Let’s Develop People Not Just Evaluate Performance
“[It’s] curious that we spend more time congratulating people who have succeeded than encouraging people who have not.”
“[It’s] curious that we spend more time congratulating people who have succeeded than encouraging people who have not.”
Neil deGrasse Tyson
We have accepted scorecards and grades as a part of life from childhood onwards — in the academic arena, in sports, and in other extra-curricular activities. This focus on measurement continues through the college application process and into our careers. Upon applying for a job we are graded on our resume and, if we pass that screen, then evaluated on our interview performance. Once in the seat, we are subject to performance reviews once, or in some companies, twice a year. That dreaded annual performance review conversation with your manager is fast approaching.
As a CFO I have been tasked with designing incentive compensation plans — the core of these plans is figuring out the appropriate “scorecard” for measuring performance. Scorecards or rubrics for measuring achievement permeate not just the business world but also the world of education — the “no child left behind” program and regular “observations” of all educators by administrators being just some examples.
We’ve accepted the principle encapsulated in this quote, “you can’t manage what you can’t measure,” as one of the sacred rules of modern management. This statement is mistakenly attributed at times to either W. Edward Deming or Peter Drucker, both giants in the field of management thinking. In reality, Drucker and Deming both realized that not everything that influences positive business performance can be measured. Deming even said, “Nothing becomes more important just because you can measure it. It becomes more measurable, that’s all.”
To be fair, there is nothing wrong with considering how best to measure success, establishing targets that are relevant to your organization and then analyzing performance. We all have a limited amount of time and resources, thus need to allocate our energy effectively and then assess if we made the right choices. And for organizations to grow and survive they need to identify, reward and retain high performers with raises in base pay, bonuses and promotions in responsibility.
Sadly, however, we have fallen in love with measuring and evaluating performance at the expense of spending sufficient time and energy on improving the performance of individuals and teams. When I refer to improving performance, I mean actively working with others to listen to, support, teach, up-level and train them, so that they can move forward on the path to their full potential.
It is quite common for managers to recommend to their direct reports that they either find a mentor outside the company or resources on the internet (classes, content etc.) to develop themselves. And when I do see or hear about managers wanting to improve the performance of their team or direct reports, they are often looking for free resources, because they realize asking for investment in performance improvement will likely fall on deaf ears. While companies do offer some training to their employees, many of the sessions employers provide are for compliance or risk management purposes (i.e. protecting the organization rather than helping the team be better at their current and future jobs).
In recent conversations with CEOs and my peers in the finance profession, I have noticed an abundance of questions on best to measure and reward performance. By contrast there is much less discussion around improving performance or developing people. A few thoughts have occurred to me about the imbalance in our business conversations between development and measurement. Below are some of the rationales (often mistakenly used) to justify measurement and evaluations.
Competitive Assessment is Necessary for People Management: The 9-box grid (below) is a common tool in HR circles for evaluating all the personnel in organization, and planning a “people strategy” for a business around whom to promote, how to distribute money allocated for raises and bonuses, as well as whom to fire.
The failing in this approach is not that this grid is inherently bad, but that it leads to biased outcomes. Performance is much easier to see (actual achievements) than potential (hidden possibility). And usually the absence of potential being realized is due to a mixture of the manager’s skills and organization’s cultural commitment to development and training, rather than a weakness in the employee herself.
Organizations Need to Set Goals for Individuals and then hold them Accountable: I agree with both goals and accountability. For goals and accountability to work well, I have three suggestions that are often not considered. First, at least one of the goals should be a personal career goal suggested by the employee. Second, ensure the goals chosen truly align with long-term value creation for all involved (company, team and individual) and not just be the easiest things to measure. And finally, always ask employees at the outset and then periodically over the course of the performance evaluation period about obstacles of all kinds that might be preventing them from achieving their goals. It is extremely rare for people to admit they don’t know how to do something. As a manager you need to make it safe for that conversation to happen.
A Mistaken Zero-Sum Worldview: Zero-sum thinking implies that if one person gains then another must lose an equivalent amount. And while zero-sum thinking might be true as regards the outcome of competitive sports matches, it is generally otherwise a toxic and unhelpful view of the world for most other pursuits in our life. I particularly like Adam Grant’s book, Give and Take: Why Helping Others Drives Our Success. In the book he points out how “Takers” have a zero-sum world view while “Givers” who help others succeed and in turn succeed themselves, adopt a positive sum worldview. Developing people in an organization has a multiplier effect over the long term creating better outcomes for colleagues, customers and shareholders.
People Will Fail and We Should be Prepared to Replace Them: The most common reaction in corporate America to under-performance in the job is to blame the person and not their manager or the company system (i.e. hiring process, onboarding, training etc.) When people lament to me on having to terminate people and look to blame others including the recruiter and the candidate, I remind them that at least half the blame for a poor outcome lies with the hiring manager and the organization. And yet, I’ve never heard a recruiting leader admit they did a poor job in hiring someone or a hiring manager confess they didn’t pay enough attention in onboarding or training an employee. This tendency to expect failure and replace people is a huge boon to the recruiting industry, a drain on businesses and feeds a lack of trust between employees and their bosses/managers.
Growth Mindset (What We Say) and Fixed Mindset (How We Hire): It is common to hear companies advertise their commitment to developing their employees and state that their approach in hiring is to optimize for attitude over aptitude. Yet job descriptions don’t reflect that approach. All of us have seen job recommendations in our LinkedIn feed; when we click through to see the job in its entirety our eyes are drawn to the to right side of the screen where we see how the algorithm matches our skills to criteria in the job posting. Recruiters and hiring managers want to find candidates who have already successfully done what is required in the role, rather than seek out those who have potential and will benefit from development. Yet once we hire someone, we know the best long-term employees are rarely those who have only the skills we sought out in the job description, but rather those best suited to adjust to and grow with changes in the demands of the role.
The “Contract” between Employer and Employee Misses the Mark: Employers reward employees with goods that have an immediate monetary value (salary, healthcare benefits, 401(k) match, paid vacation etc.) in return for their skills and work product,. Rarely do employers commit to invest real money in the future development of their employees. It seems reasonable to ask that 1% to 5% of the fully-loaded employee cost is dedicated to training and up-leveling people. But that rarely happens. Yet when CEOs seek counsel on how to select investors and Board Members, the conventional wisdom is to seek out investors who offer more than capital and appoint independent Board members who will up-level them and their Leadership team. It’s unfortunate that training for the very top is viewed as a good investment while for the rank and file, who would benefit more from training, it is viewed as a cost. The best employees today at all levels in organizations are hungry for and hoping to receive ongoing training.
Experienced people leaders will likely tell us that the business world today is much more focused on development and training than it has ever been in the past. I am hopeful we are moving from the top-down model for performance management towards the collaborative model that embraces ongoing development and mentorship as a key enabler of great performance.