Canadian HR Reporter Weekly

3 Canadian HR Reporter, a Thomson Reuters business 2018 September 19, 2018 companies have abolished it: GE (General Electric) invented it and then they abolished it." Switching to a strictly development model is difficult because "it's really hard to decouple compensation from the performance management process," said Catalano. "If you're decoupling it and change performance management to be frequent conversations and there's no rating there, well 'How do we explain this to employees?' I find that usually that cripples a lot of organizations, so they're not sure how to handle that." "People are struggling because there's no real standard way of offering compensation that people feel very comfortable with," he said. Some organizations have made the switch and then gone back to ratings, because they run into trouble when it comes to the compensation increases, and justifying the increases, as the rating systems are linked back to the reward system, said Stewart. "But those that have removed it — and most of them are very satisfied — what they've seen is it has taken some of the pressure off that discussion to look back and instead focus on where they need to go, and how they're going to get there," she said. Talent-review method A talent review is a much better way to assess employee performance and decide compensation, said Tsangarakis. "Managers get together for the talent review and they talk about their people in terms of performance," he said. "Talent reviews are about managers meeting and talking about people, talking about how they are performing, talking about how they fit into the values, and culture and — very importantly — comparing people across the organization." By keeping the talent-review talks behind closed doors, employees don't feel discouraged. "If need be, you can actually assign people into categories during that meeting but (workers) don't know what is happening. And that's because it's so undermining from a motivation perspective," said Tsangarakis. "You can still differentiate, you can still use performance for deciding on compensation increases, but you don't need ratings — that's the point." For managers, it is often tough to conduct formal evaluations with workers, said Stewart. "When you think about that typical appraisal, it is not the best way to get somebody to perform. Managers struggle a bit with the process," she said. "It's hard to give negative feedback, so maybe taking off some of that pressure of a rating, they're really able to focus a little bit more on the changes that need to be made, and looking at where the employee can go." From the employee perspective, just hearing the rating can be tough as well. "When you have a conversation with an employee, they're actually not even hearing or registering what the development conversation is all about: (It's) 'What am I getting ranked so that it can impact my compensation plan?'" said Catalano. "I am a big proponent of saying we need to get this concept of managing people's performance and remove that terminology to be more about performance development." Done incorrectly, ratings can force employees to be "pigeon-holed into a rating, versus having their performance reflect what they really have done to contribute to the organization," said Irene Lis, founder of Aligned People Strategies and vice-president of HR consulting at Stratford Managers. "If you're managing a sports team, you want everybody to know their role, you want everyone to have positive feedback, constructive feedback. When all the players are pulling together and getting that same kind of feedback, resources, they're all moving the same direction for the same purpose and feeling good about it." Paper nightmare ere's also the administrative burden that ratings sys- tems produce, according to Lis. "Performance management should never have been about policing, never about the paperwork. It should always have been performance management, which is the development piece. 'Where do we need to go together and how can I help you get there?'" "It's not a paper process, it's not simply a mechanism to confirm your annual increase or not, and it's horrendous when it's used as a way of catching people doing things wrong," said Lis. "Just making it an administrative paper process versus a people-centric process can be quite demoralizing." By overburdening managers, the process doesn't achieve its goals, said Stewart. "Usually, about half the organizations report back to us that they're just not satisfied with performance management, and they point to the amount of administration," she said. "(It's about) managers complaining, employees complaining." You can still differentiate and use performance to decide on comp increases. But you don't need ratings." Credit: Africa Studio (Shutterstock) In the next few years, there will be a shift towards an ongoing feedback and coaching model — and hopefully improved satisfaction, says Nicole Stewart, principal research associate at the Conference Board of Canada.

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