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8/12/15
© NeuroLeadership Ins6tute 2015. Not to be shared without permission. SCARF is a registered trademark of NLI. 1
© 2015 NeuroLeadership Institute 1
Rethink Performance Management
Dr. David Rock, Director, NeuroLeadership Institute
© 2015 NeuroLeadership Institute 2
NLI’S VISION
Transform Leadership Through Neuroscience
© 2015 NeuroLeadership Institute 3
A NEW LANGUAGE FOR LEADERSHIP
Research • Education • Solutions
© 2015 NeuroLeadership Institute 4
THREE PRACTICES
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© NeuroLeadership Ins6tute 2015. Not to be shared without permission. SCARF is a registered trademark of NLI. 2
© 2015 NeuroLeadership Institute 5
HOW WE PARTNER
© 2015 NeuroLeadership Institute 6
© 2015 NeuroLeadership Institute 7 © 2015 NeuroLeadership Institute 8
8/12/15
© NeuroLeadership Ins6tute 2015. Not to be shared without permission. SCARF is a registered trademark of NLI. 3
© 2015 NeuroLeadership Institute 9 © 2015 NeuroLeadership Institute 10
Kill your ratings
© 2015 NeuroLeadership Institute 11
PERFORMANCE MANAGEMENT CONTINUUM
To
Coach Coaching and development Frequent conversations Shared responsibility Enterprise contribution Minimal paperwork Growth mindset Manageable threat
Performance Scores No Performance Scores
Forced Ranking
Ratings Based on
quantitative results (i.e. 1-5)
Structured
conversations
Guided conversations
From: Judge Competitive assessment Annual event Top down Individual contribution Significant paperwork Fixed mindset Overwhelming threat
To:
The
line
of c
oura
ge
© 2015 NeuroLeadership Institute 12
TREND OR FAD?
• Fewer than five firms made major changes in 2010
• 43 - 60 large companies have radically altered PM
• 50 - 70% of firms considering major changes
8/12/15
© NeuroLeadership Ins6tute 2015. Not to be shared without permission. SCARF is a registered trademark of NLI. 4
© 2015 NeuroLeadership Institute 13
REINVENTED PERFORMANCE MANAGEMENT
© 2015 NeuroLeadership Institute 14
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
© 2015 NeuroLeadership Institute 15
THE DATA WAS NEVER ANY GOOD ANYWAY
• Two thirds of rated top performers not the top performers (CEB, 2012)
• Under 25% of performance ratings correlate to performance (Scullen et al, 2000)
• 90% of performance systems are a failure
(SHRM, 2009)
© 2015 NeuroLeadership Institute 16
Actual performance
21%
Organizational perspective
6% Idiosyncratic rater biases 62%
Random measurement
error 11%
“Ratings were stronger reflections of raters.” Scullen, Mount, & Goff (2000)
THE DATA WAS NEVER ANY GOOD ANYWAY
8/12/15
© NeuroLeadership Ins6tute 2015. Not to be shared without permission. SCARF is a registered trademark of NLI. 5
© 2015 NeuroLeadership Institute 17
TRULY WEIGH UP THE COSTS
Visible benefits Sense of certainty
Feeling of control
Perception of fairness
Invisible costs Over 40% of employees less engaged
Strong threat from all angles
Reduction in collaboration
Drop in trust across the board
© 2015 NeuroLeadership Institute 18
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 expected‘best’ and got a‘great’or‘great’and got‘good’
• Link to 23% lower engagement than those not surprised
© 2015 NeuroLeadership Institute 19
THREE RESEARCH IDEAS
1. Foster a Growth Mindset to encourage continual improvement
2. Minimise Threat to have candid and honest conversations
3. Facilitate Insight if you need people to positively embrace change
© 2015 NeuroLeadership Institute 20
TWO MINDSETS Fixed mindset
A belief that intelligence and talent are static and can’t be changed in any meaningful way
Leads to a desire to look smart • Feedback can be a setback
• Stretch goals are risky
• Motivation comes from approval
• Focus on what you are good at
• Other’s success can be a threat
Growth mindset
Believing that intelligence and talent can be developed
Leads to a desire to learn • Feedback is a chance to learn
• Stretch goals are helpful
• Motivation comes from mastery
• Focus on where you can develop • Other’s success is something to learn
from
8/12/15
© NeuroLeadership Ins6tute 2015. Not to be shared without permission. SCARF is a registered trademark of NLI. 6
© 2015 NeuroLeadership Institute 21
TWO MINDSETS Fixed mindset
A belief that intelligence and talent are static and can’t be changed in any meaningful way
Leads to a desire to look smart • Feedback can be a setback
• Stretch goals are risky
• Motivation comes from approval
• Focus on what you are good at
• Other’s success can be a threat
Growth mindset A belief that intelligence and talent can be
developed
Leads to a desire to learn • Feedback is a chance to learn
• Stretch goals are helpful
• Motivation comes from mastery
• Focus on where you can develop • Other’s success inspires learning
© 2015 NeuroLeadership Institute 22
SHIFTING MINDSETS
Fixed Mindset “Prove”
Growth Mindset “Improve”
© 2015 NeuroLeadership Institute 23
FIXED MINDSET: LEARN LESS FROM MISTAKES
Mangels et al. (2006), SCAN
Negative Feedback:
Individuals with a “fixed” mindset show an enhanced neural response to negative feedback on making errors. They also show less memory-related neural responses given information about correcting future mistakes.
Positive Feedback:
© 2015 NeuroLeadership Institute 24
GROWTH MINDSET: LEADERSHIP CONFIDENCE
Hoyt, Burnette, & Innella (2012), PSPB
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”).
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© NeuroLeadership Ins6tute 2015. Not to be shared without permission. SCARF is a registered trademark of NLI. 7
© 2015 NeuroLeadership Institute 25
IMPACT OF THE TWO MINDSETS Fixed mindset
Prove yourself
Demonstrate your skills
Perform better than others
Internal dialogue:
“Am I able to do this? Maybe I just don’t have the talent…”
“It’s not my fault. It was someone else’s responsibility.”
Growth mindset
Improving yourself
Developing your skills
Performing better than you did in the past
Internal dialogue:
“I’m not sure I can do this right now but I will give it a go.”
“If I don’t take responsibility, I can’t fix it. I need to listen and learn.”
© 2015 NeuroLeadership Institute 26
IMPACT OF THE TWO MINDSETS Fixed mindset
Prove yourself
Demonstrate your skills
Perform better than others
Internal dialogue:
“Am I able to do this? Maybe I just don’t have the talent…”
“It’s not my fault. It was someone else’s responsibility.”
Growth mindset
Improve yourself
Develop your skills
Perform better than you did in the past
Internal dialogue:
“I’m not sure I can do this right now but I will give it a go.”
“If I don’t take responsibility, I can’t fix it. I need to listen and learn.”
© 2015 NeuroLeadership Institute 27
WE ARE EASILY PRIMED
“Good job, you must be talented at this.”
versus
“Good job, you really applied yourself here.”
Chiu, Hwong, & Dweck (1997)
© 2015 NeuroLeadership Institute 28
SCARF® model THE SCARF® MODEL
8/12/15
© NeuroLeadership Ins6tute 2015. Not to be shared without permission. SCARF is a registered trademark of NLI. 8
© 2015 NeuroLeadership Institute 29
THREE RESEARCH IDEAS
1. Foster a Growth Mindset to encourage continual improvement
2. Minimise Threat to have candid and honest conversations
3. Facilitate Insight if you need people to positively embrace change
© 2015 NeuroLeadership Institute 30
THE TRANSFORMATION JOURNEY
• Six to 12 months
• Philosophy: Business case, 3 objectives, mindset shift, branding
• Dialogue: Define ‘quality conversations’ robustly
• Evaluation: Link to your objectives
© 2015 NeuroLeadership Institute 31
EARLY TRENDS
• Goals setting is getting more attention
• Everyone wants to lift the quality (and regularity) of conversations
• It helps to have a separate process for very poor performers
• There is no one-size-fits-all model for every firm
© 2015 NeuroLeadership Institute 32
EARLY TRENDS
1. Will pay for performance diminish? Pay differentiation is widening, increasing fairness
2. Will managers talk to their teams less? Managers are talking to their teams more
3. Will people be less motivated? Overall engagement is increasing when removing ratings
4. Will top performers will be dissatisfied Early results show those with top rewards had same or increased satisfaction
5. Will wrongful termination legal costs increase? Some companies are finding higher rate of self selection out for non performers
8/12/15
© NeuroLeadership Ins6tute 2015. Not to be shared without permission. SCARF is a registered trademark of NLI. 9
© 2015 NeuroLeadership Institute 33
“[We] removed obstacles to some key behaviors.”
Objectives
• Deliver results differently via teamwork
• Feedback that helps you learn, grow,
deliver results
• Reward contributions to business impact From To
4 point rating / Forced distribution No ratings, no documentation
Formal year-end reviews Frequent performance conversations
Top-down administration Manager discretion
MICROSOFT
Performance & Development
© 2015 NeuroLeadership Institute 34
Grow. Perform. Succeed.
“There’s no real change in performance as a result of ratings.”
Objectives
• Raise bar on performance
• Adopt a growth mindset company-wide
• Increase manager accountability
• Increase frequency of conversations
• Strengthen link between reward and
business performance
• Sharpen focus on team contribution
From To
4 point rating / Forced distribution Qualitative performance standard
Formal year-end reviews Monthly performance conversations
Top-down administration Manager discretion
THE GAP
© 2015 NeuroLeadership Institute 35
THE GAP
Grow. Perform. Succeed.
Rewards
• Manager discretion • Reward performance against the standard
Separate year-end rewards conversation from performance conversations
“Touch Base”
• Monthly performance conversations + • Frequent informal feedback Set and review goals against the standard SCARF®-based framework:
1. What did you do well? 2. Where did you get stuck? 3. What would you do differently next time?
Grow. Perform. Succeed.
“We’re not walking away from pay for performance at all. Instead, they’re getting paid for
a much broader definition of performance.”
© 2015 NeuroLeadership Institute 36
“Stack ranking is a soul-less and soul crushing exercise.”
Objectives
• Inspire and motivate high performance
• Increase agility of organization
• Leverage feedback to drive innovation
• Create shared employee-manager
responsibility for conversations
• Foster genuine, meaningful conversations
From To
4 point rating / Forced distribution Qualitative performance feedback
Formal year-end reviews Weekly/Monthly performance conversations
Top-down administration Manager discretion
ADOBE
8/12/15
© NeuroLeadership Ins6tute 2015. Not to be shared without permission. SCARF is a registered trademark of NLI. 10
© 2015 NeuroLeadership Institute 37
Grow. Perform. Succeed.
“Rewards Check-in”
• Manager discretion based on performance and market conditions
• Annual compensation planning No fixed guidelines, no grid, no percentages
“Performance Check-in”
• Ongoing performance-focused feedback • Manager/employee autonomy for timing Clarify and update expectations throughout year 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.”
ADOBE
© 2015 NeuroLeadership Institute 38
“We did not set out to remove ratings, but we found that it made sense for Cargill in order to make conversations more engaging.”
Objectives
• Simplify process and requirements
• Focus on communication, ongoing
feedback, building trust
• Strengthen manager capabilities
• Help employees learn and grow
• Increase employee alignment, focus,
agility, and engagement
From To
Rating / Forced distribution Frequent, high-quality conversations
Events-based year-end reviews Everyday performance management
Judge focus Coach focus
CARGILL
Everyday Performance Management
© 2015 NeuroLeadership Institute 39
Grow. Perform. Succeed.
Rewards
• Performance as continuum • Pay for performance, but also for
• Skills • Past + future performance • Potential • Market • Competitiveness
Check-Ins
• Candid daily conversations • Monthly performance feedback Reflection and goal-focused dialogue:
1. What did you accomplish this quarter? 2. What do you plan to accomplish next quarter? 3. What do you feel most proud of? 4. What was your biggest challenge? 5. What did you learn? 6. What will you do differently next time? 7. How can I help you?
CARGILL
“Cargill increased the frequency and quality of performance conversations by holding managers accountable
for the outcomes of performance activities—not just their occurrence.”
© 2015 NeuroLeadership Institute 40
PERFORMANCE MANAGEMENT CONTINUUM
To
Coach Coaching and development Frequent conversations Shared responsibility Enterprise contribution Minimal paperwork Growth mindset Manageable threat
Performance Scores No Performance Scores
Forced Ranking
Ratings Based on
quantitative results (i.e. 1-5)
Structured
conversations
Guided conversations
From: Judge Competitive assessment Annual event Top down Individual contribution Significant paperwork Fixed mindset Overwhelming threat
To:
The
line
of c
oura
ge
8/12/15
© NeuroLeadership Ins6tute 2015. Not to be shared without permission. SCARF is a registered trademark of NLI. 11
© 2015 NeuroLeadership Institute 41
REINVENTED PERFORMANCE MANAGEMENT
© 2015 NeuroLeadership Institute 42
LEARN MORE
Access further research and insights:
NeuroLeadership.com
© 2015 NeuroLeadership Institute 43
Research Briefings Bring a transforma2ve learning experience in-‐house, with members of your team. Topics:
Breaking Bias
Rethink Learning
Reinvent Performance Management
Building A Coaching Culture Schedule Your Briefing Today:
Visit www.neuroleadership.com
Or email [email protected]
© 2015 NeuroLeadership Institute 44
NEUROLEADERSHIP SUMMITBig ideas: • Pick stars early & grow people faster • Transi6on leaders beVer • Transform diversity • Create las6ng change
Neuro & trend research on: • Performance management • Diversity & Inclusion • Compensa6on
Neuroscience updates on: • Empathy • Persuasion • Insight • Behavior change
8/12/15
© NeuroLeadership Ins6tute 2015. Not to be shared without permission. SCARF is a registered trademark of NLI. 12
© 2015 NeuroLeadership Institute 45 45
Brain-‐based Conversa2on Skills / Coaching Cer2ficate Washington D.C. Face-‐to-‐face ‘Skills’ training begins September 9 Cer6ficate program con6nues on virtually Cer2ficate in the Founda2ons of NeuroLeadership
Upcoming virtual program begins Monday, November 9 Register: neuroleadership.com/educa6on Ques6ons? Email: [email protected]
Upcoming NeuroLeadership Educa6on Programs
© 2015 NeuroLeadership Institute 46
Ins2tute Membership:
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Use promo code “NORATINGS" and SAVE 10% on Membership.
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NeuroLeadership Summit:
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Learn more & register at summit.neuroleadership.com.
August Special Offers
© 2015 NeuroLeadership Institute 47
CONTACT US
Visit neuroleadership.com to connect with an
associate in your region.
Or email: [email protected]