I think it is interesting to see how the importance of performance-related pay has moved in and out of fashion. Go back a few years and everyone was saying they were a pay-for-performance employer and everything from shares to pay rises was linked to a rating. That made budgeting difficult, so we had to have forced rating distributions and hold calibration meetings lest managers got carried away and made everyone a superstar with associated rewards. The problem with relating salary increases to performance is you are, in fact, rewarding future years based on this year’s performance, thereby creating new internal pay disparity for years to come. With bonus and pension related to pay also, the impact is compounded.
Now, the needle has swung the other way, maybe because the zeitgeist is much more about equality and transparency. Many organisations, like us, have done away with performance ratings altogether, focusing more on driving behaviour through manager performance conversations. Our performance management no longer sits within the reward team but has an entirely separate reporting line into the chief people officer. That is all well and good, but we do still base our bonuses on performance and without ratings, we are rather making it up as we go along.
Tracking performance
We have a fancy new app which prompts managers to remember they have team members and that they should talk to them from time to time. It even has a little slider for each objective so they can track the lack of progress. However, it only records qualitative not quantitative feedback. This does seem to be the way performance management is trending. No ratings. No formal annual reviews. No paperwork. Well, not exactly anyway.
Last year we asked managers to divvy out a bonus budget based on performance, but without a rating to point to, only the silly sliders. It became an even more subjective distribution, based on the whims of individual managers. Worse, we had no way to analyse the bonuses given out, other than against target. It felt like a free-for-all. This year, we have decided to re-introduce a rating, but we are not allowed to call it one because we only did away with ratings last year and it will look like a U-turn. No, we will ask manager to allocate a performance ‘assessment’. Not a rating, you understand. Oh no. An assessment.
The net effect is the same, of course. The rating (sorry assessment) will form part of the final bonus calculation and determine how much someone gets paid out at year end. These things are such fun to communicate. Worse, with the performance management team now reporting up separately, we have no control over what they will say or when they will say it. Yet, we are meant to create a bonus process that is ‘fully aligned’ with the performance management process. Happy days.
I meet with the head of the performance management team in an attempt to get our year end timetable in sync. I say attempt because it is like trying to align with a wet snake. I want to create a timeline that includes the training the performance management team will do around the year-end performance conversation and objective setting, but every time I create a calendar, they go and change all the dates. They have even set one of the training dates after the deadline for managers to conduct their year-end reviews. Are the managers meant to be psychic, I ask in my head.
Managing the performance management team
The performance management team now also owns all the messaging around objectives and behaviour, describing what good looks like. If we are going to talk about how the bonus ratings (sorry assessments) will be made, we need to give guidance on how to relate that to outcomes in objectives and behaviours. I draft a slide and discuss it with both teams. We have 10 ratings (sorry, assessments) and we need to add some performance wording against each one. I would do it myself, but we do not own the wording around performance so I cannot. They take the slide away and give me just five levels instead of 10. It works but I wonder how managers are supposed to interpolate. It also only talks about combined high performance objectives and behaviour versus poor performance on both. I can also see managers asking things like what happens if someone is assessed super high in terms of objectives but low on behaviours. They have not addressed that either. Sigh. I am not about to start making things up or doing their job. I will just have to go with it.
I run a preview with our HR business partners. Sure enough, they ask about the intermediate levels of assessments and how we talk about behaviour that is at odds with outcome on objectives. What happens if someone meets all their objectives, but they stepped on everyone to get there? Good point. This means I need to run another meeting with the performance management team and try to get them to fill in the boxes the way I had asked them to in the first place. Sometimes getting other people to do things is so much harder than doing it yourself.
I go back to our manager training slides and see what else is missing. We have another run through with the HR teams and this time they call me out on the timeline. Performance management have changed their training dates again. Aaagh.
Next time…Candid works on a new recognition platform