Just how might you design performance management for an organisation that’s full of people who are used to overachieving, and who are almost obsessed with data? That was the challenge facing charity the Children’s Investment Fund Foundation (CIFF) – and HR director Martyn Dicker and his interim HR manager Nicola Fuschillo. Here’s how they solved it.
“We had a performance management process that was designed to one decimal place,” recalls Dicker. “The rationale was ‘we are an organisation focused on data, so why don’t we do the same for our internal processes?’ But how can you get close to describing someone’s performance to one decimal place? It was unpopular. People felt it was extractive and punitive.”
The results of staff surveys were hardly encouraging either, with only 39% of people feeling performance management was done well, and less than half (42%) saying reviews were followed up on. “No-one knew how the ratings were applied,” says Fuschillo. “Around four in five said they didn’t understand the ratings process.” She pauses. “And I think the one in five may have been making it up.”
“We have such a talented workforce, and we knew [the performance management process] wasn’t working,” adds Dicker. CIFF has what Dicker terms an “elite group” of employees, making managing performance along a ratings scale quite a sensitive issue. “People are very uncomfortable with not being the top of the class,” says Fuschillo. “Meeting expectations, or just being in the middle…you have people unable to deal with it.”
The fact CIFF’s performance management system is linked to bonus pay makes things even trickier. “You can’t put everyone in the high-achieving box or they all expect a very large bonus,” Dicker points out.
Given performance management is a pretty hot topic right now, there are no shortage of examples of organisations attempting to do things a little – or a lot – differently. Fuschillo pulled together four options for the ExCo to look at; from scrapping the process entirely to “sink and all” (a complex and data-heavy system).
After discussions and consultations with senior management and staff, a conversation-based approach was decided upon. And work was done to link performance to a new competency framework. “Increasing the frequency of conversations and focusing on continuous feedback were the two strongest threads, but I had to develop a rating system that would work for CIFF to go alongside,” Fushcillo explains. The result is the Target model (see below).
Getting the right language has been crucial. “We spent a lot of time on the wording,” says Fuschillo. “‘Succeeding’ is a much more positive word than ‘meeting’. ‘Succeeding’ is aspirational; who wants to just ‘meet’ expectations? And ‘struggling’ [acknowledges] it might not be someone’s fault.”
“We are saying this is where we expect the majority of people to be, and to be positive that they are meeting our high standards,” says Dicker. “Before, people were spending a disproportionate amount of time stressing about the rating system, and it ended up with staff not being open about their development areas, as that would affect their rating and therefore their bonus. None of that was working. We needed people to think: ‘How can I develop? What about the behaviours?’”
Replacing the numerical system with a simple colour-coded one removes the risk of “arguments about one decimal place”, says Fuschillo. Simplicity rules, adds Dicker: “Keep it simple. Don’t design a system for the tiny proportion of people who are not delivering; design it for the people who are. Scrap tonnes of admin and focus on good quality conversations. HR’s role is to be supporting people to have conversations, not chasing forms.”
The connection to bonuses and performance-related pay has been the trickiest to work out, both Dicker and Fuschillo report. By simplifying the approach bonuses will be more standard, varying only by colour rather than decimal place. Dicker says: “When we’ve looked at other organisations [for ideas on how to change the process] the thing we’ve struggled with is: how have these organisations that have changed their [performance management] systems paid bonuses? Most don’t appear to have an answer. We’ve found one that works for us and will take away a lot of the sensitivity as you will only get differentials at the extremes.”
The next steps:
It’s still early days but Dicker and Fuschillo are optimistic about the positive impact the new system will have. “Some people don’t like simplification; there’s comfort in forms if you are not a confident people manager,” says Dicker. “But it has been welcomed. People see it as a much more mature and trusted approach. It’s not just HR doing HR for the sake of it.”
The next step is to launch a series of conversation guides to help managers and employees open up about their performance and development needs and ambitions.
“This is a massive change for an organisation that’s always been obsessed with data and evidence,” Dicker adds. “If you want a big change to work, particularly if you want to move from it being a yearly event to something more continuous, it needs support from the top and continuous messaging.”
“There’s not enough evidence across HR that a lot of what we do works and that our processes are worth it,” he continues, on performance management more generally. “We are not saying that [performance management] is scrapped. We are scrapping the elements of the process HR has, perhaps deservedly, got a kicking for.”