For the past few weeks I have been working with people at one of Britain’s largest banks, developing ideas for a new performance management approach. In the bank’s context ‘performance management’ means ‘people management’; it’s about maximising the contribution that each colleague makes to the bank’s overall performance.
The challenge is enormous. The organisation employs many tens of thousands of people in a wide variety of roles and locations. There is an understandable desire for simplicity and transparency but also a need to ensure that any new approach works for everyone.
To guide us, we’ve been working through key decisions that we need to make and, although the end result is still a work in progress, two quite distinct world-views have started to take shape…
Specify and Control or Sense and Respond?
Who decides what matters and what to focus on? Our research has shown that the common approach of developing plans and cascading objectives leaves organisations slow to respond to change and short on grass-roots responsibility and innovation. At the bank we’ve seen that cascade objectives can quickly become redundant, performance improving faster than expected or context changing in other ways that leave a long wait for the 12 month performance cycle to complete before relevant new goals are set.
Instead of getting better at objective setting, we’re considering whether a performance management system that is clear about the purpose, values and behaviours that the bank holds dear would be sufficient for responsible and innovative practice to flourish.
- Could we do without the need to Specify and Control through cascade objectives?
- Would having clarity about purpose, values and behaviours be enough for individuals and teams to make Sense of their work and to Respond to the opportunities and issues that they confront everyday?
- Might alignment and control therefore be an output of creating a relentless focus on value and responsibility at the point of delivery rather than an input that risks constraining thinking and practice?
Move Information to Authority or Move Authority to Information?
Supporting these thoughts on creating a “Sense and Respond” approach, we’ve also been looking at how information flows in the organisation. The current performance management approach biases towards reporting upwards for decision making. People are evaluated by managers who rate their colleagues and who meet to calibrate their ratings (i.e. to check with each other for consistency). Colleagues typically feel they have to make their case to management, justifying their contribution. This results in lots of activity to gather, prepare, discuss and scrutinise evidence.
We’re exploring turning this approach on its head, not by asking colleagues to rate each other but by changing the flow of information and removing ratings altogether.
- What might performance management look like if it focused on ensuring that information and support are available to colleagues and teams so that they can make sense of how well they are doing for themselves?
- How might this help them to ‘Sense and Respond’ more rapidly and more effectively?
- What might it do for their sense of ownership and responsibility to the bank, its customers and to each other?
Develop From Attention To Deficits or Focus On Building Strengths?
From the start of our work to explore performance management at the bank, we heard colleagues consistently telling us two things:
- There is value in helping colleagues have clarity about how they are doing and how they can do better.
- Too often performance management can feel like a negative experience, focusing on what’s wrong and not doing enough to recognise what’s great.
At first pass this looks like a tension that needs to be managed. After all, a performance management system that only focuses on what’s going well could easily slide into providing the sort of false reassurance that keeps people and the organisation blind to opportunities and risks. We are thinking about how the framework of formative and summative feedback may provide a way to reconcile this seeming tension, ensuring that full and frank feedback always provides a positive platform for action rather than a sense of rebuke or failure, helping people and teams to build strengths.
- What is the role of feedback in a ‘Sense and Respond’ environment and who gives it?
- Can we help colleagues to see feedback to each other as a responsibility and from each other as a gift?
- Can frameworks like formative and summative feedback support this?
Manage Individual Performance or Remove Friction And Support Reflective Practice?
These questions and insights are encouraging us to shift the frame of reference for performance management from being about instructing and assessing individuals to being about creating the opportunity for everyone to do their best work, individually and together. As we have looked at what this might mean in practice, we’ve noticed that colleagues are typically motivated to do a great job but sometimes:
- hit policy and process barriers that make it harder than it could be to do great work.
- find themselves swimming against the tide of cultural norms that hold the status quo in place.
- find themselves at odds with each other, through objectives and priorities that don’t align.
Moving away from cascade objectives can help with this, removing one of the points of friction that puts a brake on collaboration and improved performance. We know we can go further too; applying the accelerator, not just removing the brake. To do that we are devising approaches that will help to create systematic reflective practice. The goal here is to help colleagues and teams take responsibility for surfacing tensions, agreeing shared priorities and keeping each other honest in making progress against them.
- Can reflective practice unlock a culture of responsible innovation, helping colleagues to make a habit of identifying and acting on opportunities to improve?
- What role can managers play in enabling this and in making it systematic?
- What skills do colleagues and managers have already that can support this and where may there be a need to build capability?
Design for Extrinsic Motivation or Design for Intrinsic Motivation?
All of this thinking adds up to a developmental approach to performance management. Rather than starting from the question, “How do we motivate people to perform” we are asking, “How do we make it easier for people to spot the opportunities to do a great job then to be able, accountable, supported and free to act on them?”.
These different starting points unlock different thinking and practice. During our social testing with colleagues the responses have been fascinating. In general, people are compelled by the idea that focus should be on support and development not on scoring and ranking. Colleagues like the idea of freedom to innovate responsibly within a framework of clear purpose, values and behaviours. They recognise that most people turn up to do a good job and that the first, best thing we can do is therefore give them a good job to do. All of this tells us that designing first for an environment that enables strong Intrinsic Motivation is key; creating a place where people feel connected to and responsible for the value of their work together and where they have real opportunities to influence what work gets done and how.
The extent to which we are focused on Extrinsic Motivation is therefore mostly about ensuring that issues such as pay and progression don’t inhibit any colleague’s energy to do the right thing. To do that, we need to help create an environment where decisions on matters such as pay and progression are experienced as sound, principled and transparent; meeting the needs and reasonable expectations of colleagues but not necessarily being used as a carrot or stick. This is leading to really interesting conversations about how to manage variable pay (i.e. bonus).
- To what extent might creating a ‘Sense and Respond’ environment, where colleagues have clarity of purpose, information about how well they are doing and the freedom, support and accountability to act on that, enable intrinsic motivation?
- What other enablers of intrinsic motivation are there and how can we key into these to ensure that everyone has a great job to do?
- How can we reward people in ways that recognise their contribution without driving unhelpful competition between colleagues or teams?
As these thoughts take shape we are now entering a ‘test and learn’ phase, where different cohorts within the bank will test different approaches to see what works, what it takes to get them to work and how this varies across different locations and departments. We expect that this ‘test and learn’ phase may be inconclusive in parts but its purpose is not so much to prove one approach over others as it is to surface learning about what’s achievable and under what circumstances. In making this move from theory to practice we also expect that we will discover lots that may cause us to say “we should have known that” but our intent is to stay calm, to keep going, to have our eyes open wide and our ears pinned back, being ready to sense and respond.