The rapidly changing environment in which organisations operate has profound implications across all sectors, requiring a fundamental reappraisal of many of the leadership and organisational practices that have served them well in the past. In particular, many organisations are finding that historic approaches to performance management no longer deliver the performance outcomes necessary to sustain competitive advantage in the new emerging world. This paper highlights some of the shortcomings of existing approaches and proposes a way forward designed to radically transform the impact on individual and organizational performance. In particular it highlights how employee engagement and performance management need to be inextricably linked and that the insights provided by recent neuroscience research need to be utilized in order inform organisational thinking.
The Presenting Issue
Evidence abounds to show that employee engagement matters – organisations with high levels of employee engagement are more productive, provide superior levels of customer service, deliver higher quality outcomes and generate higher levels of income, profit and shareholder returns[i]. The current climate however poses real challenges for many organization, striving as they are to ‘do more with less’, and whilst many organisations now recognise the importance of employee engagement as a prerequisite for delivering sustained organisational performance, many are still failing to stimulate the levels of engagement necessary. There are a number of reasons for this (and the tendency of organisations to revert to command and control leadership in times of adversity certainly does not help), but one of the fundamental obstacles that few organisations have succeeded in overcoming is this:
‘Performance management and appraisal processes (ie the processes which are specifically designed to improve performance), seldom stimulate engagement and more often than not destroy it. Consequently their real impact on organisational performance is minimal’
It therefore follows that if an organisation is serious about improving its performance, its approach to performance management / appraisal needs to be radically rethought; what was good enough in the past will no longer be sufficient to support organisations in the economic and political environments of the future.
What Engages Employees?
Employee engagement is a complex area and as such does not lend itself to quick fixes or ‘copycat’ solutions – every individual is different and every organisation has a unique culture and style. However extensive research over many years, across many different sectors and types of organisation, has revealed some common themes. One key theme is that whilst the loci of engagement for individuals can differ and may change over time (for example job challenge, colleague relationships, customer service, organisational identification all have different levels of utility for different people), the importance of the role of the manager is critical in all cases.
Another important consideration is that employees have a choice; engagement cannot be mandated, it is a state which employees choose to adopt and an individual’s level of engagement will be determined by their response to the working environment and culture in which they find themselves.
It therefore follows that managers have a crucial role to play in creating a working environment that encourages employees to choose to be engaged. Managers therefore need to be aware of how their behavior impacts on employee engagement and how to create the conditions that are most likely to stimulate engagement for different individuals. In particular they need to understand how to make the performance management / appraisals process an ‘engaging experience’.
Death and Rebirth
The analogy of the mythical Phoenix which was consumed in flame and then reborn is deliberately chosen to indicate that the experiences of the past are not to be dismissed; they have a vital role to play in shaping future thinking. The transformation of performance management processes is not therefore about wholesale abandonment of what has gone before; rather it is an evolution in mindset and approach that challenges some of the received wisdom of the past in order to create a new approach that is more in keeping with the realities of the future. In particular there needs to be less reliance on process and a greater emphasis and value placed on the conversations that take place between managers and their direct reports, and in order for this to take place a number of new paradigms need to be considered.
Paradigm 1: The nature of the conversation will be dependent on an individual’s state of engagement – you need to start at the right place
The following diagram illustrates four states on the ‘employee engagement spectrum’. Each state is characterised by the level of engagement, the resultant performance outcomes, the extent to which the individual is experiencing threat or vulnerability, their willingness to accept accountability for their actions and the nature of their relationship with their manager.
As mentioned earlier, employees have a choice as to which state to inhabit and the role of the manager is to create the conditions in which an individual elects to adopt a more positive level of engagement. In particular managers need to recognise that the nature of the conversations that they engage in needs to vary according to the state that an individual is in. For example, if an individual is in a ‘disaffected’ state no amount of SMART objective setting or constructive feedback is going to make the slightest difference to their performance unless the fundamental ‘threats’ as they perceive them are first addressed.
Paradigm 2: We are programmed to protect ourselves – but focusing on solutions helps
Neuroscience research has shown that the human brain operates on the basic survival principle of ‘minimise danger and maximise reward’ and depending on how the brain (in particular the limbic system) interprets particular circumstances, it will either trigger a ‘toward’ or ‘away’ decision making response. Research has also shown that our propensity to trigger an ‘away’ response and interpret external stimuli as ‘threats’ is greater and more long lasting than our tendency to trigger a positive ‘toward’ response and that whilst the brain is in defensive mode, our ability to engage in rationale cognitive reasoning is severely impaired.
It is therefore important that managers understand that in order to effect positive change in an individual’s state of engagement they first need to create safety and damp down negative emotions, then stimulate positivity and receptiveness (adopting a ‘solution’ as opposed to a ‘problem’ focused approach has been shown to be key to effecting this transition) and finally reinforce the desired focus (collaboration has been shown to be important in this regard).
Paradigm 3: Threat and reward responses in individuals are triggered by certain conditions
Every individual has different ‘emotional thresholds’ but research has shown that there are certain circumstances that are the most powerful in triggering a threat or reward response in humans[ii]. The five conditions are shown below:
The SCARF model highlights the importance for managers of ensuring that through their conversations and behaviors they reinforce personal status, create certainty, empower and grant autonomy wherever possible, foster collaborative relationships and ensure fairness in how people are treated. These conditions flourish best when the relationship between a manager and their direct report is an ‘adult – adult’ one as opposed to a ‘parent- child’ relationship; ‘parent – child’ relationships, sadly endemic in many organizations, only serve to foster a state of dependency and compliance and a reluctance to accept accountability.
Paradigm 4: Engagement needs to be harnessed and appropriately directed in order to deliver sustained performance
Clearly establishing a state of engagement is an essential prerequisite if an individual is to deliver sustained high levels of performance. But that engagement and effort needs to be appropriately channeled; after all the aim is to raise the collective contribution of every employee in order to enable the organization as a whole to be more successful in achieving its mission. Managers therefore need to rethink the purpose of the performance management conversations that they engage in and ensure that they are providing the contextual ingredients essential for performance to flourish, as shown below.
Managers need to engage in dialogue with their direct reports which provides clarity around mutual expectations, creates a sense of meaning and purpose, helps build capability and utilizes an individual’s strengths, promotes learning through constructive feedback, harnesses individual motivation and potential and facilitates future development and growth whilst at the same time building mutual respect and trust based relationships .
Paradigm 5: Received wisdom and custom and practice need to be questioned
As mentioned earlier, not everything that organizations currently do with regards to performance management is bad, but existing practices need to be subjected to serious scrutiny (ideally using a solution focused approach) in order to assess the extent to which they are truly fit for purpose. Some ‘sacred cows’ that might need to be challenged and potentially sacrificed include; linking performance management reviews to the annual planning cycle, the role and impact of rating scales and quota distributions, the appropriateness of SMART objectives, the focus on individual objective setting and problem solving, the level of process and documentation required, the frequency, duration and nature of conversations, the extent to which individual performance outcomes are aligned with team objectives, the balance between backward looking and future focused conversations, the role of feedback and its impact on positive behavior change, the danger of assumptions and how they distort objectivity and stimulate defensiveness and how manager behaviors can unwittingly destroy trust.
Paradigm 6: The new principles of performance management need to be mirrored in the way change is enacted
The lessons about how to stimulate engagement, the insights from neuroscience about how the brain works and the importance of conversations as a means of effecting positive change need to be reflected in the approach that organizations take in transitioning from the ‘old’ to the ‘new’ ways of managing performance. Securing people’s genuine commitment to change often requires them to have insight, the ‘ah- ha’ moment that transforms their defensiveness into a positive mindset. The transformation process therefore needs to create the conditions whereby key stakeholders achieve the insights that are essential for the changes in thinking and practice associate with the new approach to performance management to become embedded in the organization.
A Final Thought: Courage and persistence is the new currency of change
Change isn’t easy and in times of uncertainty and concern about individual and organizational survival, attitudes to change can harden as people understandably seek comfort in what is familiar to them. But adherence to the status quo can often provide a false sense of security and sometimes what is required is for someone to have the courage to ‘light the fire under the Phoenix’ in order to initiate the required transformation. Transforming an organizations approach to performance management will take time – it is not about simply changing the forms and sending managers on yet another training course! It is about changing mindsets and attitudes, redefining the role of the manager and expecting all employees to engage with each other, and the organization, in a different way. This will not happen overnight and hence management of peoples’ expectations and the provision of ongoing support will be critical but with courage and persistencethe benefits that can be realized can beimmense.
Doug Crawford ©Cerus Consulting June 2013
About Cerus Consulting
Doug Crawford is the Managing Director of Cerus Consulting and a specialist in employee engagement and performance management. He has over 20 years consulting experience across a wide range organizations, both in the UK and internationally. He is a member of the Engage for Success guru group and actively involved in the London Practitioners Group, the Engagement in the 3rd Sector sub group and the special interest group on neuroscience and engagement. For further information contact firstname.lastname@example.org or visit www.cerusconsulting.co.uk
[i] ‘Engaging for Success’ by David McLeod and Nita Clarke provides a wealth of research evidence
[ii]David Rock: ‘Your Brain at Work’