The second focused on neuroscience and what it is telling us about how our brains work, and how performance ratings push all of the wrong buttons in the human brain.
The third focused on the reasons we do performance ratings, their cost and the fact that they are not really effective in doing any of the things they purport to do.
While writing those three posts, I did a lot of reading, thinking about rating processes, and talking to a number of people whose opinions I trust.
I have learned some things that have shaped my views of what we should do to improve how we handle performance in the federal government.
Virtually no one likes the traditional rating processes. Some HR practitioners say the process of identifying some goals, setting multiple levels of achievement, then judging employee performance annually is a best practice. That may be true, but that doesn’t mean it is a good practice. How can a process that virtually everyone, including managers, executives, rank-and-file employees, and unions despise be good? If the only folks who like the process are the people in HR who run it, it is likely the process is not good. Not surprisingly, most HR people I talk with also dislike the traditional processes. They feel trapped in a system that they do not like and are stuck with. HR is trying to instill a management practice for supervisors and managers through the evaluation process. But really the managers and supervisors should be held to a performance standard for mentoring, nurturing and coaching their employees or staff. It shouldn’t come down to a destructive evaluation process to do it.
Almost everyone thinks there is no alternative. It is logical to assume that a process that is almost universally despised and costs a fortune (at least $900,000,000 annually*), exists only because there is no alternative, or because the federal government is legally bound to the existing process. The good news is that the existing laws and regulations do allow flexibility for agencies that are willing to take advantage of it.
Supervisors enjoy passing judgment on employees in the rating process as much as the employees like being judged — not at all.
A lot of time is wasted in traditional performance reviews that could be better spent on coaching and developing employee skills.
Many supervisors do not have the right leadership skills. Selections for leadership jobs, particularly first level supervisors, are based on technical skills rather than the interpersonal skills that the jobs require.
Ratings are confidential, but employees talk about them and eventually everyone figures out who got what rating. That leads to comparisons that are not good for the organization. An employee who got a 4 on a 5 point scale might be satisfied until s/he learns the person in the next cubicle also got a 4. Our brains run those types of equity comparisons even when we are not aware of it.
So if ratings are so bad and expensive and useless, how do we do something different? I will not presume to be able to solve a problem that has bedeviled HR professionals for years in one blog post, but I do believe there are some basic changes the federal government can make, within the confines of existing law and regulations, to make the process better, not destructive, and more likely to produce improved performance. Here are five things we can do now to make this wretched process something that may be helpful and, at least, is not destructive.
Reduce rating levels to 2. Although most agencies use 4 or 5-level systems, the regulations require a minimum of 2 – fully successful and unacceptable. The Defense Logistics Agency (DLA) got close to that with a 3-level system prior to implementing the National Security Personnel System (NSPS). DLA had Unsatisfactory, Marginally Satisfactory and Fully Successful ratings. The vast majority of employees got a Fully Successful rating. My first reaction to the system (implemented by one of my predecessors) was that it would not work. That was before I saw the benefits and decided to fully embrace the concept. As a result, we eliminated the lengthy rating document for 99 percent of employees and replaced it with a system-generated rating that the supervisor and employee signed. The ratings were input into the Defense Civilian Personnel Data System on an exception basis, eliminating more than 20,000 individual entries for employees. The number of grievances and EEO complaints regarding ratings dropped to almost zero. The rating process became far more simple, less time-consuming and expensive, and, most importantly, eliminated the stress on employees the old process caused.
Decouple awards from performance ratings. There are several problems with performance awards in government. First, the dollar amounts are often so small that they cannot realistically be considered to incentivize performance. An award of a few hundred dollars may be an effective incentive if it is for a specific accomplishment rather than a body of work over an entire year. Second, the award is often so far removed from the time of performance that it does not serve to incentive performance. Effective awards programs recognize great accomplishments when they happen, not many months later. Third, performance-based awards recognize individuals when most significant accomplishments are the product of teams of employees. There is little in government (and most other organizations) that can be done by an individual working in isolation. Awards programs that recognize individual contributions may serve as a disincentive to the team performance that is required for an organization to be truly effective.
Implement multi-source feedback (MSF) for all supervisors. Exit surveys often show that employees leave organizations because of their supervisors. Sometimes it is because the supervisor simply does not have and never will have the right skills. More often the supervisor just has not gotten the right training or is not aware of how s/he is being perceived by employees. Multi-source (sometimes called 360 degree) feedback, helps with both problems. It allows organizations to identify supervisors who are struggling, intervene appropriately, and, if necessary, take them out of supervisory roles. At DLA we implemented MSF and were often surprised by the results. For example, we found that the bottom 25 percent of supervisors (as rated by their employees and peers) viewed themselves almost exactly the way the top 25 percent viewed themselves. The top 25 percent thought they were very good supervisors. So did the bottom 25 percent. The bottom group was oblivious to their effects on the organization. In some cases we were able to help them improve significantly through training and development. In other cases, they were simply in the wrong jobs and we were able to place them in non- supervisory roles were they could be effective. None of that would have been possible without the knowledge we gained through MSF. One big lesson we took from implementing MSF was that proponents often encourage using MSF only as a developmental tool and not sharing the results with anyone other than the person being rated. We tried that at DLA and learned that it got in the way of trying to help the bottom 25 percent get better or get out of leadership roles.
Incorporate real employee development components in rating processes. The law governing employee performance management in the federal government says ratings are to be used “as a basis for training, rewarding, reassigning, promoting, reducing in grade, retaining, and removing employees. The reality is that few agencies effectively couple the rating process with employee development. The time currently wasted on the rating process can be used far more effectively to focus on developing employee skills. Every rating discussion should be an opportunity to discuss the employee’s career objectives, their interests and what motivates them. Performance plans should include development plans as well and completion of the development objectives by both management and the employee should be reviewed at the same time as performance. Agencies should work with employees to help them develop their skills for both their current jobs and their career goals. Those that do so are far more likely to retain their top talent.
Include employees in the process. The law requires agencies to “encourage employee participation in establishing performance standards.” Office of Personnel Management regulations encourage agencies “to involve employees in developing and implementing their program(s).” Credible performance management programs require such involvement, both of individual employees and the unions that represent many of them.
There is no silver bullet for performance management, but these recommendations can address some of the most troublesome aspects of current processes. Unless we do something to deal with them, we will continue to waste hundreds of millions of dollars on processes that do little good, generate countless grievances, arbitration and EEO complaints, and discourage rather than encourage performance. We can certainly do better than that.
* Cost estimate based upon 2 million employees with an average salary of $77,535 and approximately 260,000 managers and supervisors with an average salary of approximately $107,000. Because supervisors and managers also are employees for purposes of performance ratings, they are included in the count of employees as well. If each employee spends only five hours annually in the process and each supervisor or manager spends 40 hours (very conservative estimates), the annual cost of the current processes is over $900 million. That does not include systems and other non-labor costs, nor does it include the cost of grievances, appeals, arbitration and lawsuits, which could easily push the number over $1 billion.
Jeff Neal is founder of the blog, ChiefHRO.com, and a senior vice president for ICF International, where he leads the Organizational Research, Learning and Performance practice. Before coming to ICF, Neal was the chief human capital officer at the Department of Homeland Security and the chief human resources officer at the Defense Logistics Agency.