This is a guest post by Gal Rimon.
In a recent Deloitte survey published here by the Harvard Business Review a large portion of executives did not feel that their current performance management made performance or employee engagement any better. Accenture announced that it is getting rid of annual performance rankings and reviews.
This is what the Deloitte report says:
They, and we, are in need of something nimbler, real-time, and more individualized—something squarely focused on fueling performance in the future rather than assessing it in the past… We’ve arrived at a very different and much simpler design for managing people’s performance. Its hallmarks are speed, agility, one-size-fits-one, and constant learning, and it’s underpinned by a new way of collecting reliable performance data.
What this is telling us is that:
- Performance management needs to focus on future behvaiours
- It needs to be real-time, so that people can tune their focus at work
- It needs to feel fair – focused on the one individual and not “rank and yank”
- It needs to integrate into learning
- It needs to be reliable and not subjective
But perhaps the first element is making performance management more effective. Traditional performance management is time consuming. So much so, that Deloitte found that the hours dedicated to the performance review process, year-end assessments, and the consensus building process of how employees are ranked against each other, added up to 2 million hours every year! But if that isn’t enough, it seems that all this time spent may not even be creating the desired results. Here’s what Deloitte says about rating people in HBR:
62% of the variance in the ratings could be accounted for by individual raters’ peculiarities of perception. Actual performance accounted for only 21% of the variance. This led the researchers to conclude … most of what is being measured by the ratings is the unique rating tendencies of the rater. Thus ratings reveal more about the rater than they do about the ratee.
Where does performance management go from here?
It seems that the most pressing needs are:
- the need for timely, future-focused feedback; and
- The removal of forced rankings
Both of these make sense. Ranking employees creates a system where except for top performers, most employees are the recipients of rankings that are frustrating and make them feel insecure. It’s just like a leaderboard where everyone except the top five feels they are underachieving. Additionally, there is something frustrating about past-focused ratings, people want to know how they are doing now in order to adjust themselves.
A CEB research found that 6% of Fortune 500 companies have decided to stop using rankings, which used to be the standard for human resource management.
In fact Prof Satoris Culbertson from Kansas State University argues that the mere act of receiving a numerical rating on employee performance is perceived as negative feedback.
Timely Feedback: the idea here is to enable the employees to alter and better their performance on the job, instead of in hindsight when there isn’t as much that they can do about it.
Gamification is uniquely suited for this, since it is a feedback mechanism. An important feature of games, and therefore of gamification as well, is that you have the ability to try something again and again until you get it right (think of trying to get through a difficult stage in a video game). In the same way, good feedback enables you to fail, understand what you did wrong, and get to fixing it straight away.
Gamification is timely since it ties into enterprise applications and collects real time data from them, reflecting current performance and not past performance.
Fair and transparent: One of the most disheartening experiences for an employee is to feel that she is being judged unfairly or subjectively. Again, gamification allows for an objective system where everyone is rated on the same parameters and in the same way, since it is based on hard data. This cancels all the emotional and psychological distress associated with feelings of unfairness and allows for a uniform way for the organization to calibrate itself.
Visibility: employees have a need for a clear line of sight between the actions that they do and the larger goals of the company. Gamification is a great way to communicate corporate goals, and to direct employees as to what is next for them.
No rankings: None of us like to labeled. We feel that putting a tag on us doesn’t grasp the breadth and the intricacy of what we’re about. This is the problem with ranking systems. They focus on one dimension of what we are doing at the workplace – how we rank in comparison to our peers. There is no room for an evaluation of how we have improved, which fields we are stronger in than others, etc. By ignoring the employees’ achievements and comparing him to his peers, one can expect a defensive reaction which can undermine the whole performance review process.
Focus on growth: while it may be intuitive to rank employees on characteristics which are relevant to us as managers, such as talent or intelligence, what matters to employees (and to all of us, for that matter) is growth. Therefore, it would be wise to design a system which gives room and emphasis to the strides in improvement and personal growth that the employee has experienced. That’s why leaderboard that show how someone is performing relative to themselves, and not to others, work better. Otherwise, we may witness a natural response on behalf of employees, where they distance themselves emotionally from the performance review process.
Focus forward: The main reason cited by Accenture for discontinuing performance management systems was the lack of focus on the future, and too much focus on the past. Modern performance management is focused on shorter term goals, fast feedback cycles and on-going feedback. Very much like gamification, these systems are trying to help people grow and get better instead of focusing on the past and on a winner-takes-all mentality.
Give every employee the manager treatment: as managers, we are used to being connected to corporate goals. But for non-managerial employees, a lot of their guidelines come in “do” and “don’ts” instructions, quotas, thresholds, etc. These don’t communicate the corporate objective or spirit properly and create a workforce which is performing sub-optimally. Gamification has the ability to trickle down the business agendas and goals to every employee in a non-intrusive fashion, while making it part of the daily routine.
Performance management is changing. New technologies such as gamification are becoming the performance management of the future. The value of these technologies lies in their design and understanding of the people they need to serve, and not in extremely complex or sophisticated technology or algorithms. They are beginning to change the face of the workplace to offer more meaning, satisfaction and a sense of control and autonomy.
Gal Rimon is the founder and CEO of GamEffective, a next-generation enterprise gamification company focusing on skillful change in organizations.