‘Death of the Appraisal’. What’s next for performance reviews
by GEOFFROY DELESTRANGE
Geoffroy de Lestrange is a B2B marketing specialist cloud solutions. After several years of experience in various European countries, he was able to establish a logistics management and CRM solution for a technology training company Salesforce.com before joining Cornerstone in 2013 to look after the marketing Southern Europe.
Cornerstone OnDemand (NASDAQ: CSOD ) is a global leader of SaaS talent management solutions. Cornerstone OnDemand helps organizations of all sizes to manage the entire course of the employee from a single platform , recruitment assessments of skills through training. Available in 41 languages, it has 15.5 million users in 191 countries . Cornerstone enables global groups such as Starwood Hotels & Resorts, Neiman Marcus Group, Save the Children, Turner Broadcasting System, Virgin Media and Pinkberry, retain staff and increase the performance of their employees to develop their business.
Presenter: Geoffrey de Lestrange is the Southern Europe Marketing Manager for Cornerstone OnDemand. He is a business-to-business marketing professional with significant international experience. At Cornerstone, Geoffrey manages marketing in France, Germany, Italy and Spain.
Geoffrey: Hi everyone, my name is Geoffrey de Lestrange. I am working for Cornerstone OnDemand, software provider of talent management solutions, headquartered in California. I'm based in Paris and I'm in charge of product marketing for Europe.
Today, I would like to talk with you about performance reviews, whether they'd be useless or strategic. The situation is not very good because as some surveys show only 13% of workers feel passionate about their work and more than half of employees consider that reviews do not motivate them to work harder. Of course, the situation can vary a lot from one country to another. At Cornerstone, we did a survey last year on internal recruitment in Europe and we saw that retention was an important topic for 60% of HR directors in the UK, up to 79% in Germany, but actually, only 35% for France. At the end of the day, the point is that there is definitely an issue about employee engagement all over Europe and worldwide.
Yet there is good news. We've seen that according to Gallup, employees that get strength-based feedback are more productive. And this seems logical because proper result-driven feedback can give a real boost. If you know what you've done well and if you know where you need to improve yourself, you can really focus your efforts. By the way, don't forget that psychological studies have shown that anytime you give one negative feedback, you need to also give four or five positive ones.
So what's the goal of all this? Well, first of all, you need to better understand people skills, expertise and interest. Second point, you need to know who are your potentials and if you have any retentionalist. And last but not least, you need to anticipate a future talent needs. That's the reason why old performance reviews are disappearing. You may have read in the newspapers that Accenture, Deloitte and other companies were ditching their old-fashioned performance reviews and everyone, to be frank, finds them completely boring and useless.
Many people are still condemned to, what we would call the spreadsheet nightmare, where you have standard questions for different people, different roles, which is like comparing apples and orange. In addition, the traditional performance review that happens once a year, consistent in telling employees you've done a good job, here's your raise, thank you, good bye, see you next year. So it's really completely useless, there's no real discussion about development skills or result-driven feedback.
At the end of the day, what are we talking about? Well, hopefully, we're not talking about this person here on this cartoon. How can you answer questions about performance, behavior, attitude, know how, motivation with simple grades one to five or bad, average, good, very good, that kind of scoring, which is really sort of demeaning somehow? So this is really not what we should be doing today. You really need to define your targets, you need to know your employees' skills, you need to ensure that you have the right person at the right position with the right skills, now and in the future, and this is important because of course when you hire someone, you have a job description and you have organized a series of interviews, and tests and assessments.
You know that when that person passes the job, he or she is probably the perfect match though this doesn't mean that it would be the case in two years. So you also need to understand who is able to develop new skills because you may not even be able to anticipate which competencies your company will need in two or three years' time. So in the short term, you need to be able to identify strengths and weaknesses in order to leverage the strengths and correct the weaknesses. But in the long term, you need to be able to plan for future developments and workforce planning, which is why change is underway.
So I'm quoting here Deloitte and the Human Capital Trends of 2015 that show that companies are changing their performance process. As you can see on the right side, 89% of respondents of this Deloitte's survey said they would change their performance system within the next year and a half. Yet still too many companies use Excel, or worse, paper-based evaluation methods with very low response rates and no follow up. We all know that kind of document would be stored somewhere, will get completely forgotten, and might come back a year later completely outdated and useless.
There is another issue in bigger international corporations because they may have to face different evaluation systems and methods per country, per subsidiary, per brand and they are not able to have consistent data all over the company. This is often a trigger for a new performance project, which in that at Cornerstone, I've had in mind a few clients. For example, a very big company in Germany with more than 140,000 employees with subsidiaries in 30, 40 countries and they really wanted to move from a being German company with international activities and become a real international company with headquarters in Germany, which means that they really wanted to develop mobility across borders so that everyone all over the world could be able to move from one country to another and get new opportunities. And for that, they really needed to develop a performance review that would apply all over the world so that they could know who in which country would have the skills and the potential to be mobile and move from one place to another and get new positions.
So this is really a strategic question. Therefore, we need to rethink the way we define performance review. What are we really talking about? What is a performance review or what should it be today? The issue was that all performance reviews were mixing different conversations.
There are actually three questions that an employee would ask himself or herself. The first one would be, "Am I doing a good job?" and this should be discussed on a very regular basis with probably the line manager first but also internal or external clients, and this should be done on a project basis or task based. Any time something is finished, something is accomplished, this discussion should happen so that on a day-to-day basis, some may be weekly or monthly depending on the company culture and the industry you're on, you can really get feedback on what you've done properly, where you've been really good and where you need to improve yourself.
Based on that, based on those regular discussions, we can have a second discussion around talent and development, which should be probably once or twice a year. And that's more a longer-term discussion on, "Can I really develop my skills in order to get a new position? Can I get new responsibility? Can I be in charge of a new project in order to develop new skills? Can I get a development plan?" That kind of questions, which are more for the longer term and for career planning, should also happen on a regular basis but maybe less frequently.
And last but not least, of course, if you've done a good job and you've had good reviews all over the year and you feel that you are working better and better, then you want this to be recognized from a financial point of view. And that's the third discussion around compensation, which really is about recognizing the work and recognizing new future responsibility, a bonus and maybe a raise.
So all three discussions are important and they used to be completely mixed in the old-fashioned performance review.
The main point is actually to be fair. This is really important that should design a set of key performance indicators to measure the effectiveness of performance reviews and managing objectives. I'm saying managing objectives and not managing by objectives, which is the not the same because you manage people and those people have objectives, which is not the same situation as managing by objectives, which could reduce your staff to [inaudible 00:11:21] they need to attend.
With the new flexible workforce we know today, a yearly review is not sufficient to have a precise view on employee performance and evolution. You need think about indicators, such as the performance versus the target. You were given a task, have you done it properly? The performance in a certain time frame compared to a previous time frame, "Am I better now than I used to be?" A performance before and after a development plan so, "I have been trained in new skills, do I know how to use them properly?" And a performance compared to a position I would like to get, so, "I have an evaluation and I want to get the new job. What do I need to do in order to fulfill the skills that will enable me to be successful?" And therefore, this fair analysis needs to be based on real-life evaluations.
It's really important to evaluate performance on the job, in situation, to get the main areas that must be addressed and to ensure consistent performance evaluation.
By the way, it's also the most efficient way to ensure compliance around topics such as security, hygiene, following procedures, any critical task that has to be done in order to be compliant. Defining a set of indicators that you can really observe on site will enable you to recognize which employees are ready to get more responsibilities and which ones need to get additional training, for example. But who should do that?
Most of the time, this is the job of the line manager, and if we look at it in a neutral way, we have to say that the line manager has a huge responsibility. He or she is often the person that has the biggest role in a chart, actually, because they are responsible for the efficiency of their team, which is normal. They're also in charge of ensuring that each member reach their target. But they also have HR responsibilities. They need to mentor and coach their team. They need to review them. They also need to hire. They need to be aware everyone's talents and weaknesses. They might be in charge of defining development plans. They must be aware of the company strategy.
And if I quote the British Association CIPD, they have to be problem solving, they have to show integrity, they have to manage emotion, they have to show consideration, they must be proactive, they must be sociable, empathetic, accessible. So, basically, they need to be superheroes, somehow.
So we really need to think beyond just performance review. HR needs to support the line manager and all employees with a strategic vision around performance management and not just performance reviews. So we really need to look beyond reviews.
If I talk about performance management, it's important to improve employee performance in an efficient manner. Managers need to align employee activities with organizational strategies and they need to monitor performance with continuous feedback and coaching, as I've just mentioned.
That means they must be able to set meaningful goals in an easy and transparent way because this will then allow them to observe this in a very concrete way on site. They'll also be able to track skills and competency so that they can identify skill gaps or special competencies that would need to be fostered. And for this, they should be able to do face to face, get client feedback, also show feedback, a bit like the Facebook like, you know. I am the manager but I might not be the person always in contact with my commanders, maybe they do work for other stakeholders within or outside the company, and I should be able to know how those stakeholders evaluate my team members.
I've mentioned observation quite a lot. So it's very important to be able to define, what we would call checklists of skills that can be observed on site in order to assess competencies. As I mentioned before, this is a great way to ensure compliance, but it's also a great way to recognize that targets have been reached. And this implies that you should be able to do it on, if possible, from a technical point of view, on mobile so that you will observe and see how someone is behaving and working and then you can enter your observations on your smart phone or your tablet.
As a manager, you also need to understand the way your entire team is working in what we would call a Matrix of Skills. This of course could be done with a paper and a pen or if you had proper software, such as the one that Cornerstone is offering. Anyway, the manager needs to define the series of skills upon which he or she can observe his or her team member and have a framework to compare their competency and see who needs to be trained, who has any gaps, and who, on the other way, is extremely efficient and could get new responsibilities, could get new qualifications and maybe some internal mobility.
I mentioned before that the old performance review was mixing different topics and one of the topics which is truly important for an employee is compensation. In itself it is not directly around performance but it's of course, related to performance and it's a way to reward performance and also to incentive for future performance results.
That's why it is so important for a manager to have the ability and insight on performance to convert a compensation analysis and have the ability to make good decisions about base-pay bonus and other types of rewards within one's team. The idea being to enable a true pay-for-performance culture and build compensation plan that take into account the good work that has been done and the potential in the future.
There's a third element when we talk about performance reviews, which is more on the long term, and that's succession planning. You can't really think about succession if you do not know your talent. So based on performance and development and skills, you can plan for current and future needs, you can recognize your higher potential employees all over the organization and position the best to leadership.
So you can address work [inaudible 00:20:13] issues with succession plans because you have put in place a real performance management helping you to identify talent pool for future roles, which is also a great way to increase employee engagement, as this is based on evaluation results.
And if I take the point of view of the employees themselves, they can also or they should be able to also evaluate themselves to positions they would want to get. If I know that I have just had good performance reviews, that I have all the skills and competencies that I expected for the role I'm having right now, I may want to know how I am compared to a new role, maybe from junior to senior or maybe in a brand new position. And this can be done if you have the reviews I've had before and then I can know which new skills I will need to develop in order to apply for a new position within the company.
As you can see, this goes way beyond traditional performance review because we've talked about performance of course, we've talked about evaluation, we've talked about compensation and succession, which means at the end of the day, we are really talking about global talent management. Performance is actually just an element of talent management and we at Cornerstone consider that talent development really is at the core of HR. That's the most important part of HR.
Human resources managers have no value added with payroll. Of course you need to pay salaries on time and that's very important and if it's not done, you have a problem. But this is not with that that you will ensure that you have an impact on the company bottom line.
On the other way, if you properly develop your teams and you can prove that with proper performance management that people work better, are more efficient and have an impact on the company turnover, then you as an HR manager prove that you deserve a seat at the table. Performance management that we've just talked about is just a means to an end, the end being to have better and more engaged employees.
We at Cornerstone believe that we are the right partners for that, of course, and I will just say one or two words on Cornerstone.
We are a global leader in talent management with more than 20 million users at 16 years experience. We have clients in almost 200 countries, 2,300 companies, so that is where our vision around talent management comes from. We can be a trusted partner for your performance and talent management projects.
In conclusion, I really believe that HR has to lead to change. Companies are in perpetual movement today, and talent management, including performance reviews, are at the core of this strategy. There are tools for transformation and HR is the fuel for change. HR via proper talent development and talent management can help the company reach its goal and can help the company face new challenges in the future.
Thank you very much.