May 9th, 2012 by Ann Zerkle
This part of a series of articles called “Employee #12345.” This series is designed to point out how MBM differs from other management philosophies from an employee standpoint. While not a comprehensive view, this series is designed to provide a personal view of how the MBM philosophy differs from more traditional ways of running a business. As with all posts, keep in mind this is my viewpoint alone, and I’m not a guru.
Supervisor: Thanks for stopping by Employee #54321. Here’s your performance review.
Employee #54321 sits in stunned silence.
Supervisor: I know you did a couple of special projects that our review process doesn’t include — like the mentoring program and hiring committee work — but my hands are tied. Your numbers just don’t stack up to the other people with your job title this year.
Employee #54321 sits in stunned silence.
Supervisor: Don’t worry. I know you’re a good employee. I’m working to get your job title reclassified so we don’t have this type of thing happen in the future.
Traditional companies can treat employees like numbers when it comes to their performance reviews. Here are a couple of common practices that can have that effect:
- Performance reviews are a one time event (usually on a rigid schedule).
- Performance reviews are largely based on a single dimension assessment of whether someone met, did not meet or exceed expectations.
- Those responsible for giving performance reviews have to compare everyone internally by rankings.
- Performance review forms are widely standardized (i.e., an accountant and a machine operator have the same form).
Employee #54321′s frustration largely comes from a situation where performance reviews are based on internal comparisons and have been overly standardized. (Employee #11234 was featured in another post addressing the other two bullet points listed above). Some of the downsides to forcing annual reviews to have internal comparisons include:
- Losing touch with the reality of market competition. What if compared to the industry you have most employees who are far above (or far below) the typical contributor?
- The incentives may cause a lack of initiative in areas that may create value but don’t contribute to pre-mandated performance measures. Why would Employee #54321 agree to take on special projects in the future?
Compound the idea of internal rankings with overly standardized forms and employees like Employee #54321 may become extremely demotivated. Not only are the special project contributions being overlooked, but the standardize reviews are penalizing her. Employee #54321′s supervisor feels trapped as well because a high performing employee is going to get a bad review. It’s a double whammy that demotivates employees and limit’s the supervisor’s abilities to motivate and retain great employees.
So what would Employee #54321 experience if she was in an MBM organization? Well, she might find on the surface that her supervisor does things similar to her past experiences, like annually sitting down with her to take a big picture look at how the year has gone. What she’ll find is some major differences in approach. For instance, her supervisor will have detailed feedback, using many different sources of data (like her RR&Es, feedback from people all around Employee #54321, as well as the supervisor’s own observations and whatever else helps form a reality-based view of Employee #54321′s performance). Instead of Employee #54321?s supervisor just filling out a form, Employee #54321 will get an annual review that is personalized.
Employee #54321′s performance isn’t based on a forced internal ranking — instead her supervisor will use an approach that considers many factors, including:
- The MBM Guiding Principles as a critical part of assessing Employee #54321′s performance. The MBM Guiding Principles are expectations for all employees in MBM organizations and must be included in the performance review.
- Personalized measures (both quantitative and qualitative) that have been clarified during the RR&E Process.
- “Economic analysis and 360-degree feedback should be used to understand his or her contribution to long-term results. This is to ensure the best information available is used to appropriately recognize both positive and negative contributions” (The Science of Success, 153).
Like many of the topics examined in this “Employee #12345″ series, instead of viewing performance reviews as a one-time-one-size-fits-all-process, MBM organizations consider individuals. I don’t want to mislead you, there are some forms involved in most annual reviews in MBM organizations. The difference is MBM organizations allow for personalization on the forms and supervisors are asked to use their judgement when using standardized forms. Sometimes it makes sense to use standard forms, but when it doesn’t, supervisors have options. This approach is quite different from standardizing a form to use for every employee in the business. It’s likely Employee #54321′s experience would have included the extra projects and mentoring because her supervisor would have had the option to include them. Also, it’s likely Employee #54321′s RR&E would have been adjusted to account for the special projects. So her expectations would have been different than they were previous to taking on those projects.
I’ve found my annual reviews to be useful — sometimes exciting, sometimes painful (not overly so), and sometimes a little of each, but always useful to my growth. It’s not easy work for a supervisor to approach annual reviews this way. The payoff can be huge in terms of helping direct reports increase their abilities to create value in the long run. MBM organizations are not perfect, but the likelihood of useful annual reviews increases significantly when taking this approach.
What’s been your experience with annual reviews? Does my experience reflect what you’ve experienced with performance reviews? Let me know what you think in comments.