Heavy HR? Looking for a New Year’s resolution? Does your HR Department need to go on a diet?

Driving through the snow this morning I pondered my first post of 2010, given the time of year I thought it best to focus in on January tradition. Roll up! Roll Up! Yes it is that time of the year again where annual performance reviews kick in (or out)!

I dislike performance reviews, and not because they aren’t (theoretically) valuable. I’ve had them most of my career. Some were okay, many were totally inept, some could have made for good comedy such as “The Office UK” and very few were done well. When I started reviewing people, I had no role models to emulate, and basic HR guidelines weren’t much help. Good managers don’t need a “system” to get the most out of an employee. They just need a good relationship. Performance Appraisal (PA) processes are something of a major industry – peer reviews, performance reviews, results reviews, learning (skills/capability) reviews, L-180s (team leaders are appraised anonymously by their team members), and L-360s (an individual is appraised anonymously by supervisor, subordinate, peers, colleagues on other teams), and others.

I can look back in disbelief to my own first “performance review”, back in a time when video had apparently killed the radio star and DVD had yet to reach the shelf. Prior to my review my HR manager sent me on Performance Appraisal training through an external management consultancy. You can imagine my surprise when my appraisal finally came around and followed the “how not to give/what not to do in” a performance review’! My general manager had failed to attend any formal PA training and on scale of how not to give a performance review, excelled with honours.

Part of the HR established “performance” evaluation process includes clarifying and justifying a managers ranking of individuals. This is not an enjoyable process for managers. However its’ inherent transparency controls personality conflicts and levels the playing field somewhat.

2010 is a year where pay for performance is one of the cards global management teams are playing – the idea if it cannot be measured it cannot be managed / you can’t improve what you don’t measure – this of course holds true as a generalisation but as managers know there is a lot that cannot be measured. It’s ok to talk about the theory but in practice most cases turn inside out and the PA system becomes a bug/disease to the company. There are many other considerations to note for example the War for Talent – both sides of the fence those companies with revolving doors and those with high/100% retention rates. The results of recessionary times – cost cutting measures, massive layoffs, and reduction in jobs have left organisations with fewer talented employees. Many organisations are being compelled to recruit from the best available rather than those best suited for the job. This is resulting in bad hires. Ultimately it is the organisation’s performance that is affected.

Hospital cleaners are worth more to society than bankers, the BBC reported yesterday. The research, carried out by think tank the New Economics Foundation, says hospital cleaners create £10 of value for every £1 they are paid. It claims bankers are a drain on the country because of the damage they caused to the global economy, and today in HR Magazine according to Royal Bank of Scotland HR Head Neil Roden, he argues only 300 people out of the 155,000 staff employed by RBS were involved in businesses that caused these problems. Bankers reportedly destroy £7 of value for every £1 they earn. Meanwhile, senior advertising executives are said to “create stress”. Eilis Lawlor, spokeswoman for the New Economics Foundation, said: “Pay levels often don’t reflect the true value that is being created. As a society, we need a pay structure which rewards those jobs that create most societal benefit rather than those that generate profits at the expense of society and the environment”.

I have noted some of the main reasons why people dislike Performance Appraisal Systems:

You are under the microscope – negative and positive “feedback” aka “criticism”.

Bad past experience

Paper/online data mountain – both sides

Poor manager

Poor relationship with the manager

Poor performance!

The process, structure and formality of a performance appraisal

Performance reviews try to do too much

Used as a substitute for not offering regular, ongoing feedback throughout the year

Most often is a management problem, not a management performance problem

People are afraid to share information

Focus too much on what’s quantifiable

Inverse ROI associated with performance appraisal – they are onerous, forced, ranked, subjective, and wed to compensation

They aggregate long-term performance of the system

Driver of sub-optimization (every man/woman for him/herself, system-destroying competition, etc)

Viewed as an exercise you just have to get through so you can say it was done

Many occur directly after the Christmas period where people have just spent quality downtime with family/friends not thinking about work

Knowing What Really Motivates Workers in 2010 and beyond?

Ask leaders what they think makes employees enthusiastic about work, and they’ll tell you in no uncertain terms. In a recent survey the World Economic Forum which invited more than 600 managers from dozens of companies to rank the impact on employee motivation and emotions of five workplace factors commonly considered significant: recognition, incentives, interpersonal support, support for making progress, and clear goals. “Recognition for good work (either public or private)” came out number one.

Unfortunately, those managers are wrong.

Having just completed a multiyear study tracking the day-to-day activities, emotions, and motivation levels of hundreds of knowledge workers in a wide variety of settings, we now know what the top motivator of performance is—and, amazingly, it’s the factor those survey participants ranked dead last.

It’s progress.

The study demonstrates that the key to motivation turns out to be largely within your control. What’s more, it doesn’t depend on elaborate incentive systems. (In fact, the people in the study rarely mentioned incentives in their diaries.) Managers have powerful influence over events that facilitate or undermine progress. They can provide meaningful goals, resources, and encouragement, and they can protect their people from irrelevant demands. Or they can fail to do so.

This brings the strongest advice offered from the study: Scrupulously avoid impeding progress by changing goals autocratically, being indecisive, or holding up resources. Negative events generally have a greater effect on people’s emotions, perceptions, and motivation than positive ones, and nothing is more de-motivating than a setback—the most prominent type of event on knowledge workers’ worst days.