Kill Your Performance Ratings With David Rock Aug 2015

8/12/15
NLIS VISION
Rethink Performance Management
Transform Leadership
Dr. David Rock, Director, NeuroLeadership Institute
Through Neuroscience
2015 NeuroLeadership Institute
THREE PRACTICES
A NEW LANGUAGE FOR LEADERSHIP
Research Education Solutions
NeuroLeadership Ins6tute 2015. Not to be

shared without permission. SCARF is a
registered trademark of NLI.
8/12/15
HOW WE PARTNER

8/12/15
Kill your ratings
10
PERFORMANCE MANAGEMENT CONTINUUM
Based on
quantitative results
(i.e. 1-5)
From:
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Fewer than five firms made major changes in 2010

The line of courage
Ratings
Judge
Competitive assessment
Annual event
Top down
Individual contribution
Significant paperwork
Fixed mindset
Overwhelming threat
TREND OR FAD?
No Performance Scores
Performance Scores
Forced
Ranking
Structured To
conversations
Guided
conversations
43 - 60 large companies have radically altered PM
To:
Coach
Coaching and development
Frequent conversations
Shared responsibility
Enterprise contribution
Minimal paperwork
Growth mindset
Manageable threat

50 - 70% of firms considering major changes
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8/12/15
REINVENTED PERFORMANCE MANAGEMENT
WHY THE CHANGE?

Long cycles and complexity is reducing agility
Inhibiting collaboration, which reduces customer focus
Not connected to how work gets done: fast and in teams
Too complex for the return it provides
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THE DATA WAS NEVER ANY GOOD ANYWAY
THE DATA WAS NEVER ANY GOOD ANYWAY
Two thirds of rated top performers not the top performers
Actual
performance
Random
measurement
error
(CEB, 2012)
21%
11%
Organizational
perspective
Under 25% of performance ratings correlate to performance

(Scullen et al, 2000)
6%
Idiosyncratic rater
biases
62%
90% of performance systems are a failure

(SHRM, 2009)
Ratings were stronger reflections of raters.

Scullen, Mount, & Goff (2000)
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TRULY WEIGH UP THE COSTS

Visible benefits
Invisible costs
Sense of certainty
Over 40% of employees less engaged
Feeling of control
Strong threat from all angles
Perception of fairness
Reduction in collaboration
DELL STUDY: HEART OF THE CHALLENGE?

50% were surprised by their rating
87% negatively surprised
Correlates to 47,850 employees
Many surprised were the better performers. They
expectedbest and got agreatorgreatand gotgood
Drop in trust across the board
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Link to 23% lower engagement than those not surprised

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THREE RESEARCH IDEAS
TWO MINDSETS
1. Foster a Growth Mindset to encourage continual improvement
A belief that intelligence and talent are static

and cant be changed in any meaningful way
Fixed mindset
2. Minimise Threat to have candid and honest conversations
3. Facilitate Insight if you need people to positively embrace change
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Growth mindset
Believing that intelligence and talent can be
developed
Leads to a desire to look smart
Leads to a desire to learn
Feedback can be a setback
Feedback is a chance to learn
Stretch goals are risky
Stretch goals are helpful
Motivation comes from approval
Motivation comes from mastery
Focus on what you are good at
Focus on where you can develop
Others success can be a threat
Others success is something to learn

from
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8/12/15
TWO MINDSETS
SHIFTING MINDSETS
Fixed mindset
Growth mindset
A belief that intelligence and talent are static

and cant be changed in any meaningful way
A belief that intelligence and talent can be

developed
Leads to a desire to look smart
Leads to a desire to learn
Feedback can be a setback
Feedback is a chance to learn
Stretch goals are risky
Stretch goals are helpful
Motivation comes from approval
Motivation comes from mastery
Focus on what you are good at
Focus on where you can develop
Others success can be a threat
Others success inspires learning
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Fixed Mindset
Prove
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FIXED MINDSET: LEARN LESS FROM MISTAKES
Growth Mindset
Improve
GROWTH MINDSET: LEADERSHIP CONFIDENCE
Negative Feedback:
Individuals with a fixed mindset show

an enhanced neural response to
negative feedback on making errors.
Positive Feedback:
When asked to think about a

leadership role model, individuals
with a growth mindset (leaders
are made) gained leadership
confidence, compared to those with
a fixed mindset (leaders are
born).
They also show less memory-related

neural responses given information about
correcting future mistakes.
Mangels et al. (2006), SCAN

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Hoyt, Burnette, & Innella (2012), PSPB

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IMPACT OF THE TWO MINDSETS
IMPACT OF THE TWO MINDSETS
Growth mindset
Fixed mindset
Growth mindset
Fixed mindset
Prove yourself
Improving yourself
Prove yourself
Improve yourself
Demonstrate your skills
Developing your skills
Demonstrate your skills
Develop your skills
Perform better than others
Performing better than you did in the past
Perform better than others
Perform better than you did in the past
Internal dialogue:
Internal dialogue:
Internal dialogue:
Internal dialogue:
Am I able to do this? Maybe I just dont

have the talent
Im not sure I can do this right now but I will

give it a go.
Am I able to do this? Maybe I just dont

have the talent
Im not sure I can do this right now but I will

give it a go.
Its not my fault. It was someone elses

responsibility.
If I dont take responsibility, I cant fix it. I

need to listen and learn.
Its not my fault. It was someone elses

responsibility.
If I dont take responsibility, I cant fix it. I

need to listen and learn.
25
26
WE ARE EASILY PRIMED
model
THE
SCARF
MODEL
SCARF
Good job, you must be talented at this.

versus
Good job, you really applied yourself here.
Chiu, Hwong, & Dweck (1997)
27

28
8/12/15
THREE RESEARCH IDEAS
THE TRANSFORMATION JOURNEY
1. Foster a Growth Mindset to encourage continual improvement
Six to 12 months
Philosophy: Business case, 3 objectives, mindset shift, branding
2. Minimise Threat to have candid and honest conversations

Dialogue: Define quality conversations robustly
Evaluation: Link to your objectives
3. Facilitate Insight if you need people to positively embrace change
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EARLY TRENDS
EARLY TRENDS
Goals setting is getting more attention
1.
Will pay for performance diminish?
2.
Will managers talk to their teams less?
3.
Will people be less motivated?
4.
Will top performers will be dissatisfied
5.
Will wrongful termination legal costs increase?
Pay differentiation is widening, increasing fairness
Everyone wants to lift the quality (and regularity) of conversations
Managers are talking to their teams more
Overall engagement is increasing when removing ratings
It helps to have a separate process for very poor performers
Early results show those with top rewards had same or increased satisfaction
There is no one-size-fits-all model for every firm
Some companies are finding higher rate of self selection out for non performers
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8/12/15
MICROSOFT
THE GAP
Objectives
Objectives
Performance &
Development
Deliver results differently via teamwork
Raise bar on performance
Feedback that helps you learn, grow,
Adopt a growth mindset company-wide
deliver results
Increase manager accountability
Increase frequency of conversations
[We] removed obstacles to some key behaviors.
Reward contributions to business impact
From
To
4 point rating / Forced distribution
No ratings, no documentation
Grow. Perform.
Succeed.
Theres no real change in performance as a result of ratings.
Strengthen link between reward and
From
To
Qualitative performance standard
Formal year-end reviews
Monthly performance conversations
Top-down administration
Manager discretion
business performance
Frequent performance conversations
Manager discretion
33
34
THE GAP
ADOBE
Touch Base
Objectives
Monthly performance conversations +

Frequent informal feedback
Grow. Perform.
Succeed.
Grow. Perform.
Set and review goals against the standard
Succeed.
SCARF-based framework:
1. What did you do well?
2. Where did you get stuck?
3. What would you do differently next time?
Were not walking away from pay for performance at all.

Instead, theyre getting paid for
a much broader definition of performance.
35
Sharpen focus on team contribution
Rewards
Inspire and motivate high performance
Increase agility of organization
Leverage feedback to drive innovation
Create shared employee-manager
Manager discretion
Reward performance against the standard
responsibility for conversations
Separate year-end rewards conversation

from performance conversations

Stack ranking is a soul-less and soul crushing exercise.
36
Foster genuine, meaningful conversations
From
To
Qualitative performance feedback
Weekly/Monthly performance
conversations
Manager discretion
8/12/15
ADOBE
CARGILL
Performance Check-in
Grow. Perform.
Clarify and update expectations throughout
year
Succeed.
Growth and development-based framework:

1. What are you going to do?
2. How are you going to do it?
3. What have you learned or achieved?
I have seen and experienced the
reaction to the review process being a primary driver
in driving good people from the company.
37
Simplify process and requirements

Focus on communication, ongoing
We did not set out to remove ratings, but we found that it

made sense for Cargill in order to make conversations more engaging.
feedback, building trust

Rewards Check-in
Strengthen manager capabilities
Manager discretion based on performance

and market conditions
Annual compensation planning
Help employees learn and grow
Increase employee alignment, focus,
No fixed guidelines, no grid, no percentages
38
To
Frequent, high-quality conversations
Events-based year-end reviews
Everyday performance management
Judge focus
Coach focus
PERFORMANCE MANAGEMENT CONTINUUM

No Performance Scores
Candid daily conversations

Monthly performance feedback
Forced
Ranking
Grow. Perform.
Reflection and goal-focused dialogue:
Succeed.
What did you accomplish this quarter?

What do you plan to accomplish next quarter?
What do you feel most proud of?
What was your biggest challenge?
What did you learn?
What will you do differently next time?
How can I help you?
Cargill increased the frequency and quality of

performance conversations by holding managers accountable
for the outcomes of performance activitiesnot just
their occurrence.
Judge
Competitive assessment
Annual event
Top down
Individual contribution
Significant paperwork
Fixed mindset
Overwhelming threat
Performance as continuum
Pay for performance, but also for
Skills
Past + future performance
Potential
Market
Competitiveness

Based on
quantitative results
(i.e. 1-5)
From:
Rewards
Ratings
40
The line of courage
Performance Scores
Check-Ins
39
From
Rating / Forced distribution
agility, and engagement
CARGILL
1.
2.
3.
4.
5.
6.
7.
Everyday
Performance
Management
Objectives
Ongoing performance-focused feedback

Manager/employee autonomy for timing
Structured To
conversations
Guided
conversations
To:
Coach
Coaching and development
Frequent conversations
Shared responsibility
Enterprise contribution
Minimal paperwork
Growth mindset
Manageable threat
10
8/12/15
REINVENTED PERFORMANCE MANAGEMENT
LEARN MORE
Access further research and insights:

NeuroLeadership.com
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Big ideas:
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Create las6ng change
Topics:
Breaking Bias
Rethink Learning
Neuro & trend research on:
Performance management
Reinvent Performance Management
Diversity & Inclusion

Compensa6on
Building A Coaching Culture

Schedule Your Brieng Today:
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Behavior change
Visit www.neuroleadership.com
Or email chris6nechesebrough@neuroleadership.com
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8/12/15

Rethink Performance Management

Dr. David Rock, Director, NeuroLeadership Institute

2015 NeuroLeadership Institute

2015 NeuroLeadership Institute

A NEW LANGUAGE FOR LEADERSHIP

Research Education Solutions

2015 NeuroLeadership Institute

NeuroLeadership Ins6tute 2015. Not to be

2015 NeuroLeadership Institute

2015 NeuroLeadership Institute

2015 NeuroLeadership Institute

2015 NeuroLeadership Institute

2015 NeuroLeadership Institute

NeuroLeadership Ins6tute 2015. Not to be

Kill your ratings

2015 NeuroLeadership Institute

PERFORMANCE MANAGEMENT CONTINUUM

Fewer than five firms made major changes in 2010

2015 NeuroLeadership Institute

43 - 60 large companies have radically altered PM

2015 NeuroLeadership Institute

NeuroLeadership Ins6tute 2015. Not to be

50 - 70% of firms considering major changes

2015 NeuroLeadership Institute

REINVENTED PERFORMANCE MANAGEMENT

WHY THE CHANGE?

2015 NeuroLeadership Institute

THE DATA WAS NEVER ANY GOOD ANYWAY

2015 NeuroLeadership Institute

THE DATA WAS NEVER ANY GOOD ANYWAY

Two thirds of rated top performers not the top performers

Under 25% of performance ratings correlate to performance

90% of performance systems are a failure

Ratings were stronger reflections of raters.

2015 NeuroLeadership Institute

NeuroLeadership Ins6tute 2015. Not to be

2015 NeuroLeadership Institute

TRULY WEIGH UP THE COSTS

Over 40% of employees less engaged

Strong threat from all angles

DELL STUDY: HEART OF THE CHALLENGE?

Drop in trust across the board

2015 NeuroLeadership Institute

Link to 23% lower engagement than those not surprised

2015 NeuroLeadership Institute

THREE RESEARCH IDEAS

1. Foster a Growth Mindset to encourage continual improvement

A belief that intelligence and talent are static

2. Minimise Threat to have candid and honest conversations

3. Facilitate Insight if you need people to positively embrace change

2015 NeuroLeadership Institute

NeuroLeadership Ins6tute 2015. Not to be

Leads to a desire to look smart

Leads to a desire to learn

Feedback can be a setback

Feedback is a chance to learn

Stretch goals are risky

Stretch goals are helpful

Motivation comes from approval

Motivation comes from mastery

Focus on what you are good at

Focus on where you can develop

Others success can be a threat