The idea of taking a critical lens to ranked performance management styles is nothing new. In fact, a quick Google search shows a wave of articles from 2015 discussing the concept and even the pitfalls of jumping away from rankings too quickly.

However, the conversation is once again picking up speed, no doubt spurred in some – albeit, maybe small – part by the recent revelations around Amazon’s performance management policies. Their leaked 2021 performance review instruction manual contains highly-criticized evidence of a stack ranking system that forced adequate employees into lower score categories to fill out tier quotas. While the company denied the allegations and has dropped the notion of tiers from their 2022 manual, there’s likely still room for growth from the online retail giant.

Also hungry for growth are Connex Community members, who have made the desire to reevaluate performance management a regular talking point at brainstorming sessions like Think Tanks. In fact, a community poll in July of this year indicated that a combined 36 percent of respondents said they have already moved to either an ongoing/agile model or foregone numeric ratings altogether. That was in fact the experience of two Members in particular: Dominic Boon and Tony Callander, Vice President of Talent & Org Development for Liberty Latin America and Chief Human Resource Officer of CPS Solutions respectively. The pair of professionals gladly agreed to share practical insight into their performance management philosophies, each of which helped push their respective organizations in a more development-centric direction.

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Embracing agile performance
Liberty Latin America began a performance management journey of self-discovery three years ago. A series of workshops, consultations, and internal deliberation led them to launch what they dubbed ‘Agile Performance Development’ in 2019, which completely removed ratings from their performance management process and moved it from a once-a-year discussion to an ongoing dialogue. With this evolution, the company implemented a recognition bonus for outstanding achievement which is granted in addition to a company bonus, but the latter would be determined entirely based on organizational, financial, and operational performance rather than individual metrics. The decision was made for a number of reasons - including the belief that the time and energy spent chasing down managers to adhere to the process could be better spent – but two reasons in particular stood above the rest.

Firstly, they felt that the ranking system negatively impacted employee morale. “Somebody might have done an outstanding job for the year,” explained Boon, “but might only get a three on a five-point scale because of a bell curve allocation. It’s just not motivational when you’ve worked so hard only to be told you’re just average.” Little did they know, the importance of maintaining and promoting staff morale would hit all-time highs within the year as COVID’s stressors shone a light on holistic employee wellbeing and emotional health.

Secondly, they weren’t entirely certain that the ranking system was fair. “Those who were better at self-promotion, or that had connections with those overseeing the calibration process were more likely to get beneficial ratings.” This point in particular highlights one of the largest shortcomings of any hard-and-fast, numerical-based approach: no matter how objective you try to be, the system will only be as unbiased as its creators and executors. Numbers may be regarded as the ultimate arbiters of truth, but their collection and interpretation are subject to the same societal factors and systemic biases underpinning the HR industry’s embrace of Diversity, Equity, and Inclusion (DEI).

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In contrast, their new approach focused more on talent development and consistent managerial communication. Leaders weren’t expected to assess their reports as much as they were expected to safeguard their overall welfare and make sure company resources, structures, and processes were supportive every step of the way. Annual talks gave way to quarterly touchpoints with less formal conversations filling the gaps, and while managers still provided feedback on what could be improved, it was better couched in supportive rhetoric, discussions of what went well, and candid talk of career aspirations. “It all became less about some intangible, absolutist ranking, and more about starting a dialogue around where you’re at as a person and how we can help make you stronger. The performance focus remained, but it was all delivered through human-centered coaching rather than a number.”

Liberated and thriving

The results have been promising so far, especially in an era where most companies are scrambling to define and bolster a competitive employee value proposition that can meaningfully engage and satisfy a shrunken labor force. Annual engagement survey results have been improved, with a particular uptick in the “the level of feedback received from managers” and the “level of development and coaching support”. “As an extension of that,” continued Boon, “we’re looking at employee satisfaction with their line manager and seeing improvements,” which they hope will help keep resignations to a minimum. Managers and teams that are particularly satisfied are consulted with to glean more about their particular process and approach to employee conversations, which then gives HR an opportunity to further refine their Agile
Performance Development best practices.

“We actually went out and spoke directly to more than 1,000 employees and managers last year to see what they thought two years in, and they made it clear they didn’t want to go back to the old system, and that it was a relief not to have ratings.”

Boon clarified that some managers recognized early on that they weren’t as equipped for development conversations as they expected themselves to be, but that recognition itself actually helped spur a cultural shift throughout the organization towards being more career-oriented. That transition could not have come at a better time, as it runs parallel to the kinds of questions Boon is now seeing during the onboarding process: “New employees want to know how they can be a success with the company, and that gives us an early opportunity to start a dialogue about our performance process and philosophy, as well as the mechanisms we’ll use to support them.”

Unranked doesn’t mean unorganized

While the idea of removing formal ratings may conjure up a Montessori-esque mental image that’s more amorphous than it is structured, CPS Solutions’ approach is really anything but. Callander has helped ground their entire process in a competency-based matrix that’s designed to facilitate succession planning, frame growth conversations, and provide a consistent performance language across the enterprise. With their tightly refined list of core values labeled along the X-axis and the levels of the organization situated along the Y, each cell contains a description of how individuals are expected to exemplify and live CPS Solutions’ principles. These descriptions don’t enumerate out what work gets done, but rather, how it’s done.

By using a matrix, they’ve effectively created both horizontal and vertical ‘swim lanes’ by which they can have career conversations. Horizontally, managers can use the enumerated expectations as a guideline for what to discuss with their reports.

They can highlight which cells need additional focus, and in a similar experience to Boon, the complete absence of numbers means conversations remain qualitative. “When you talk about performance with numbers, people don’t focus on the behaviors, duties, or really the objective evidence behind them,” explained Callander, “So this approach actually lent itself to richer, more detailed discussions.” And that’s not just HR’s assessment, but mirrored in the feedback they received: “People struggled at first, but then they found giving feedback was easier. One manager even told me, ‘I was able to have these powerful conversations because instead of defending what I was saying, I could just say it and we both knew where it was coming from and that it wasn’t punitive.’”

Vertically, the matrix enables the creation of individualized development plans (IDPs) and more structured succession planning. “These competencies in each cell are very specific, and crucially, they build upon one another as you move up through the levels. Say you start as an individual contributor, and under the value of ‘Expertise’, you’re focused chiefly on getting the work done. But as you work up through the organization, it becomes more about expertise within the organization, and eventually, the industry. You go from very finite to very broad,” commented Callander, “and it creates these clear development plans for those that want to escalate through the organization because you take these foundational competencies and continually iterate upon them.”

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A personal touch

Those IDPs are predicated on an organization-wide commitment to the classic 70-20-10 rule, with the bulk of the experiential 70 percent coming from stretch assignments and special projects that run parallel to the individual’s IDP trajectory. In a departure from classic development, however, there’s significant focus placed on the individual’s own desire for growth. “IDPs are manager-facilitated and organizationally-supported, but team-member initiated,” explained Callander.

This dovetails well with CPS Solutions’ embrace of a voluntary self-assessment. Their decision to make this optional helped remove pressure that would have otherwise soured the experience – and echoing Boon’s commentary, would have hurt morale – and actually led to a dramatic increase in participation that capped out at 94 percent. “The thinking there wasn’t very HR-like to be honest with you,” joked Callander, “Because HR normally tells people what to do under the guise of knowing best. Instead, this gives team members a genuine opportunity to talk about themselves and how they interpret their relationship to our values without fear that it will hurt their chance at a merit increase or a bonus.”

Callander remarked that performance is still a factor in determining those bonuses, but clarified that it was just that: a factor. “In today’s world, compensation is linked to so many things, especially if you’re being diligent about pay equity,” explained Callander. And it’s here that the two companies’ philosophies once again quickly converge. “Diversity and equity are important to us,” Callander said, “And in fact, the matrixed competency model helps us be even more intentional about developing diverse talent, placing them on our succession plans, and giving them the upward mobility and recognition they deserve.”

Putting it all into practice

Performance management – a phrase Callander himself lamented as being overly punitive – ideally is about capturing an accurate representation of team member capacity and output so growth and development can take place parallel to organizational strategy. The beauty of removing hard and fast metrics is it takes the most unsettling and demeaning elements out of the equation, making the process more positive, and by extension, sustainable. But like most things, that’s easier said than done. “It’s a big change,” Boon cautioned, “Because it’s a cultural change and those take time. I’ve heard of companies that introduce a new performance management strategy and then quickly reverse the decision because they didn’t see results immediately. But as with most good things, you need to be patient.”  

Not only do leaders need to be prepared for a lack of instant gratification, but they also must be prepared for the way in which such a shift will alter their daily lives. In both Callander’s and Boon’s experiences, the success of their unranked performance management strategies hinged upon the preparedness and talents of their leaders. “We had spent a lot of time reconfiguring systems, but I wished we had spent more time upfront on giving managers actual strategies for having developmental conversations,” said Boon, seconds before explaining that they’ve since expanded their efforts to do so.

Callander echoed those sentiments, adding that, “talking to team members about their performance and their career can’t be a one-and-done event. It must be continual, and I think it’s easy for leaders to forget that.” He continued: “We’re pushing leaders to check in on how their reports are doing once a month, and crucially, we’re encouraging them to ask how team members are feeling. That question really catches people off-guard, but gives them a chance to say what they’re going through. People call them ‘stay interviews’, but I really think it’s just talking to your people and showing that you care.”

At their core, both these Members’ approaches are about fostering trust and discussions about personal growth. They’re emblematic of the HR industry’s recent journey to reemphasize the ‘H’, the value of which is near impossible to quantify. In fact, attempting to do so is about as difficult and misguided as trying to tie a numerical value to the whole of an employee’s contributions.

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