.

[00:23:04] James: Yeah, as I say, this too shall pass.

[00:23:08] Jimmy: Hopefully you've enjoyed this week's episode. If you've got any comments, I'm sure there's a few people who have been on the receiving end of performance appraisal systems. , , or perhaps some HR experts who want to tell us some other ways of doing things, then please feel free to drop us a line at jimmy at jobdonewell.

com.

[00:23:26] James: or james at jobdonewell. com

[00:23:30] Jimmy: Thanks everyone,

Enjoy your week.

[00:23:31] James: Cheers If you'd like to find out more about how James and I can help your business, then have a look at our website at ajobdonewell.Com.