Bootstrap Leadership Blog

Not sure if you’ve noticed, but performance management is getting a second (or third or fourth) look these days.  Without question one of the most controversial organizational processes of the last 50 years, performance management is getting some interesting recent publicity.  What started as a way to differentiate performance for the purposes of applying compensation morphed into a sort of “feedbackapolooza” with the advent of competency ratings and the balance of “what” and “how” (results and behaviors).  This was received as mostly good news in the Human Resources arena, as it helped us reward and recognize teamwork and civil obedience among the workforce.   

Personally, I’m a fan of the equally weighted “what” and “how” model, but now it looks like the pendulum might be swinging back a bit.  In last week’s Wall Street Journal, I read about a recent Hewitt Associates study that found 11% of manager’s and 10% of other employees’ performance reviews were being based ONLY on results (using objective measures).  These numbers were up from 7% and 8% respectively in 2005.  The survey further stated that 33% of all executive’s ratings were derived solely from results, which is up from 20% in the 2005 survey.  OK, so these might feel like small moves, but they do represent a bit of a trend. 

Two new books are also finding their way into the performance management discussion.  The first is called One Page Talent Management (Effron and Ort, 2010) which presents a case for framing the behaviors any employee is being held accountable for as an actual goal – one that can be measured in terms of progress toward completion, just like results objectives (however subjective this assessment might be).  In other words, we might not rate every employee on the same set of 7-8 behaviors, but rather set up unique behavioral elements of the performance appraisal that fit each person’s specific development plan (determined during the goal setting process).  In a sense, this probably tips the scale a little bit back to results, as it seems reasonable to include only 1-2 of these “how” development efforts per year, whereas you might have 3-4 “what” goals.  An interesting approach to be sure (btw, this is a terrific book with lots of solid ideas).   

The second book is Get Rid of the Performance Review! (Culbert and Rout, 2010) and it has a simple premise that really pushes the envelope – it calls for the unequivocal end to performance reviews as we know them.  Culbert, a UCLA management professor, teams up with Wall Street Journal senior editor Lawrence Rout to tell us why performance reviews are bogus and how they undermine both creativity and productivity.  Culbert and Rout do offer an alternative - the performance preview, which is designed to hold people accountable for their actions and their results and give managers and their employees the kind of feedback they need to improve their skills.  It’s especially intriguing as a tool for teams.

One of the cool things about working in leadership development is watching the macro trends within HR.    I feel the sands shifting with performance management and the performance review process… it wouldn’t surprise me a bit if we see a movement back toward a results focus, or away from annual reviews entirely. 

This is one I’d like to here from you on – what’s your company doing with performance management, and do you have any innovative ideas?  Or what do you think of the premise of doing away with it altogether?

Yesterday, I spent the day with a client that has a compelling corporate mission, one that drives everything they do.  It was inspiring to hear them talk about their goals and objectives, because everything was grounded in what it meant for their customers and the greater good.  It was clear that these people knew why they were working, and what achieving their goals meant in terms of making the world a better place.

On the way home, I got to thinking about their goals and the stark contrast with most corporate performance goals and objectives.  Usually, our performance goals represent just the base result we’re trying to achieve. Typical examples might include:  

• Meet your budget
• Achieve xx % sales growth
• Design and launch a new process, program or tool
• Achieve xx level of customer satisfaction

Think how much more powerful objectives could be if helped our people dig a little deeper for the second level of  purpose. What if every performance goal had two levels of intent – the actual result, and the compelling, emotional purpose?  I’m not just talking about adding “… in order to…” at the end of the objective.  A lot of corporate objectives include the full “so that” results picture.  I’m talking about the emotional, greater good purpose – the “why are we really here” component. 

Here’s an example from my career.  On many occasions I had the privilege of working with direct reports who were managing leadership programs.  Their objectives would include designing and running an effective program (as measured by participant ratings, etc.).  Now, these people were terrific performers, and I’m sure they wanted to create a quality learning experience simply because they were passionate about their jobs.  But what if I had motivated them even more with a longer-term vision of what this program could mean to the participants’ careers or personal lives?  Could we have done even better if our second layer objective was making these managers into better community leaders and parents? 

Give this concept some thought as you help your teams prepare their annual performance goals for 2009.  As they come back to you with a first draft of their goals and objectives, probe a bit to see if you can help them uncover deeper meaning and purpose behind those goals, and then add them to the document.  Give your people a more powerful reason for achieving results – show them how to connect what they do to the greater good.  Just about everything we do can be taken out to something of personal or social significance.  Inspire and motivate your team by helping them develop two levels of performance objectives – achieving the result will have much greater meaning for everyone involved. 

I always travel with a stack of articles I’ve torn out of magazines – it makes for lighter traveling, and since much of the stuff I read is relatively timeless, it allows me to work through the readings at my own pace.  This weekend, I found a 2008 USA Today article stuck between a couple of HBR articles – I remember tearing it out because I wanted to write about it in this column. Well its three years later, but the article was so interesting that I think you’ll still enjoy the lessons here in 2011.  Here it is…

At the time (January, 2008) one in every five CEOs running the 1,187 publicly traded companies with a market cap of $2B or greater had at one time held a job at one of just 20 companies.  That’s right, only 20 leadership “factories” had produced 20% of all large-cap CEOs in America in 2008.  Ten percent had worked at just 8 companies!  The Top 20, in order of CEOs, were:
 

GE (26)

IBM (18)

McKinsey (16)

PepsiCo (13)

AT&T (13)

Procter & Gamble (12)

Ernst & Young (12)

Citigroup (11)

Baxter International (11)

Honeywell (10)

PricewaterhouseCoopers (10)

Disney (9)

Johnson & Johnson (8)

Deloitte & Touche (8)

Intel (8)

Novartis (8)

Merrill Lynch (7)

Motorola (7)

ExxonMobil (7)

 
The 20^th company was the now-defunct Arthur Andersen (the article did not cite the number of CEOs who had previously worked at Andersen).  Think these companies are doing something right when it comes to developing leaders?  Yeah, I think so… not only are they grooming future leaders for their own companies, but they attract such great talent that there isn’t room for everyone at the top of the pyramid – leaders left to spread their wings in other companies, and a lot of them end up in the top job.  Pretty impressive… kind of begs a question doesn’t it - how many of your former leaders left and went on to run $2B+ market cap companies?   Sounds like an interesting internal TM research project, yes?