Top Research Takeaways of 2016: Performance Management

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Performance Management Takeaways

Those of you who caught my October article on Upgrading Performance Management will be familiar with the trends and changes that shook up the field in 2016. Since Human Resources is constantly evolving, I thought I’d give you a jump on your 2017 planning with a quick run down of the three studies that, for me, turned up some of the most important insights into our field this year.

The Impact of Performance Management on Performance in Public Organizations: A Meta-Analysis.

Methodology:

If you want an overview of how performance management (PM) works across different organisations, a meta-analysis is the way to go. The authors looked at data from 49 studies evaluating PM in the public sector to see what worked, what didn’t, and where improvements can be made.

Key Findings:

To measure their effectiveness, the report graded the 49 individual studies on everything from data collection to performance management structure. Now, we’re managers not academics, so not every measure is of interest to us. However, if we focus on the assessments of benchmarking (its absence, limits, and structure), performance measures, and feedback; we unearth some valuable insight.

Top of the list, measuring performance doesn’t improve it. That’s not to say it’s time to ditch the performance metrics, but it does mean we can’t let them drive our performance management systems.

What this analysis shows us is that PM success hinges on management. Systems with a dedicated performance leadership team, that provided regular actionable feedback, increased organisational performance by as much as three times that of systems that simply measured objectives. Interestingly, organisations that used benchmarking to rank employee performance also performed better, probably because leaders could see who was learning well and tailor their approach to individual needs.

Top Takeaways:

  • Management practices have a significant impact on the effectiveness of PM practices.
  • Managing performance is more important than measuring it.
  • PM systems with poor benchmarking are associated with lower performance.

Full study available from: http://onlinelibrary.wiley.com/doi/10.1111/puar.12433/full

 

Regular feedback statistics

When Employee Performance Management Affects Individual Innovation in Public Organisations: The Role of Consistency and LMX.

Firstly, let’s address the concept of ‘LMX’. An abbreviation of Leader-Member Exchange, it is basically a description of the relationship an individual has with their line manager, a relationship that impacts their experience of management and PM practices. High LMX means employees will experience management as supportive rather than controlling.

Methodology:

This study took a detailed look at the working environment of 1095 caregivers in 68 care homes across Belgium. The data was collected with self-assessed questionnaires, and workers asked to grade performance management, LMX, and individual innovation on scales designed for each variable.

(For those of you who are wondering, ‘individual innovation’ in this study refers to the tendency of workers to generate and implement new ideas).

Key Findings:

The long and short of it? Continuous monitoring and feedback in an environment where leaders and employees trust and respect each other leads to great LMX, and drives organisational performance by allowing individuals to innovate and improve workflows.

A word of warning: new employees were found to experience higher LMX than their long-serving counterparts. So don’t overlook those individuals who’ve got their roles down – good performance management practices are just as important to them, arguably more so since it encourages individual innovation.

Top Takeaways:

  • LMX has the biggest influence on employee perceptions of performance management practices.
  • Great LMX creates high performing employees with a strong inclination to innovate and improve services.
  • The best performance management systems are on-going, consistent, and personable.
  • Employers have a tendency to undervalue the importance of performance management to long-serving employees.

Full study available from: www.researchgate.net/M_Audenaert

Do Similarities or Differences Between CEO Leadership and Organizational Culture Have A More Positive Effect on Firm Performance? A Test of Competing Predictions.

Methodology:

The authors of this study set out to quantify the interaction between the CEO, organisational culture, and performance. They collected data from 119 CEOs in the software and hardware industries, and 337 members of their top management teams (TMT – think board executives). The TMT rated CEO leadership, the CEO and TMT rated organisational culture, and the unbiased Technology Consortium provided an objective measure of company performance.

Key Findings:

As the captain of the ship, the CEO’s impact on performance is multifaceted and far reaching. It is not, however, a case of one-size-fits-all. CEO behaviours that reduce performance in one organisation optimise it in another – and it’s organisational culture that determines which.

There are two prevailing theories on this phenomena. The first is Similarity Theory, and it states that leaders who align their actions with organisational values send out a unified message to staff. Theoretically, these consistent cues drive everyone towards the same objectives and enhance performance.

The alternative is Dissimilarity Theory, which suggests that leaders mirroring organisational values create redundancies. Rather than parroting the same values, CEOs take a contrasting approach, providing the support and frameworks missing from the organisational culture.

The findings of this study suggest Dissimilarity Theory best describes the interaction between CEO behaviour, culture, and performance. Organisations where social interactions were not valued, were seen to benefit from CEOs with strong interpersonal skills and a social focus. Businesses that lacked strong performance-based goals performed better under results-driven leaders.

Top Takeaways:

  • CEO leadership behaviour has a significant impact on organisational performance.
  • The interaction between CEO leadership and company culture has a critical impact on performance.
  • CEOs are most effective when they provide the support missing from the organisational culture.

Study available from: www.researchgate.net/Patricia_Corner

To Sum Up…

What these three studies (and the host of others published on their heels) demonstrate is that, as an industry, we’ve still got a lot to learn about how our employees, leaders, and organisations interact with each other.

With each year we gain more valuable, actionable insight. It’s up to us as managers and leaders to make the most of it, optimising our performance management systems to create processes that deliver tangible results at an individual, team, and organisational level.

References

Organisations that implement regular performance feedback have 15% lower turnover rates than those that don’t. Source.
43% of highly engaged employees receive regular feedback. Source.
80% of millennials say they prefer on-the-spot recognition over formal reviews. Source.

Walt Disney and the 4 Performance Management Tools

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Walt DisneyThe Performance Management King

I recently picked up the very brilliant The Illusion of Life by Frank Thomas and Ollie Johnson. For those of you who don’t know, it’s a colourful investigation into the origins of our favourite Disney characters. Written by two of the nine animators who made Walt Disney into a household name, it very aptly demonstrates what a visionary Disney was – and not just in the field of animation.

Way back in 1923, when performance appraisals, 360 feedback, and employee evaluations weren’t established (and certainly weren’t Googleable), this guy was blazing a performance management trail that leaves many modern businesses in the dust. It’s an approach that took his fledgling studio from two employees to over 1000 in only sixteen years¹. Let’s take a look at exactly how he did it.

1. Alignment

“Of all the things I’ve done, the most vital is coordinating those who work with me and aiming their efforts at a certain goal.” – Walt Disney

Over the last 20 years, we’ve seen a huge amount of research published on the topic of employee alignment. We now know that employees who are aligned with organisational goals and objectives have higher engagement and job satisfaction, while their employers enjoy significant advantages over competitors². Disney was way ahead of us, using three key practices to actively aligning his workers:

Leading by Example

Disney had a firm creative vision, and he made sure his animators shared it. In story meetings he would act out the scenes, demonstrating the gestures and attitudes he wanted to see in the final cartoon. It’s a philosophy the Disney Company maintain today, and leaders are expected to behave according to their values and vision, which must align with organisational values³.

Team Effort and Ownership

‘Everyone has to contribute, or they become laborers.” – Walt Disney

Disney believed that each person connected to a film had to feel that they were vital to its success. As such, he involved everyone in the collaboration and evaluation process throughout production.

Engagement

To get his team excited about an upcoming production, Disney would bring in a well-known artist to create unique drawings or paintings long before any actual story work began.

2. Transparency and Collaboration

When animation was in its infancy, skills gaps were commonplace. Studios did not share techniques, and it was difficult for beginners to learn the skills and tricks other animators had already discovered, even within their own studios.

Disney turned this model on its head. He insisted on an open atmosphere and encouraged each artist to share their views and discoveries. The studio effectively created a mentoring program which, by pooling insight from newbies and experienced professionals, allowed Disney animators to remain at the cutting-edge of their field.

Believing that good ideas came from everyone⁴, Disney did away with the concept of seniority. All the animators worked together in one large room to encourage discussions and problem solving. It wasn’t until 2012 that knowledge management (the process of transforming individual knowledge into organisational knowledge) was proven to contribute positively to organisational performance. At the same time, we also discovered that a collaborative culture enhances the benefits of knowledge management⁵, something Walt Disney had recognised nearly nine decades before.

Regular feedback infographic

3. Recognition

With the power to increase engagement, encourage development, enhance alignment and reduce turnover, recognition is critical to talent management (check out my article on recognition programs for a re-cap). Disney knew this only too well and made sure to praise great work – calling everyone together to discuss a drawing he particularly liked.

Recognition still plays a pivotal role at The Disney Company – Florida’s Walt Disney World alone boasts 180 different employee recognition programs. One of the most coveted at the park is the Spirit of Fred Award. Named for a long-term employee who made his way up the ranks by exemplifying Disney values, Fred makes the awards himself, which include The Lifetime Fred Award and the annual Spirit of Fred Awards⁶.

4. Frequent Feedback and Training

Quality was everything to Disney, but so was skill. If an animation was clumsy or poorly staged, he wouldn’t delegate the work to an animator with more proficiency. Instead, he would pair the original artist with a more experienced teammate to provide guidance.

Despite this focus on mentoring and on-the-job training, by the 1960s, Disney’s studio was suffering from a skills gap. His original nine animators – trained in 1929 at the Chouinard Institute – were starting to retire, and those coming up lacked the technical expertise to take their place. He needed a new approach to training, and his long-term association with Chouinard provided it.

Disney’s vision for a specialist college led to the incorporation of CalArts (a merger between Chouinard and the Los Angeles Conservatory of Music) in 1961. There, students studied animation under the tutelage of his nine retired animators, and the company cherry-picked the best graduates⁷. It’s an approach we see more and more of in China and India, where companies sponsor existing colleges or create their own to guarantee the graduates and skill sets they need⁸.

To Sum Up…

One word crops up over and over again when investigating The Disney Company’s people management processes; genuine. Disney genuinely cared about his business, his worker, and his product. His understanding of alignment and company values ensure his attitudes to training, recognition, and collaboration are still at the heart of the company today.

References:

¹Disney Institute. Undated. Leadership excellence.Disney Institute

²Gottschlag and Zollo, 2007. Interest alignment and competitive advantage. Academy of Management Review. 32 (2). pp. 418-437.

³James, 2014. Leadership lessons from Walt Disney: how to inspire your workforce.Disney Institute.

⁴Jones, 2013. Leadership lessons from Walt Disney: building relationships.Disney Institute.

⁵Rasula, et al., 2012. The impact of knowledge management on organisational performance. Economic and Business Review. 14 (2). pp. 147-168.

⁶BH Engagement, undated. Exploring employee incentives. Black Hawk Engagement.

⁷Wikipedia, undated. California Institute of the Arts. Wikipedia

⁸Capelli, 2014. How Disney solved its skills-gap problem. Human Resource Executive Online.

Promoting High Performers to their First Leadership Role

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What does promotion mean to you? A step up the ladder, expanding your skill set, a pay rise? At some point, promotion is likely to mean a move to a management position. When hiring for management roles, senior leaders typically gravitate towards high performers, assuming those who have mastered their current role are the perfect choice for leadership. In reality, great workers don’t always make great managers, and turning your high performers into spectacular leaders requires more than a promotion.

The Challenges Facing New Leaders

New managers have to stop focusing on their own performance and become an inspiration to others, delivering results at a team or even organisational level. For many, this involves developing an entirely new skill set.

Australian Managers leadership survey

Motivation and Alignment

The ability to influence, motivate, and inspire a team is essential for managerial success¹. Without it, poor performance, disengaged individuals, and low staff retention are the inevitable result.

Managers play a pivotal role in ensuring employees are invested in their work, aligned with organisational objectives, and productive². If new managers have no understanding of employee engagement, top-down communication, or alignment strategy, they lack the tools to get the best out of their team

Need a refresher on aligning employees to organisational goals? Check out my article, Aligning People P2: The Role of the Manager.

Feedback

Delivering feedback is no easy task, it’s a skill that took many of us years to master. Imagine how much more nerve-racking it is evaluating individuals who were recently peers?

With potential trust issues to navigate, little experience of goal setting or managing different personality types, providing actionable feedback is a potential minefield for new managers.

Looking for tips to master performance conversations? Check out my article on the psychology behind workplace feedback.

Delegating

Tasked with succeeding at a team level, new managers have no individual control over their goals for possibly the first time in their careers. For high performers used to exceeding expectations, the desire to micro-manage is a difficult one to fight³.

Those that are comfortable delegating have yet more problems to face. With no previous management experience – and in some cases knowledge of their team – judging attainable goals and knowing which individuals are capable of delivering autonomously is all but impossible.

Planning and Organising

Critical thinking is crucial to managerial success¹, but it is not a skill that’s common in junior roles. Suddenly required to establish priorities, streamline workflows and think autonomously, many new managers struggle to identify the best strategy for success at a team level. Without these skills, new managers often feel as though they are underperforming, leading to poor team productivity at best and, at worst, an exodus of high performers.

How to Promote to Leadership

A leadership role is completely different to any other. Creating confident, able managers begins long before promotion.

Training

Individuals with the possibility of promotion are more engaged and committed to their employer⁴. Providing management training is a great way to reward high performers, encourage loyalty, and increase managerial competency. In fact, those given developmental assignments before promotion have been shown to make much better leaders in the long run⁵.

Training can take many forms. Those of you who caught my article on managing freelancers will know I’m a big fan of facilitated learning. By providing employees with the opportunity to take on new responsibilities, you give them the freedom to develop their skills organically, solving problems and adjusting their strategy to create an approach that works for them.

Of course, self-learning has its limits, and there are situations where having someone with experience on-hand to offer advice is invaluable. Assigning a mentor to help an individual develop their managerial skills is a great way to ensure they are ready when the time comes to take on a leadership role.

Mentors are facilitators rather than instructors. They provide advice and guidance, but it is the mentee who takes responsibility for the outcome. Encouraging future managers to own a solution boosts their confidence, promotes critical thinking and encourages high performers to move from an individual ‘what do I need to accomplish’ mentality to a wider, team perspective.

Experience

Exposing potential managers to leadership situations means that, when they do make the jump, they have a thorough understanding of what is expected of them. It also gives individuals the opportunity to identify which skills they need to work on and where their strengths lie.

Enabling promising candidates to shadow other leaders is one of the best ways to deliver this perspective. Placing them in departments outside of their own offers a number of other advantages, broadening individual understanding of wider organisational goals and strengthening interdepartmental relationships.

Providing cover during a leader’s absence is another way for potential managers to hone their skills and gain much needed experience.

Discussion

Open discussions of employees’ long-term goals, strengths and weaknesses feature highly in all the best performance management systems. If, with experience of management, individuals are still keen to move up, then place them in a team leader or junior management role. If, however, an individual decides leadership is not suited to them, help them expand their role to make the best use of their strengths and skills.

Don’t forget, even with the appropriate groundwork, a promotion does not create a leader. New managers need ongoing coaching and development from senior staff to help them succeed in their new roles⁵. Check out my article on the seven skills all exceptional leaders need for an in-depth look at what it takes to make a manager.

To Sum Up…

Leadership is not a natural progression; it takes time, training, and support to turn high performers into fantastic managers.

What did your career progression look like? Feel free to share your experiences, I’d love to hear your take on management training and progression.

References

¹Muller and Turner, 2010. Leadership competency profiles of successful project
managers. International Journal of Project Management, 28. pp. 437- 448.

²Cartwright and Holmes, 2006. The meaning of work: the challenge of regaining employee engagement and reducing cynicism. Human Resource Management Review, 16. pp. 199 – 208.

³White, 2010. The micro-management disease: symptoms, diagnosis and cure. Public Personnel Management, 39 (1).

⁴Kosteas, 2011. Job satisfaction and promotions. Cleveland State University (Thesis).

⁵Dragoni et al., 2009. Understanding managerial development: integrating developmental assignments, learning orientation, and access to developmental opportunities in predicting managerial competencies. Academy of Management Journal, 52 (4), pp. 731-743.

Is your recognition program actually motivating your employees?

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Five things you need to know to keep your employees motivated and on track

Recognition program

Employee recognition is a topic that doesn’t get as much attention as it deserves in the HR blogosphere. A well-structured (and executed) employee recognition program is a critical piece of an effective talent management strategy. But too often businesses think of employee recognition as a formal and expensive HR only activity.

In my experience, doing employee recognition well definitely doesn’t have to mean expensive. And it also doesn’t have to mean gold watches. So to help you out, I’ve put together my employee recognition cheat sheet. Here are the top five things that I think you need to know about employee recognition.

1. You don’t give as much recognition as you think you do.

Studies have shown there’s a big disparity between how much recognition managers think they give employees and how much recognition is actually delivered. This research from Bersin showed that “Nearly 80 percent of senior leaders believe employees are recognized at least on a monthly basis… [whereas only] 40 percent of managers and only 22 percent of individual contributors report that their peers are recognized monthly or more often.”

It’s easy to let recognition slip. Things get busy or something urgent pops up. And saying thankyou for something that’s already been ticked off can always be done a little bit later. But if you let recognition fall through the cracks, your employees will feel like they have too.

2. Any form of recognition can be effective, as long as it’s timely.

The best time to give recognition is as close to the deed you’re trying to recognise as possible. Waiting to deliver feedback or recognition diminishes its value. This has been shown through a bunch of academic studies (There’s a great collection of supporting research listed here)

It’s important that you give feedback on your employees’ work as they do it, whether it’s good or bad. If an employee isn’t performing up to your standards, you don’t wait until their performance review to deliver this feedback. It’s got to be the same with an employee doing outstanding work.

Praising an employee for a job well done is more effective at the completion of the job, rather than six months down the track. It locks into everyone’s mind what standard of work is expected and rewarded in your organisation.

3. Informal recognition beats the gold watch every time.

You might have a recognition program of gold watches, plaques and pens. But are they really effective in driving discretionary effort from your workforce?

The biggest problem with these reward systems is they’re all tenure based. And research shows tenure based reward systems have little to no impact on performance.

Just how ineffective tenure-based recognition programs are is easy to understand from your own personal experience. Have you ever stuck around in a job for a few more years just to get a gold watch? Of course you haven’t.

The most effective form of feedback is informal, timely and genuine. You don’t need to put someone’s picture on the wall to say thanks for a job well done.

4. Reserve significant recognition for exceeding expectations, not meeting them.

If an employee submits a report to you on time, that’s meeting expectations. If a team brings a project in early and under budget, that’s performing beyond the call of duty.

Talk to your employees about their performance every day. But be sure to only give out the most significant recognition when it’s deserved. Whilst it’s important to give out recognition frequently, it’s also critical to keep your recognition meaningful. Give out too much recognition and it will carry little or no value. Give out too little and it will seem unattainable, and won’t become a motivating factor for your employees.

As this German research study shows, Employees will work harder as long as your positive feedback feels attainable and carries value.

5. Make sure the connection between your business goals and your recognition program is clear

One final word of warning: It’s critical that your recognition program is clearly tied back to the goals of your business. If you’re not rewarding behaviours that drive the business forward, you’re not rewarding the right behaviours (full stop).

At Cognology, we want to deliver talent management software that powers the future of work. That means I place a premium on innovation. It means making the effort to publicly call out employees that think outside the box. And it means constantly tying back performance and remuneration reviews to our ability to deliver software that works for our clients both today and tomorrow.

Business goals are really easy to talk about in the abstract. But they’re much harder to consistently reward and recognize. That’s why it’s so powerful when your reward system reinforces your long-term business goals – everyone’s incentives are completely aligned.

What’s the most effective form of recognition at your workplace? I’d love you to jump into the comments below and let us know your view.

Jon Windust

Jon Windust is the CEO at Cognology – Talent management software for the future of work. Over 250 Australian businesses use Cognology to power cutting-edge talent strategy. You can follow Jon on Twitter or LinkedIn.

My experience using enterprise social technology

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We have been using our own enterprise social technology internally now for some time.  I’d like to share just one of the many experiences.  In part I’m doing this to help illustrate the benefit of enterprise social technology.  It helps answer the question of why someone would want to use it.  I’m also sharing the experience to shed some light on the technology for those who are wondering what it’s all about.

Cognology Wall screenshot

There are a myriad of uses for social tech in the organisation … this is just one.

A wall or news feed makes so much sense.  We are social beings, we operate under social constructs.  It helps to be able to see things that are happening across a group or wider group.  Having used our wall quite a bit I couldn’t go back to pre-wall.  For example, one of the uses of the Wall is to recognise others.  As a manager I find this one of the most powerful and positive tools in my kit bag.  When someone does something that deserves recognition, it’s wonderful to be able to put a thank you note on a wall so others can see.  And it’s such a buzz when you see team members giving each other recognition.

There’s some legitimate concerns that people may have about this though.  They are reasonable concerns and need to be addressed.  The three key ones are:

  1. The potential to waste time.
  2. Inappropriate comments.
  3. Replacing face to face interactions.
The potential to waste time

You may wonder whether a wall creates a social love fest.  A frenzy of recognition and other posts.  It doesn’t.  It’s rare to see the same person giving recognition more than once a fortnight.  My experience is that recognition has been given sparingly, where it deserved to be.  If it were given for even the slightest thing, for the sake of it, I believe it would quickly lose its benefit.

The wall hasn’t magically created a perfect working world.  Not every situation and person that truly deserved some recognition, received it.  I think the truth is that people are just busy working and don’t always think to do it.  But there is more recognition, a lot more.  And it’s much more visible.

Inappropriate comments

When many HR people think of social tech, they are probably thinking of sites like Facebook and Twitter.  Let’s face it, we’ve all read news stories about their inappropriate use.

The question is whether we should sacrifice the benefits of enterprise social technology to protect our organisations against potential misuse.  My experience is that I haven’t seen any misuse at all.  But I’ve read the news stories like everyone else and I know it can and will happen.  So do we avoid social tech?  I believe that would be crazy.  That would be like saying no to the introduction of computers into the organisation in the 80s and 90s because of their potential for misuse.

The real question should be how can we minimise the possibility of misuse and protect people from it.  The answer is that people, managers and HR should be given control over information sharing and visibility.  And of course, appropriate policies are needed.  But those policies are needed now regardless of whether you have enterprise social technology.

It’s counterintuitive, but I believe enterprise social technology helps protect organisations and their people.  This is better explained by pointing out what happens if an organisation doesn’t implement social tech.  People will eventually find their own social solutions which organisations won’t have any control over.

Replacing face to face interactions

From a leadership perspective face to face conversations are the shiznit.  Great progress has been made in recent years getting leaders to have one-on-one conversations.  Anything that threatens to undo all this progress is going to be received with some caution.

2 people in a discussion

So does a wall replace face to face interactions?  No it doesn’t.  It enhances them and makes new things possible.  Here’s three ways it does this.

If you’re a manager, ask yourself how often you see team members recognising other team members in front of others.  It happens, but infrequently.  To make things worse, you most likely won’t be there in the moment it happens.  You probably won’t hear about it.  The wall improves both of these problems.  For reasons explained below, recognition is more frequent.  Everyone doesn’t have to be there in the moment either.  If you aren’t there, you’ll still see it, you won’t miss out.

How does a wall increase the frequency of recognition?  The answer is something called the gift economy.  In short it means this.  Joe gives recognition to Sally.  This makes Sally more likely to recognise Joe some time down the track when he deserves it.  In my experience it also makes it more likely that Sally will think to recognise someone else.

The wall also gives people a greater reach.  Visibility is not just restricted to one or two people.  Recognition is not just heard by those in the verbal vicinity.  People across a wider group get to see things they previously couldn’t.

A couple of posts ago I wrote about the new world of work and the need for HR to be part of the change.  I’d love to hear your thoughts on enterprise social technology.

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