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Transform Performance Management with Strategic Employee Recognition

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Table of Contents

What’s the Purpose of Performance Management?

The Feedback Challenge

The Traditional Performance Review Tries to Do Too Much

The Games We Play with Performance Appraisals and Merit Increases

Game 1: Using the Appraisal as the Primary Means of Feedback

Winning the Game Every Time: Overcome the Dearth of Feedback in the Workplace

Feature: No One Knows Who’s Doing the Best Job Like the People Doing the Job

Game 2: Ranking Performance

Feature: 3 Reasons for Differentiation Creep

Winning the Game Every Time: Stop Tolerating Head-in-the-Sand Management and Create a Culture of Recognition

Game 3: Relying on Merit Pay to Reward Performance

Winning the Game Every time: Expand the Tools Available for Accurate Performance Assessment

Winning with Strategic Recognition™

Zappos Gets It Right – Again. How a Performance Appraisal Process Should Work

Globoforce Can Help

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About the Author







© 2011 Globoforce, Ltd. All information has been previously published by Derek Irvine at www.recognizethisblog.com or www.compensationcafe.com. All content is the copyright property of those entities, unless otherwise expressed.

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What‟s the Purpose of Performance Management?

When implemented well, performance management

processes help company leaders get employees aligned

with company strategy, vision, values and objectives.

In most organizations, performance management

encompasses:

1) Goal setting

2) Progress assessment

3) Performance assessment

4) In most cases, differentiation and associated pay

raises

Yet, research shows:

87% of employees are not satisfied with the results

of their work at the end of most weeks

73% of workers say their organizations‟ strategies

and goals are not translated into specific work tasks

they can execute.

70% of workers do not know what to do to support

their organizations‟ strategies and goals.

81% of workers do not feel a strong level of

commitment to their organizations‟ strategies

“People don’t know

what you want them

to do, don’t know how

to do it anyway, don’t

particularly care, but

at least they’re

somewhat dissatisfied

for it at the end of

the week”.







The Feedback Challenge

Employees want more feedback. Managers who give regular feedback

have employees who willingly give more discretionary effort on

precisely those areas targeted as critical to success.

Yet, research shows:

67% of employees say they get too little positive feedback1

51% of employees say they get too little constructive criticism

from their bosses1

5

1 LeadershipIQ

2 Gallup

0%

10%

20%

30%

40%

50%

60%

70%

Employee Strengths

Employee Weaknesses

Ignore Employees

Em

plo

yees

Primary Focus of Manager Feedback

Impact of Feedback on Engagement2

Engaged

Actively Disengaged








“Reviews tend to have competing goals: Employees are looking for frank, honest and helpful feedback, but know that if they don't

use the review time to pump up their performance, they might not get the top bonus or best raise. Meanwhile, organizations want

to allocate rewards according to performance and merit, and they want to provide developmental feedback so that employees can

improve. But organizations also have to make tough decisions about who ranks higher and what kinds of bonuses people get.“

Knowldege@Wharton, April 2011

The Traditional Performance Review

Process Tries to Do too Much.

One major challenge with the way performance

appraisals are conducted today is the tight link

between feedback and compensation.

Feedback –Employees want and need more frequent

feedback, both constructive and appreciative.

Pay for Performance – Employees aren‟t in the right

state of mind to accept the value of constructive

feedback – no matter how well communicated – in a

review during which their focus is on showing

themselves in a positive light to get the greatest raise.


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Too often, the performance appraisal process

has become a game that both employees and

managers have learned to navigate without

any true business advantage result.

The Games We Play with Performance

Appraisals and Merit Increases

The Three Most Common Appraisal Games:

Using the Appraisal as the

Primary Means of Feedback

Ranking Performance

Relying on Merit Pay to

Reward Performance

1

2

3

7







Game 1:

Hallmarks of the Game

1. At least a third of employees never receive a performance

appraisal. If the manager cannot be troubled to deliver on a key

management requirement on an annual basis, how often do you

think the employee reporting to that manager gets any kind of

feedback – positive or negative – on their work.

2. When employees do receive an appraisal, the conversations

aren‟t authentic. Dan Pink recently explained in a Telegraph

article: “Appraisals are the West's form of kabuki theatre –

highly stylized rituals in which people recite predictable lines in

a formulaic way and hope the experience ends very quickly.”

3. The feedback itself is separated from the events being

discussed. Whether the employee performed well or poorly, the

feedback given requires both the manager and the employee to

vaguely remember an event, accomplishment or incident. Far

better is feedback in the moment.


Using the Appraisal as the Primary Means

of Feedback

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Winning the Game Every Time:

Overcome the Dearth of Feedback in the Workplace

1. Recognize we are all in desperate need of more feedback.

We‟ve become so accustomed to the lack of praise or criticism that we‟ve

become comfortable working away in the hopes that our final product will

be what is wanted. Too often, this amounts to little more than spinning

our wheels. How often have you completed a project, in this dearth of

feedback environment, only to have to redo 90%? This must end. Think

how much more productive employees could be if their progress was

validated, praised, and corrected along the way.

2. Give managers tools for frequent feedback.

To give managers some credit, they often work within a system that

doesn‟t give them the means, methods or processes to assess and reward

performance outside of the annual performance review. Give them a

strategic recognition program that enables frequent, ongoing feedback in

a timely manner throughout the year.

3. Let all employees provide positive feedback in the form of recognition.

If all employees are allowed and encouraged to express their appreciation

for colleagues‟ efforts – including specific information about how those

efforts contributed to project, team, customer or company success – then

those assessments can also be included in the review process.


Would you rather rely on

a once-a-year

assessment from one

person passing

judgment, or on many

assessments throughout

the year from many

people sharing

appreciation?

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FEATURE

No One Knows Who‟s Doing the Best Job Like the People Doing the Job

The feedback of others affected by an employee‟s work is rarely captured at all, much less

well, in the traditional performance review process.

The person receiving the performance appraisal feels the feedback is coming from one

person‟s perspective and may be rehashing “old news” – stuff that happened ages ago.

The manager giving the review feels pressure to give meaningful, helpful feedback (both

good and bad) to numerous employees. Often, they don‟t work closely enough with each

employee to do this.

With strategic employee recognition, people – not just one person – can contribute to the

performance appraisals of their colleagues through continuous feedback year-round.

Don‟t stop at just letting employees

recognize the efforts of their

colleagues. Pay close attention to

what they are saying. Track, measure

and report on who is recognized,

how frequently and for what reasons.

Now you gain a much more complete

picture to color your performance

appraisal process.

How much more

motivated and

engaged with your

work you would be

if you knew your

efforts were

appreciated and

contributing to

something greater?


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Game 2:


1. Performance ranking – typically ranking employees on a

scale of 1 to 5, with 5 being “outstanding” and 1 being

“exit from the organization” – tries to make the arbitrary

seem reasonable. Regardless of the details an HR pro puts

in place, one manager‟s understanding of “outstanding”

will always be different than another‟s.

2. Performance ranking forces the objective on what is

inherently subjective, creating “differentiation creep.”

Lance Haun explains this well: “[Reviews] are

implemented by managers … who plead to HR, „I know

who is great, let me just give them raises,‟… all for the

benefit of executives who think, „Nobody should get 5′s

because that means they‟ll stop wanting to improve!‟”

3. Most importantly, performance ranking does nothing to

influence or change a management culture that doesn‟t

care to give frequent feedback in a way more meaningful

than a number.

Ranking Performance


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FEATURE

3 Reasons for Differentiation Creep

1

2

Managers don’t want to make the hard

choices of who appears in the bottom 10%.

“I just give all my team members the

same merit increase. It’s too hard to

differentiate them and trying to do so

leads to too many problems. I just don’t

want to choose.”

3


Managers lack enough insight into employee contributions to make correct differentiation decisions.

“I give all my team members the same ranking year after year. Their performance doesn’t change that

much. It’s easier, and I hit my targets for the appropriate number of employees at each level.”

Managers have truly hired well and none of their employees are poor performers.

“Why should I have to rank my employees? I don’t hire low performers, and my entire team

consistently hit high performance targets.”

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Stop Tolerating Head-in-Sand Management

and Create a Culture of Recognition

1. Acknowledge a need for culture change.

A culture that allows once-a-year feedback in the form of a

performance appraisal is a culture that encourages management

malfeasance. Allowing managers to sit behind closed doors and offer

feedback on projects, performance or progress only once a year can

be categorized in no other light.

2. Reassess requirements for management positions.

People are often promoted to management because they excelled in

their individual contributor roles, not because they displayed any

hallmarks of a good manager. Being a manager of people requires

being able and willing to notice the work your employees do, the

attitude with which they do it, and then praising or correcting them

accordingly – in the moment. This takes presence, courage, foresight

and insight.

3. To truly want to differentiate employees, let them do it

themselves.

Let all employees recognize excellent behaviors, actions and results

demonstrated or achieved by their colleagues. Require specifics on

what was done and why it was important. Now you have a much more

complete picture of employee achievement throughout the year –

from the wisdom of crowds.


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Game 3:


1. There is little differentiation in merit increases between levels of employee performance. Merit salary increases have compressed from a traditional 5% for average performers and 7-8% for top performers to an average employee increase of 2.8% with 3.1% for top performers. If this is the primary means to communicate to top performers that they truly are “more valuable” than the average employee, how much more valuable do you think they will feel?

2. Pay increases are no more “promotable” than salary itself. Managers cannot publicly laud employees who continually go above and beyond by promoting how much of a pay increase they received over their “average” peers.

3. Relying on salary increases ties recognition of excellence to a once-a-year event. Don‟t top performers deserve more than a once-a-year pat on the back?

Relying on Merit Pay to Reward

Performance

Two-thirds of organizations

have a pay-for-performance

policy, but of those, only

one in five always ensures

that rewards are accurately

aligned to contribution.

Accenture/SuccessFactors,

April 2011


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Expand the Tools Available for

Accurate Performance Assessment

1 Allow colleagues to “assess” each other through

frequent, specific recognition. Use recognition

accumulated during the year as part of a formal

assessment of a person‟s true contributions to the

success of team members, customers and the

organization.

2 Diversify forms of recognition. In many

organizations, the performance review and

subsequent promotion or raise is the only form of

recognition employees receive for their hard work.

Strategic recognition eliminates this narrow

“recognition platform,” creating continuous positive

feedback “events” that recognize employee

accomplishments, show appreciation for efforts that

advance critical projects, and reward mastery.

3 Offer year-round rewards commiserate with year-

round recognition of employee efforts. Those who

perform at a higher level are naturally recognized

and rewarded more frequently for those efforts.

Think of recognition like

cooking your favorite

recipe. You typically

include five spices to

make the dish just so.

Think how different – and

how bland – that dish

would taste if you only

used one spice. The same

is true in organizations

with bland programs that

use only one form of

recognition: the review.


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Solutions dramatically enhance the performance

management and appraisal process, overcoming these

challenges by increasing the frequency, timeliness and

specificity of feedback and recognition. A powerful tool

for communicating both what the company needs done

and how each employee contributes, such behavior-

based recognition encourages employees to appreciate

peers and colleagues – specifically and with details – for

achieving an objective (including a description of the work

and the objective achieved). Frequent recognition also

allows for course correction throughout the year in sync

with changing company objectives.

These “recognition assessments” and kudos can then be

used during the annual performance review as an

additional data point on the strengths (John has been

recognized repeatedly for innovation) and weaknesses (but

John has been recognized only once for teamwork) as

potential areas of improvement. This presents a much

more rounded view of an employee’s contributions.

Moreover, since such a strategic recognition program is

deployed company-wide, data can be gathered and used to

benchmark an individual‟s performance and demonstration

of values in their work against direct peers, team

members, the division and the company.

Setting individual

goals annually does

little to align

employees with your

goals. It’s not that

employees don’t

want to help the

company achieve its

strategic objectives.

It’s that they don’t

know how.

Strategic Employee Recognition







Zappos Gets It Right – Again.

How a Performance Appraisal Process Should Work.


Area for Improvement

Open the ability to provide feedback on behavior demonstration to all employees,

not just managers. If Zappos did that, think how many more data points the review

process would have.

Zappos, a company that proudly grounds all actions in its company values, recently

switched from the traditional goals/results appraisal process to one equally

grounded in its company values.

“Employees would no longer be

rated on how well they

accomplish tasks, such as

meeting deadlines or being

punctual. Instead, success would

be determined by how well

employees embody Zappos’ 10

core values, such as delivering

“Wow” service or showing

humility. … Under the new values-

based system, managers

document how many times they

notice an employee exhibiting

certain behaviors, such as

expressing their personality or

acting humble. While the

behaviors are open to

interpretation, managers must

cite specific examples of how an

employee displays them.”

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Globoforce Can Help

Do you need to transform your performance management processes?

Our recognition strategists are ready to help you implement a strategic

recognition program that will broaden and deepen the scope of feedback and

recognition across your organization.

Visit us on the web at www.globoforce.com or email us at

[email protected]. To speak to one of our global

consultants immediately, please call: +1 888-7-GFORCE.

About Globoforce Founded in 1999, Globoforce is the world‟s leading provider of strategic employee recognition solutions for

enterprise and mid-sized companies. Through its easy-to-use on-demand software, Globoforce helps HR and

company leaders recognize and engage employees, transforming how a company‟s culture is strategically managed

globally. A private corporation, Globoforce is co-headquartered in Southborough, Massachusetts, and Dublin,

Ireland. To learn more, visit www. globoforce.com or the Company‟s blog at http://globoforce.com/globoblog.

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About the Author

As Globoforce‟s Head of Strategic Consulting,

Derek Irvine is an internationally minded

management professional with over 20 years of

experience helping global companies set a

higher ambition for global strategic employee

recognition, leading workshops, strategy

meetings and industry sessions around the

world. He blogs regularly on the power of

strategic recognition across the talent

management spectrum at Recognize This! His

articles on fostering and managing a culture of

appreciation through strategic recognition have

been published in Businessweek, Workspan and

HR Management. Follow Derek on Twitter at

@DerekIrvine.

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