One of the interesting Buzz or Trends the last 18 months was the flurry around getting rid of Performance Reviews inside of major companies. Articles were touting huge names like GE, Adobe and Deloitte to add credibility to the idea. However, instead of being a lemming, here are some things to consider.
35 Years of Science
Organization Development (OD) has been studying motivation theory for years and there are numerous studies that back up the simple idea that setting goals drives higher productivity. There have been studies that went showed individual goals (e.g. how many logs to move) to corporate goal setting all have a positive impact on the results (Stillwater & Kurani, 2013; Hilltrop, 1996).
Personality versus Goals
One of the fall back excuses is that an organization doesn’t need to set goals if they hire the right motivated people. There have been lots of studies that show personality plays a major role in motivation, but there was an incredibly interesting study that showed that Goal Setting was a much better predictor of success than personality traits (Yukl & Latham, 1978).
It works at all levels – Including CEO
One of the more interesting movements since 2014 has been the growing utilization of non-financial measurements (NFMs) for CEO compensation. There was an interesting study that showed that using appropriate NFM’s absolutely drive CEO behavior (O’Connell & O’Sullivan, 2014). The only reservation, and it is an obvious one, is to make sure the NFM’s align with the strategic objectives.
Don’t confuse Bad Process:
I personally believe the reason that this wave of Anti-Performance Management occurred is not due to the science, but due to the fact that organizations were being inflicted with bad process. Rather than fix the bad process – the idea is to throw out the potential results. Do some of these sound familiar:
- The goal setting and performance review cycles are completely separate?
- The cascaded goals have nothing to do with the individual (e.g. asking Sales and Marketing to decrease quality defects 5%).
- The process concludes way into the time period being measured (e.g. 2017 calendar goals will be done in April).
- The resulting individual goal (e.g. I got a 5) has no intrinsic or extrinsic value.
- The organization does nothing with the resulting scores.
So what do you think? What are the hallmarks of a great process? Do you think the new generations need a different approach?
Hiltrop, J. M. (1996). The impact of human resource management on organisational performance: theory and research. European Management Journal, 14(6), 628-637.
O’Connell, V., & O’Sullivan, D. (2014). The influence of lead indicator strength on the use of nonfinancial measures in performance management: Evidence from CEO compensation schemes. Strategic Management Journal, 35(6), 826-844.
Stillwater, T., & Kurani, K. S. (2013). Drivers discuss ecodriving feedback: Goal setting, framing, and anchoring motivate new behaviors. Transportation research part F: traffic psychology and behaviour, 19, 85-96.
Yukl, G. A., & Latham, G. P. (1978). Interrelationships among employee participation, individual differences, goal difficulty, goal acceptance, goal instrumentality, and performance. Personnel Psychology, 31(2), 305-323.