Canadian HR Reporter

SEPTEMBER 8, 2014 CANADIAN HR REPORTER & STRATEGIC CAPABILITY NETWORK Perfecting performance reviews Maybe it's not the program that's the problem, but how it's applied: Expert BY MARCEL VANDER WIER e methods with which companies evaluate employees are facing heavy scrutiny and calls for change, according to Ilana Hechter, a partner at Mercer Consulting in Toronto. Organizations are looking to fi ne- tune strategies, and attract and retain top talent, while building capabilities required for not just today but also in the future, she said. With this in mind, the perfor- mance review process has earned a mixed reputation in terms of value and time consumption in recent years, said Hechter, speak- ing at a recent Strategic Capability Network (SCN) event in Toronto. " e business environment is under increasing pressure and, quite frankly, they're looking to HR today to drive a very diff erent level of service than previously," she said. "Organizations and ex- ecutives are looking to HR to drive business strategy through people." Research is in e results from Mercer's Global Talent Trends Study — an annual survey of 1,700 HR professionals and 5,400 workers — were very similar to last year's fi ndings in terms of performance manage- ment. In Canada, employees want understandable performance rat- ings, comparisons to peers, clear team goals to promote collabora- tion, and additional benefi ts for high performers, said Hechter. "Individuals and employees are really concerned about having meaningful conversations," she said. " ey want to have people invested and inspiring them to do diff erent things in their career." e majority of performance management programs are simi- larly structured, with check-ins at scheduled times that see work- ers walk away with a ranking on a four- or fi ve-point scale. "What's shocking about this is, despite the similarity in how they're structured, there is a huge level of dissatisfaction across most organizations," said Hechter, not- ing 97 per cent of managers sur- veyed rated their system as "to- tally ineff ective." However, while many manag- ers believe performance reviews are "meaningless" and do not yield accurate information, it may not always be the program that is inef- fective, but rather the application of it, she said. As a result, employers are at- tempting to be creative with the review systems, with one in 10 global companies — including Adobe, Deloitte and Netfl ix — turning to a no-ratings system over the past year in favour of a culture heavier on continuous feedback, said Hechter. " e question is: If there are no ratings, how do you diff erentiate between individuals?" Many companies have imple- mented a cross-calibration exer- cise looking across lines of busi- ness while requesting quantitative feedback on how individuals or group are contributing, or relying on an individual manager's report. But companies should think twice before dropping ratings al- together, said Hechter. "Employees are saying, 'We like ratings,'" she said, because they al- low for diff erentiation from peers that is often further refl ected in compensation. Best practices Ratings or no ratings, the core essence of performance reviews is all about motivating human capital, said Hechter. And the ap- plication of employee reviews, ac- cording to Mercer, is held back by four key challenges: goal-setting, coaching, feedback and ratings. Managers should avoid giving employees unclear expectations and keep the list of goals down to three clear and actionable items, she said. After that, developing leaders is critical through coaching and feedback. "It's the leaders below the execu- tive, or the middle managers, that are actually carrying the business forward," she said. "Are they inspir- ing people to align with their vi- sion? Are they inspiring people to work and behave diff erently going forward? It's that level of leadership that we really need to focus on." With so many managers pro- moted on technical expertise alone, it's often wrongly expected they will be able to naturally in- spire their direct reports, said Hechter. Finally, organizations should ensure ratings are meaningful as opposed to an over-exaggerated bell curve, she said. Eff ective performance manage- ment could technically be com- pleted on the back of a napkin, as long as it's a meaningful conversa- tion, she said. "It's a little less about the ratings and the program than it is about the application." ere are four ways to drive more meaningful performance management, according to Mer- cer: focusing dialogue; reallocat- ing time; keeping score; and re- warding strong leaders. Establishing clear, actionable goals; reducing year-end focus in favour of ongoing engagement — or at least four check-ins per year — measuring review eff ective- ness; and providing compensa- tory boosts to consistently strong leaders who generate quality behaviour is the road map to effectively handling the work- force of tomorrow, said Hechter. Employers need to spend less time on what their program looks like, and more time on manag- ing change in the applicability of those programs and "actually driving employee behaviour." But a relationship to compensa- tion changes remains critical, she said. " at link has to be there in order for it to be meaningful. If you're going to diff erentiate in- dividuals and then not link it to how they're rewarded, the mean- ing of it becomes a little more challenged." Case study: Wawanesa Wawanesa Insurance recently overhauled its performance re- view system in partnership with Mercer. Up until recently, the company's regional operations operated independently and uniquely in terms of both busi- ness and people practices, said Jodi Carradice, CHRO of the Winnipeg company, which has 3,200-plus employees. "(Our workforce) wanted clar- ity and consistency," she said, speaking at the SCN event. "We are focused on driving towards 'One Wawanesa,' and driving to- wards the best possible employee experience that will ultimately drive a culture of excellence." e overhaul was conducted to ensure the review process was meaningful and consistent — a "key organizational capability" for the company. Ultimately, Wawanesa kept a Credit: Olivier Le Moal (Shutterstock) "Are they inspiring people to align with their vision? Are they inspiring people to work and behave diff erently? It's that level of leadership we need to focus on." RANKING > pg. 12

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