Why didn't Google get rid of ratings like many other companies ?

So far, in the past few posts, we looked at the changes into performance management system brought in by companies such as Juniper Networks, Accenture, Microsoft, Adobe and Deloitte. As stated, all these companies had their own share of good reasons while deciding to make the shift. I will delve into a bit more analysis around this in the upcoming posts but for now, would like to focus on Google.
I consider the case of Google as important because- by the virtue of it's image, is known to be an organization that has evolved newer ways of doing routine things. I had recently gotten a chance to read the book by SVP of HR at Google, Laszlo Bock. Bock is the key author of the book titled- Work Rules!: Insights from Inside Google That Will Transform How You Live and Lead. This book is all about how Google reinvented the way their HR function is run. While i will try and narrate in detail the review of this book in the future posts, but in gist, Google relied a lot on the concept of Data driven HR by bringing in a unique focus around People analytics.
Using this approach as a foundation, Google reviewed the various aspects of the way Human Resources function was managed and brought in many changes that eventually helped HR function make a desired impact. Like many other companies, the book states that- Google also reviewed the Performance Management system and did bring in the changes wherever necessary or seeked an objective reason to not change. Unlike most of the organizations that i have featured in the recent blogs, Google didn't let go of rating system and retained the rating system as a part of its core performance management philosophy. Why did Google retain ratings ?

To answer this question, i have included the below image from the Page-167 of the above stated book by Laszlo Bock. Please do take a moment to go through the contents-

To Summarize:
1. Google sees ratings as a tool that can help managers take key people related decisions.
2. The focus is not just on having a rating system but rather a "just" or "fair" rating system.
3. Google considers calibration meetings important, where the key managers calibrate the efforts across the organization to bring in the necessary consistency across the organization.
4. Ratings play an important role in calibration meetings by providing a standard language. It can also help provide the visibility of exceptional employees to the rest of the organization's managers- hence help take crucial decisions like move to other teams.
5. The rating system probably makes less sense if the organization has less people. But if we are dealing with a large mass of people, a foundation of just system is needed to create consistency and fairness. Rating process that relies on calibration actively weeds out badness and bias from the system.

Google has an interesting take here, as it is not directly taking the approach of weeding out symptom of the problem (i.e. ratings) but rather tries to address the root of the problem (bad "unjust" rating system) as they see it.

Hope you enjoyed reading this. See you soon.

How Deloitte Revamped its Performance Management System ?

Sources and Acknowledgements:
Most of the below text is adapted (directly and indirectly) from the below URLs. So all credit to the author of the below articles for the upcoming text.
https://hbr.org/2015/04/reinventing-performance-management

Motivation behind the Deloitte's change:

1. Like many other companies, we realize that our current process for evaluating the work of our people—and then training them, promoting them, and paying them accordingly—is increasingly out of step with our objectives.
2. In a public survey Deloitte conducted recently, more than half the executives questioned (58%) believe that their current performance management approach drives neither employee engagement nor high performance. They, and we, are in need of something nimbler, real-time, and more individualized—something squarely focused on fueling performance in the future rather than assessing it in the past.



Shortcomings of the traditional system as observed by Deloitte:
1. Employees thought that the existing process was fair, however management didn't. Internal feedback demonstrates that our people like the predictability of this process and the fact that because each person is assigned a counselor, he or she has a representative at the consensus meetings. The vast majority of our people believe the process is fair. We realize, however, that it’s no longer the best design for Deloitte’s emerging needs: Once-a-year goals are too “batched” for a real-time world, and conversations about year-end ratings are generally less valuable than conversations conducted in the moment about actual performance.

2. But the need for change didn’t crystallize until we decided to count things. Specifically, we tallied the number of hours the organization was spending on performance management—and found that completing the forms, holding the meetings, and creating the ratings consumed close to 2 million hours a year. As we studied how those hours were spent, we realized that many of them were eaten up by leaders’ discussions behind closed doors about the outcomes of the process. We wondered if we could somehow shift our investment of time from talking to ourselves about ratings to talking to our people about their performance and careers—from a focus on the past to a focus on the future.

3. The most comprehensive research on what ratings actually measure was conducted by Michael Mount, Steven Scullen, and Maynard Goff and published in the Journal of Applied Psychology in 2000. Their study—in which 4,492 managers were rated on certain performance dimensions by two bosses, two peers, and two subordinates—revealed that 62% of the variance in the ratings could be accounted for by individual raters’ peculiarities of perception. Actual performance accounted for only 21% of the variance. This led the researchers to conclude (in How People Evaluate Others in Organizations, edited by Manuel London): “Although it is implicitly assumed that the ratings measure the performance of the ratee, most of what is being measured by the ratings is the unique rating tendencies of the rater. Thus ratings reveal more about the rater than they do about the ratee.”

4. We also learned that the defining characteristic of the very best teams at Deloitte is that they are strengths oriented. Their members feel that they are called upon to do their best work every day. We wanted to spend more time helping our people use their strengths—in teams characterized by great clarity of purpose and expectations—and we wanted a quick way to collect reliable and differentiated performance data.

What kind of changes in Performance Management System were embraced by Deloitte?:
1. what we’ll include in Deloitte’s new system and what we won’t- It will have-
   a. no cascading objectives,
   b. no once-a-year reviews, and
   c. no 360-degree-feedback tools.
2. We’ve arrived at a very different and much simpler design for managing people’s performance. Its hallmarks are speed, agility, one-size-fits-one, and constant learning, and it’s underpinned by a new way of collecting reliable performance data.

3. At the end of every project (or once every quarter for long-term projects) we will ask team leaders to respond to four future-focused statements about each team member. We’ve refined the wording of these statements through successive tests, and we know that at Deloitte they clearly highlight differences among individuals and reliably measure performance. Here are the four:
   a. Given what I know of this person’s performance, and if it were my money, I would award this person the highest possible compensation increase and bonus [measures overall performance and unique value to the organization on a five-point scale from “strongly agree” to “strongly disagree”].
   b. Given what I know of this person’s performance, I would always want him or her on my team [measures ability to work well with others on the same five-point scale].
   c. This person is at risk for low performance [identifies problems that might harm the customer or the team on a yes-or-no basis].
   d. This person is ready for promotion today [measures potential on a yes-or-no basis].
4. In effect, we are asking our team leaders what they would do with each team member rather than what they think of that individual.
5. Our design calls for every team leader to check in with each team member once a week. For us, these check-ins are not in addition to the work of a team leader; they are the work of a team leader. If you want people to talk about how to do their best work in the near future, they need to talk often.

Additional comments:
1. This is where we are today: We’ve defined three objectives at the root of performance management—to recognize, see, and fuel performance. We have three interlocking rituals to support them—the annual compensation decision, the quarterly or per-project performance snapshot, and the weekly check-in. And we’ve shifted from a batched focus on the past to a continual focus on the future, through regular evaluations and frequent check-ins.
2. Deloitte's previous performance management:
Objectives are set for each of our 65,000-plus people at the beginning of the year; after a project is finished, each person’s manager rates him or her on how well those objectives were met. The manager also comments on where the person did or didn’t excel. These evaluations are factored into a single year-end rating, arrived at in lengthy “consensus meetings” at which groups of “counselors” discuss hundreds of people in light of their peers.

Around what time-frame were the changes brought in:
Likely 2015

Image source:
https://www.snelling.com/Client_Resources/How_to_Design_an_Employee_Satisfaction_Survey/ 
http://www.clarabridge.com/welcome-to-the-world-of-big-feedback-data/ 
http://www.sitrion.com/blog/the-scorecard-helps-you-be-smart-about-qa

How Microsoft (possibly) changed its Performance Management System ?

Sources and Acknowledgements:
Most of the below text is adapted (directly and indirectly) from the below URLs. So all credit to the authors of the below articles for the upcoming text.
http://www.theverge.com/2013/11/12/5094864/microsoft-kills-stack-ranking-internal-structure

Motivation behind the Microsoft's change:

1. Driven by Microsoft HR chief- Microsoft HR chief Lisa Brummel
2. Microsoft employees who all cited stack ranking as the most destructive process inside the software giant.

Shortcomings of the traditional system as observed by Microsoft:

1. For years Microsoft has used a technique, stack ranking, that effectively encourages workers to compete against each other rather than a collaborative Microsoft that CEO Steve Ballmer was trying to push ahead of his retirement.
2. Stack ranking is a process where each business unit's management team has to review employees' performance and rank a certain percentage of them as top performers, or as average or poorly performing. Former Microsoft employees have claimed it leads to colleagues competing with each other, especially when some employees in a group of individuals need to be given poor reviews to match the method.




What kind of changes in Performance Management System were embraced by Microsoft?:

1. More emphasis on teamwork and collaboration.  We’re getting more specific about how we think about successful performance and are focusing on three elements – not just the work you do on your own, but also how you leverage input and ideas from others, and what you contribute to others’ success – and how they add up to greater business impact.
2. More emphasis on employee growth and development. Through a process called “Connects” we are optimizing for more timely feedback and meaningful discussions to help employees learn in the moment, grow and drive great results.  These will be timed based on the rhythm of each part of our business, introducing more flexibility in how and when we discuss performance and development rather than following one timeline for the whole company.  Our business cycles have accelerated and our teams operate on different schedules, and the new approach will accommodate that.
3. No more curve.We will continue to invest in a generous rewards budget, but there will no longer
be a pre-determined targeted distribution.  Managers and leaders will have flexibility to allocate rewards in the manner that best reflects the performance of their teams and individuals, as long as they stay within their compensation budget.
4. No more ratings. This will let us focus on what matters – having a deeper understanding of the impact we’ve made and our opportunities to grow and improve.


Around what time-frame were the changes brought in:
Around the year 2013-14

Image source:
http://www.computerworld.com/article/2475472/it-management/shock--microsoft-hr-kills-its-hated--stack-ranking-.html
http://puretextuality.com/2013/11/07/news-jenas-on-her-soapbox-again-and-you-have-thatkevinsmith-to-blame/
http://www.dreamstime.com/stock-photo-teamwork-growth-image21782380

How Adobe (possibly) Revamped its Performance Management System ?

Sources and Acknowledgements:
Most of the below text is adapted (directly and indirectly) from the below URLs. So all credit to the authors of the below articles for the upcoming text.
http://www.businessinsider.in/Why-Adobe-Abolished-The-Annual-Performance-Review-And-You-Should-Too/articleshow/33570770.cms

Motivation behind the Adobe's change:

When Donna Morris joined Adobe in 2002 as a senior director of global talent management, she noticed that the annual performance review, such a central part of the human resources job she had been hired to do, wasn't much of a resource to the humans it served.
"At one point, the planning alone took nine months," she says. "It was like preparing to give birth to a child. It was like, 'why does this take so long? Does this really drive the business return?'"
Five years later, she was promoted to Senior Vice President of People and Places. She came to realize that the most important part of her job - and the success of the company - was to invest in people and not a months-long process.

Shortcomings of the traditional system as observed by Adobe:

1. As Morris explained to us in the interview, the performance review is a "dreaded dental appointment" for manager and employee alike. What's more, it's inherently adversarial in the way it sets manager against employee, terrible for a company that's trying to be creative by way of collaboration.
2. At the end of 2011 we were transforming our business. We were declaring that we really were going to be the company that wanted to enable creativity, but our people processes were stuck in a time warp.
There were three things that need to be disrupted.
- One was that performance reviews were an annual process. It was like a dreaded dental appointment, where once a year we would give people feedback. While our intent was for that review to be reflective of the whole previous year, in reality it was based on the most recent events.
- The second was that the performance review was like a rear-view mirror - it had nothing to do with
the person's progress forward.
- The third, probably most important element was that we fundamentally believed people were our most important asset, yet once a year we had a process that pitted person against person.

What kind of changes in Performance Management System were embraced by Adobe?:
1. Swapping out the annual review in favor of regular check-ins allowed Adobe to have a lightweight process that served - rather than distracted from - people doing their best work.
2. The check-in is far more informal. While the check-in process is regular and on-going, it starts at the beginning of the year, since it's tied to people having yearly expectations.
3. At the beginning of the year, we outline what our priorities are across Adobe. That's done at the leadership level. For a manager, you're already in regularly scheduled one-on-one meetings. You're taking time out of one of those meetings and having a discussion with your respective employee on what's expected for the year.
4. As an employee, I would actively participate in that. Many employees are driving those discussions themselves, saying, 'Here's what I believe I should be held accountable for this year.' That's scene one, setting expectations.
5. how does the check-in system help with that?
People are most effective when they know where they stand. Then there's no mystery.
We want people to be getting feedback on their performance against those expectations in real time. We don't want to be policing it at a certain time of the year. We want it to meet the expectations of what is most appropriate for that business cycle.
For instance, in our field organization, it's very quarterly driven because many of the individuals are on sales incentive plans. At the beginning of the actual quarter they'll know what their goals and objectives are. Throughout the quarter they'll be getting feedback and then at the end of the quarter they'll get an overall recap of areas in which they were really strong and where they had opportunities for development.

Around what time-frame were the changes brought in:
Around the year 2014

Image source:
http://www.jobnimbus.com/blog/2014/05/03/managing-complicated-processes-with-simple-crm/
https://www.sciencenews.org/blog/scicurious/people-prefer-just-get-pain-over
https://commons.wikimedia.org/wiki/File:Rear_view_mirror_view_in_Mt._Rainier_National_Park,_driving_to_Longmire.jpg

How is Accenture (possibly) planning to Change its Performance Management System ?

Sources and Acknowledgements:
Most of the below text is adapted (directly and indirectly) from the below URLs. So all credit to the authors of the below articles for the upcoming text.
http://www.washingtonpost.com/news/on-leadership/wp/2015/07/21/in-big-move-accenture-will-get-rid-of-annual-performance-reviews-and-rankings/
http://www.washingtonpost.com/news/on-leadership/wp/2015/07/23/accenture-ceo-explains-the-reasons-why-hes-overhauling-performance-reviews/

Motivation behind the Accenture's change:

1. The firm will disband rankings and the once-a-year evaluation process starting in fiscal year 2016, which for Accenture begins this September.
2. A move backed by current CEO- Pierre Nanterme.
3. Pierre Nanterme's thoughts-  "What I learned is that leadership is about letting it go. Trust people. The art of leadership is not to spend your time measuring, evaluating. It’s all about selecting the person. And if you believe you selected the right person, then you give that person the freedom, the authority, the delegation to innovate and to lead with some very simple measure."

"And for the millennium generation, it’s not the way they want to be recognized, the way they want to be measured. If you put this new generation in the box of the performance management we’ve used the last 30 years, you lose them. We’re done with the famous annual performance review, where once a year I’m going to share with you what I think about you. That doesn’t make any sense."

Shortcomings of the traditional system as observed by Accenture:
1. have had enough with the forced rankings, the time-consuming paperwork and the frustration
engendered among managers and employees alike.
2. These companies say their own research, as well as outside studies, ultimately convinced them that all the time, money and effort spent didn't ultimately accomplish their main goal — to drive better performance among employees.
3. “All this terminology of rankings—forcing rankings along some distribution curve or whatever—we’re done with that,” Nanterme said of Accenture's decision. “We’re going to evaluate you in your role, not vis à vis someone else who might work in Washington, who might work in Bangalore. It’s irrelevant. It should be about you.”
4. “Employees that do best in performance management systems tend to be the employees that are the most narcissistic and self-promoting,” said Brian Kropp, the HR practice leader for CEB. “Those aren’t necessarily the employees you need to be the best organization going forward.”
5. CEB also found that the average manager spends more than 200 hours a year on activities related to performance reviews—things like sitting in training sessions, filling out forms and delivering evaluations to employees. When you add up those hours, plus the cost of the performance-management technology itself, CEB estimates that a company of about 10,000 employees spends roughly $35 million a year to conduct reviews. “The process is too heavy, too costly for the outcome,” Nanterme said. “And the outcome is not great.”
6. Performance is an ongoing activity. It’s every day, after any client interaction or business interaction or corporate interaction. It’s much more fluid. People want to know on an ongoing basis, am I doing right? Am I moving in the right direction? Do you think I’m progressing? Nobody’s going to wait for an annual cycle to get that feedback. Now it’s all about instant performance management.
7. The process is too heavy, too costly for the outcome. And the outcome is not great. My philosophy has always been very simple: You need to be relevant to your clients, not the other way around. It’s the same thing with your people. You need to be relevant to them. I’m not going to impose on the millennial generation something that is not the environment in which they want to develop and grow.

What kind of changes in Performance Management System were embraced by Accenture?:
1. It will implement a more fluid system, in which employees receive timely feedback from their managers on an ongoing basis following assignments.
2. At the end of the day, you need to give some evaluation. You need to give a compensation increase. But all this terminology of rankings—forcing rankings along some distribution curve or whatever—we’re done with that. We’ve totally done too much effort for a limited outcome.
3. We’re going to evaluate you in your role, not vis a vis someone else who might work in Washington, who might work in Bangalore. It’s irrelevant. It should be about you. How are you performing now, and do we believe you are prepared to move to another role? We are getting rid of all this comparison with other people.

Additional comments:
Interestingly, though, the decision to roll out an updated approach usually has little to do with reining in the numbers. Kropp said companies aren’t likely to save much time or money by transitioning away from their old ratings systems to a new evaluation process. Where they stand to benefit is, instead, the return on those investments. “The smartest companies are asking, how do we get the best value out of the time and money we are spending?” Kropp said.

Around what time-frame were the changes brought in:
Around the year 2015-2016

Image source:
https://hbr.org/2010/05/mentoring-millennials
https://brighthillgroup.com/game-thrones-work-hr-performance-forced-rankings-heres-instead/

How did Juniper Networks (possibly) Revamp its Performance Management System ?

Continuing the discussion started in the previous blog, i am bringing-up the case of Juniper Inc., that embraced a new and updated performance management system some years back. Read on to know more-

Sources and Acknowledgements:
Most of the below text is adapted (directly and indirectly) from the below URLs. So all credit to the authors of the below articles for the upcoming text.
http://searchfinancialapplications.techtarget.com/feature/Juniper-Networks-VP-of-HR-boldly-redefines-stale-practices
http://www.growbold.com/home/2012/10/performance-appraisals-part-ii-case-study.html
http://www.npr.org/2014/10/28/358636126/behold-the-entrenched-and-reviled-annual-review

Motivation behind the Juniper's change:

1. As a part of the changes brought in by then new VP of HR- Steven Rice, who is said to be a
veteran who like to stay in tune with times and embrace changes faster.
2. With Rice at the helm of Juniper's HR organization, several processes have been revamped, from corporate learning to employee surveys, and even the HR department's intranet site.
3. So how does he manage to keep ahead of the curve? He constantly questions each assumption about HR -- and challenges his peers to do the same. "Focus on what is the business outcome you're trying to drive, and don't let the language get in your way of throwing out [processes] or re-imagining them," he said.
4. Rice said the greater personalization of technology is one of the driving forces behind several of his organization's HR initiatives.

Shortcomings of the traditional system as observed by Juniper:
Beginning in 2009 Juniper started a process of defining, and articulating, its vision, its brand, values and aspirations to employees. With a blueprint of disruptive innovation, underpinned with central values of collaboration, authenticity and trust Juniper aspired to employ 100% ‘J Players’ – those who agree with the company’s mission and live the values on a daily basis.  The annual performance review was not viewed particularly well in engendering trust.  Employees wanted more regular feedback, no surprises and the review decoupled from the pay and bonus allocation process.

What kind of changes in Performance Management System were embraced by Juniper ?:
1. At the HR Strategy Forum meeting  in Santa Clara,  Greg Pryor, VP, Leadership Development, discussed the philosophy and implementation of the ‘Talent Matters’ process.  Juniper drew on work of David Rock – see ‘Managing with the Brain in Mind’6 in designing a scientifically sound performance management system.

2.  Recent studies in neuroscience, as summarized by David Rock in his various writings,  point to us having  a social brain with circuitry that mirrors the ‘primitive’ brain’s basic survival response – to approach reward, and, more particularly, to avoid threat. Rock identifies five social domains of Status, Certainty, Autonomy, Relatedness and Fairness which have the capacity to activate the primary reward or primary threat response.  Traditional performance appraisal processes, particularly with rankings, have the propensity to fire off the alarms across multiple domains – rankings, even ratings, affect perceptions of status and fairness.
3. Juniper implemented a system that includes a ‘Conversation Day’ in which employees and their managers together look at the employee’s career aspirations, capabilities, connections and contributions. Traditional threat responses are minimized by the focus on career growth (and what’s possible) and framing the event as a dialogue, not a problem that needs attention.  No label or rating is assigned. This is neither documented nor graded. "There's no label associated with any individual, so from our perspective there is no formal or traditional performance management process in the company," says Steven Rice, Juniper's executive vice president for human resources.

4. During the first year, using the new system, Juniper achieved a record 93% participation and survey results indicated that 66% of those who did participate found Conversation Day “helpful” or “extremely helpful”.

Additional comments:
Juniper Systems is using Halogen Software’s award-winning talent management solution to reinforce a strong coaching culture and drive higher performance. Juniper Systems selected Halogen eAppraisalTM based on its integrated development planning and strategic goal alignment capabilities and the system’s flexibility in meeting the company’s unique business requirements.

Around what time-frame were the changes brought in:
Around the year 2010

Image source:
http://www.dmnews.com/mobile-marketing/personalization-the-missing-link-for-mobile-marketers/article/328618/
http://www.amazon.com/Your-Brain-Work-Strategies-Distraction/dp/0061771295

Will the Performance Management (as we know it) cease to exist in future?

In the traditional realms, the topic of innovation is often attributed largely to the product specific deliverable.

I have long believed that in-order for organizations (especially the kind of ones that i have experienced) to innovate and scale, it is imperative for supporting functions to embrace the principles that lead to innovation. By supporting functions i mean- HR, IT, Finance, Operations etc. As an example, we may have the best product innovation strategy but if the facilities is not supporting the engineers create a good physical environment, then chances of breaking new grounds may be quite less. In the similar way, one of the core supporting groups in the organizations is that of Human Resources. In my experience, i have not seen many engineers having positive perception about HR function and always seem to undermine the actual importance this group has on the eventual outcomes of the organization. Like some functions, the importance of HR is generally appreciated when this function is not there rather than when it’s often there. HR department can often be equated with Software testing department in the premise that both often seem to be thankless jobs and the value of one is known more by the absence of the group rather than by their presence, which is often taken for granted.

If i don't look back far too back, there has been some sort of silent (not much talked-about) innovation happening in the HR function as well. A lot of the age old practices are being re-thought and one such practice has been that of performance management.

Historically, performance management (and the way it’s traditionally done) isn't one of the most appreciated practices in the organizations. Having experienced reasonable number of employee surveys, this is one area that is often found wanting in the organizations. I won't discuss this reasons about it in this post as this will be the subject of the upcoming posts. In the next few posts, i will try and highlight some of the companies that have brought in some refreshing thinking around handling performance management and have shunned the old, traditional way of handling performance management and adopted something new. I will highlight a few companies and post that will try and provide some consolidated perspective around it. Alright, just await the next few posts.

Just as a trivia around performance management, consider the following snippet adapted from here-

Performance reviews have been a part of institutional life since formative Harvard Business School studies of the 1930s. Professor Elton Mayo found that "happiness and productivity were directly related to the social structure of the workplace," Businessweek reports. "Suddenly it wasn't enough to just hire someone to do a job; bosses had to manage and mentor people, too. They did that, usually, with formal meetings."

Then, in 1950, the performance review was enshrined in law. The Performance Rating Act of 1950 mandated the annual review of federal workers. Additional laws tethered bonuses and salaries to the grades given in those evaluative meetings, setting a nationwide precedent of annual performance reviews.

In the upcoming sections, I will be analyzing some of the companies that have gone ahead and embraced change in their performance management philosophy with the focus on the following points, which was the core i wanted to understand-
1. Motivation behind the change
2. Shortcomings with the traditional system
3. What kind of changes were embraced ?
4. Any other related comments

See you soon!

Image source:

http://www.dreamstime.com/stock-illustration-performance-management-chart-keywords-icons-image44846962