Do your performance management reviews help or hinder your team

Tuesday, November 1, 2016

AME Author, 2017 AME Boston Conference Chair, Lean Leadership Resource Center, Inc.

Many times an employee has come to me for support after being rated “average” in a performance review. They are deeply discouraged by the rating, and even more so when told of areas they need to improve.

Most employees put their hearts and souls into their work and being “average” or “less than average” leaves them feeling deflated and hurt.  Sometimes it has led them to look for another job, one in which they would be “appreciated.”

Since the majority of traditional Performance Management Systems utilize some variation of the bell curve ranking system, that leaves a lot of people (80 – 90%) being told they are “Average” or “Need Improvement.” What impact does this have on their motivation and engagement?

One of the managers who left a lasting impression on me was Gavin, who refused to follow the bell curve.  His was one of 20 facilities required to submit performance review ratings in a bell curve.  However, Gavin rated his entire team as above average.

When I called to discuss it, Gavin told me his team’s level of improvement during the year was higher than ever, and they were excited to do more. 

That’s not average!

He refused to carry out a directive he knew would damage his team’s morale and the facility’s results. He explained that his approach was to ensure each member of his team knew they were talented and appreciated. At the end of the conversation he asked, “Which would you rather have: good results, or have me follow the company rules about performance reviews?”  Not surprisingly, we left him alone.  

In his book, Out of the Crisis, Dr. Peter Deming lists “evaluation of performance” as one of the seven deadly diseases.  It’s not that Deming didn’t understand why reviews were done or that they made logical sense; the issue was actual impact.  From my experience, I’d have to agree.

The intent of reviews and their actual impact is vastly different. This conflict can be tremendously wasteful of employee engagement and can clearly impact turnover.

Yet, when it comes to applying Lean Principles to an organization, Performance Management systems are often the last areas to be considered in terms of their impact on the team. Rarely do managers consider how it does or does not drive an “improvement-based” culture. This is surprising since it is an area that affects the motivation and mindset of all employees and in turn impacts the effectiveness of Lean Initiatives.

Three Key Steps to Re-align your Performance Management System

Following are Three Key Steps to take, when considering making revisions to your Performance Management System and how it aligns with your improvement efforts.

1. Evaluate your system against Lean principles – As with all forms of improvement, first begin with some type of evaluation, which is often better done as a team.  Here are a few examples:

  •     What are the key elements of the culture you want to create: Root cause problem solving, team work, customer focus, business skills, etc.?
  •     Does it inspire your people to do more? Expand their engagement in the business?
  •     Does your system help reinforce key ideas or does it send conflicting messages?
  •     If Lean Principles encourage an open, no-blame environment where employees are free to bring up issues without fear of retribution, does your Performance Management System recognize errors as an opportunity or an area for judgment on the individual?

​Include feedback from team members (Voice of the Customer).  In order to facilitate change, there needs to be a foundation that confirms that change is needed. Survey the workforce to get their opinions on the current system and solicit ideas for improvement.

2. Create discussion and consider options – As you have in many areas of your work, reach out to benchmark other organizations for best practices. Seek out written articles and books written on the topic of Performance Management. Dr. Deming is a tremendous resource for material for one end of the spectrum.  There are many others that have differing viewpoints, such as Forced Ranking. Having conversations helps people think more deeply about the impact of performance management and potential “unintended” consequences of some approaches.

Based on areas of agreement, brainstorm ways to make improvements, such as - Increase the amount and quality of the feedback. If you are presenting this information to “others,” make suggestions on what would be an improvement and why it will drive better results. Make sure that the argument is one that offers a solution and doesn’t just identify a problem.

3. Take change in steps, and consider the timing of changes – Similar to other aspects of improvement, you can experiment to see what difference new approaches make on employee morale and motivation.  Since the Performance Management System is woven into the fabric of the organization, it can take time to make a change. Since it’s getting late in the year, consider your timing.

Review Systems are best changed well before they are in broad effect.  As we approach the end of this calendar year, it’s not too late to change the approach for 2018 and potentially some impact on 2017.  This year’s review might be a great time to gain some Voice of the Customer feedback.

By aligning these areas of the organization to work together instead of against each other, a Lean culture will continue to grow and thrive.