Lively debates about performance appraisal processes have continued this year. Microsoft liberated itself from the shackles of annual performance reviews back in 2012, with other organisations following suit, including Accenture, Gap, Adobe and more recently, Deloitte. Other organisations, such as Facebook, believe there is value in prevailing with performance evaluations for the reasons of fairness, transparency and development. There is no ‘one size fits all’ answer for performance management. Organisational size, culture, technology access, manager capability and manager-employee proximity will all be thrown into the mix that determines the best approach. But one person has been running an effective performance appraisal process longer than any organisation. Santa.
Santa’s performance appraisal process is refreshingly simple; there are just two rating options – naughty or nice. He takes into account the entire year’s behaviour, and via his proactive management team (that’s the parents), in-the-moment performance feedback is provided to warn children when they’re veering dangerously close to the naughty list. Okay perhaps not all year round, but certainly from the Autumn months parents find it hard to resist reminding their mischievous offspring that ‘santa is watching.’
The other critical factor to Santa’s approach is that good performance leads to actual reward. A stocking full of presents (or pillow case if you’re smart – you fit much more in!) is a highly motivating reward. What’s more, the presents are tailored to the individual making the reward wonderfully meaningful. Who wouldn’t strive for high performance?
Of course there are a number of flaws. Namely, there are no clear guidelines on the behaviours that lead to either performance rating and there’s a huge dose of positive bias in the performance assessment. Has any parent ever let Santa follow through on a ‘naughty’ rating? Imagine if forced distribution were introduced… a heart breaking notion.
As January rolls around, along with performance evaluations and objective setting for many organisations, it’s timely to review how effective your performance management process is. If, as an HR professional, you’re anticipating and dreading having to chase managers and employees to complete performance reviews, it is likely your process is not as effective a business tool as it should be.
Failure to address underperformance, disconnect between performance & reward and a lack of meaningful performance feedback all negatively impact employee perception of fairness and motivation. An effective performance management process is where to start to tackle these issues. There are four principles that work really well for Santa (and in all seriousness, in real-life organisations too):
- Simplicity: A major global bank uses just two ratings in their mid-year review; employees are either on track, or off-track. This makes the process more efficient for all involved, whilst still ensuring performance discussions take place.
- Meaningful, performance-related reward: Whether using annual or multiple performance evaluations, at some point there has to be a translation to real reward. A series of focus groups I ran recently for a media agency unearthed the demoralising impact of performance ratings that do not lead to a worthwhile distinction in monetary reward. There has to be substantial recognition for achieving high performance, and an effective approach for under-performance to relieve demand on the reward pot.
- In-the-moment performance feedback: Adobe use a ‘check-in’ system to support regular (every 8 weeks) performance discussions between managers and their direct reports.
- Unlimited reward budget: Okay, Santa has an unfair advantage on this one. We’ll have to grapple with real world provision.
As a starting point, review how your performance management process stacks up against these principles and gather feedback from managers and employees about the next round of evaluations. That will give you a good steer as to the improvements to prioritise. In the meantime, lets all hope we made it on the ‘nice’ list.