Replace performance management with a system of feedback loops that simultaneously empowers and inspires employees to be their absolute best. People do not have to feel stressed and aprehensive about discussing performance. The entire notion of performance management can be reframed to take out the tension, refocus the conversation on continuous improvement, and appeal to people's intrinsic motivations.
Performance management is well intentioned but poorly executed at most companies. The term itself is demeaning, implying employees cannot manage their performance themselves - they need to be managed by others. Because the process is also typically tied to compensation and promotion decisions, timelines are usually aligned to the fiscal calendar, making people wait far too long for feedback. Employees can come away from the experience feeling misunderstood, frustrated and resentful, demoralizing teams and toxifying working relationships - all of which actually negatively impacts performance.
It does not have to be this way. Feedback does not have to be delivered once a year. Talking about how to get better at your job does not have to be a stressful experience.
What if work life were more like a video game? What if you could just check your score to see how you're doing and you had clearly defined objectives that, once attained, allowed you to advance to the next level?
Life is not a video game, and gamification is no panacea to improving workplace performance. But there is a better way to get the best out of all the talent in your organization.
- Focus on mastery of capabilities - The goal of every employee should be a sort of personal kaizen - constant improvement. All gazes (manager and employee alike) should be fixed forward, out on the horizon of the possible, rather than dwelling on historic performance (which is inherently backward looking).
The critical question for employees is,"What capabilities do I need to develop further to a more valuable employee and how do I develop those capabilities going forward?" Past performance may only be one relevant data point for answering that question, if at all.
The critical question for managers is, "What near-term investments do we need to make in our firm's talent to get the absolute best out of everyone going forward?" That could mean hiring better talent, training and education to "up-skill" current talent, and even reallocating resources away from underperforming talent.
The manager's role would be recaste as that of a career coach, one who would help individuals in his or her team identify the capabilities that are important to the individuals ongoing professional development as well as to the overall success of the business. These capabilities would be the targets of mastery. Attainment would mean all at once a more valuable employee for the business, a more marketable skillset for the employee, and a more successful business for investors. Metrics would then be set to monitor progress toward mastery of those capabilities so people can keep score (kind of like in a video game!).
- Decouple the feedback process from compensation and promotions - Tying feedback to promotions and raises only increases the stress and negative emotion from both giving and receiving constructive criticism. Concern about that next "bump up" create a distraction and can poison the employee/manager relationship. Taking that concern out of the equation returns the focus to where it should be - becoming a better, more valuable employee.
None of this is to say that decisions on promotions and raises should not take performance into consideration. Of course they should! But the mechanism by which an individual's progress is measured and feedback is provided can, and should, be decoupled from when and how a promotion or raise is decided. Money may not be the best way to motivate the desired behaviors anyway.
One possibility (as an illustration) is to define the criteria for a promotion or raise upfront with employees; set clear objectives, agreed to ahead of time by the manager and employee. Feedback then becomes a measure of the progress made toward something rather than the distance of a shortfall (think "glass half full"). Once an employee has reached all the agreed upon objectives, he or she could request the expected promotion or raise. After all, if a person feels deserving of a promotion or raise, why shouldn't that person be asked to make a business case for it (as you might for any other investment)? A panel of managers could evaluate the request and award it if all agree the objectives have been met (perhaps the same panel should also approve the objectives when they are initially set so no one is denied a promotion or raise because the objective were too easy). To make this all work for financial planners, promotions and raises could take effect in a batch process, either annually or semi-annually. This might mean a short delay after a request is approved before it takes effect, but is that really any different than the status quo?
The important points from this example are 1) promotions and raises still take performance into account by way of reaching the pre-agreed upon objectives or performance milestones and 2) feedback helps the employee monitor progress toward objectives without worrying about when he or she will get that next raise or promotion. Picking back up the video game analogy, feedback becomes the score, but you only advance once you win the challenge at the end of every level.
- Make feedback both social (from almost anyone) and continuous (almost anytime) - Feedback should not be given just once a year by one person. It should be frequent and incorporate the perspectives of all stakeholders - managers, peers, and subordinates alike (assuming such hierarchical structures are even still relevant to a reinvented management discipline).
Involving more people in feedback has a two-fold benefit. First, a greater variety of perspectives will improve the quality of feedback and enhance the incentives for improvement with social pressure and esteem (social esteem possibly being more important to human happiness than money). Second, feedback will no longer be constrained by the time and energy of just one person. It could come at almost any time from almost anywhere.
Freed from the strictures of the fiscal calendar, feedback could be delivered in a weekly or even daily process. Or it could be done adhoc and on the spot through a peer-to-peer mechanisms, making it both more relevant and more immediately actionable.
What if you could create a personal dashborad for employees to check how they're doing on the aforementioned performance metrics and advancement objectives? Then, maybe, the workplace really would start to feel more like a game. Giving people a way to measure their performance on a near real-time basis would help set the stage for flow in the workplace.
What if you could "like" a document your coworker prepared (as you might on Facebook) or rate a project and write a review (as you might on Amazon)? Of course, because this kind of ongoing, social feedback would be new (to the workplace anyway) some training might be in order for people to learn how to frame feedback in a positive and constructive way, but people are already highly socially attuned. A well designed and transparent system would keep bullies in check.
The management hack "Just-in-time Teams" suggests some ideas for how mastery feedback loops might be implemented, bottoms up.
- Organize into groups of 7-13 individuals, ideally around specific capabilities or competencies that the constituents are looking to develop or that are important to their roles at the company
- Meet regularly (weekly if possible) for an hour or so over coffee (or other refreshments) in something like a performance support group (hmmm, maybe that's what we should call this hack)
- Working together without any nominated leader, set mastery goals for each person in the group; maybe assign some at home individual pre-work so the process moves quickly while meeting
- Help "coffee chat" members set specific metrics to monitor their progress toward mastery and figure out how to take the necessary measurements
- Each week (two weeks or month), discuss where each person is at and provide advice on how to improve
- Use an online tool (e.g. wiki, Google Site, etc.) to post metrics of progress and to solicit and provide feedback asynchronously
- Just before the start of the formal performance review process, prepare documentation on each group member, signed collectively by the group, recording how that person's performance has changed over the course of the year; this document can be brought into conversations with management as an additional data point in the review/evaluation/appraisal and help make the business case for any raise or promotion
- Use the collective performance of coffee chat members over time, when compared to a "control" of non-participants, to make the case for chaging performance management at the firm