Ratings battle: for or against performance ratings

 

 

“We want to remove performance ratings. It’s outdated, and then it puts labels on employees…”

… tell us a growing number of clients, with annual performance reviews under attack in recent years.

The truth is that we must develop talent, pay it and equip it. Often budgets are limited and managers forced to make choices. But how do you choose who to give to? And how much to give?

Editor’s note: We present to you an abbreviation of the discussion between the expert panelists Ms. Sandra Houillier, PMP, CRHP and Édith Boyer, Ph.D moderated by Julie Tardif, CRHA during the Lesaffaires en event last March.

Julie:

Performance ratings and annual evaluations have been openly criticized in recent years. Some organizations maintain them while others abandon them.

For or against evaluations conducted annually?

Edith:

FOR, at the City, it is important that each executive takes stock, with their manager, at least annually.

First, the City of Montreal has 28,000 employees, spread across 19 boroughs and 25 central services. Totally different needs and realities (Police vs. water service, IT vs. Public Works), shape a context and governance structure specific to the municipal world.

The new performance management approach deployed in 2022 that I will talk to you about today, the “Meeting Points”, applies to the City’s executives, representing nearly 2,000 people .

Julie:

So at the City of Montreal, you have kept the annual evaluations. What are the reasons for this choice and the benefits observed?

Edith:

1. Because performance ratings are common and known benchmarks: they bring rigor and fairness.
2. Because this is part of the practices necessary for sound management of public funds.
3. Because it is the beginning of something and not the end; it is animportant inputto guide future actions on an individual (development) and collective (talent management) level.

When I hear, after a first exercise, a management executive say: “the matrix has become my best friend”, I think that these common and known benchmarks, even imperfect, are clearly useful.

Julie:

Excellent! And at Deloitte, you carried out a complete overhaul of the evaluation program. Moreover, the entire HR sphere has heard about it in recent years. Can we know the nature of this redesign work?

Sandra:

Around ten years ago, companies, particularly in silicon valley (Adobe etc.) began to question the process: administrative burden, no value outside of compliance, waste of time for managers and employees, normal curve on which performance ratings were forced… even if they were excellent, an employee was not necessarily advantaged because of the normal curve; Furthermore, in “project mode”, the creation of annual objectives is sometimes compromised in its execution.

At Deloitte, we decided to work with [researcher] Markus Buckingham to review the way of thinking about performance management, in a context where the majority of our employees are in project mode. The main axes of this overhaul were:

1. Abolition of 4 ratings and performance forms to be completed manually
2. Creation of an in-house system allowing agile, data-driven and multi-source performance management: rapid performance assessments (snapshots), regular check-ins, surveys. etc.

I will come back to this system which is the cornerstone of our approach. [However, we have] maintained the more traditional HR structure and career management: career coach for everyone, HR supervision during talent round tables, HR calibration, etc.

Julie:

Very interesting! And what does the purpose of the interview look like? Do you use a performance ranking system? Actually, what I want to ask you is:

Are you For or Against performance ratings?

Sandra:

Against

Edith :

For

Julie:

But what is a performance rating? So at Deloitte, you removed the ratings. How do you close the performance review now? How do you link salary progression to performance?

Sandra:

Our in-house system enables agile, data-driven, multi-source, multi-level performance management. Each performance evaluation (on a project or other involvement) asks the evaluator 4 key questions (radio buttons):

1. Evaluation of job satisfaction (1 to 5)
2. If he would use this person in his future project (1 to 5)
3. If he is at risk of non-performance (yes no)
4. If he performs at the next level (yes no)

All multi-source evaluations are added together and the first 2 questions are the basis of a point cloud where we can compare each employee and their peers across the entire organization in an ultra-precise manner. Can we say that we replaced 4 odds by 50 odds (1.1; 1.2, 1;3 etc.)? Maybe!

The last 2 questions are the basis for discussions on extremes during talent roundtables. Performance and salary conversations are separated. The salary scales are very clear and the bonus is discretionary, based on targets and an envelope managed by the firm’s senior leaders. [The] HR department ensures that proposals for increases and bonuses are calibrated for internal equity.

Julie :

So at the City of Montreal, you have kept the annual evaluations. What are the reasons for this choice and the benefits observed?

Edith:

1. Because performance ratings are common and known benchmarks: they bring rigor and fairness.
2. Because this is part of the practices necessary for sound management of public funds.
3. Because it is the beginning of something and not the end; it is animportant inputto guide future actions on an individual (development) and collective (talent management) level.

When I hear, after a first exercise, a management executive say: “the matrix has become my best friend”, I think that these common and known benchmarks, even imperfect, are clearly useful.

Julie:

Excellent! And at Deloitte, you carried out a complete overhaul of the evaluation program. Moreover, the entire HR sphere has heard about it in recent years. Can we know the nature of this redesign work?

Sandra:

Around ten years ago, companies, particularly in silicon valley (Adobe etc.) began to question the process: administrative burden, no value outside of compliance, waste of time for managers and employees, normal curve on which performance ratings were forced… even if they were excellent, an employee was not necessarily advantaged because of the normal curve; Furthermore, in “project mode”, the creation of annual objectives is sometimes compromised in its execution.

At Deloitte, we decided to work with [researcher] Markus Buckingham to review the way of thinking about performance management, in a context where the majority of our employees are in project mode. The main axes of this overhaul were:

1. Abolition of 4 ratings and performance forms to be completed manually
2. Creation of an in-house system allowing agile, data-driven and multi-source performance management: rapid performance assessments (snapshots), regular check-ins, surveys. etc.

I will come back to this system which is the cornerstone of our approach. [However, we have] maintained the more traditional HR structure and career management: career coach for everyone, HR supervision during talent round tables, HR calibration, etc.

Julie:

Very interesting! And what does the purpose of the interview look like? Do you use a performance ranking system? Actually, what I want to ask you is:

Are you For or Against performance ratings?

Sandra:

Against

Edith :

For

Julie:

But what is a performance rating? So at Deloitte, you removed the ratings. How do you close the performance review now? How do you link salary progression to performance?

Sandra:

Our in-house system enables agile, data-driven, multi-source, multi-level performance management. Each performance evaluation (on a project or other involvement) asks the evaluator 4 key questions (radio buttons):

1. Evaluation of job satisfaction (1 to 5)
2. If he would use this person in his future project (1 to 5)
3. If he is at risk of non-performance (yes no)
4. If he performs at the next level (yes no)

All multi-source evaluations are added together and the first 2 questions are the basis of a point cloud where we can compare each employee and their peers across the entire organization in an ultra-precise manner. Can we say that we replaced 4 odds by 50 odds (1.1; 1.2, 1;3 etc.)? Maybe!

The last 2 questions are the basis for discussions on extremes during talent roundtables. Performance and salary conversations are separated. The salary scales are very clear and the bonus is discretionary, based on targets and an envelope managed by the firm’s senior leaders. [The] HR department ensures that proposals for increases and bonuses are calibrated for internal equity.

Julie :

And at the City of Montreal, you kept the odds. Can you explain to us concretely how they are used, the latest modifications made to your system, and the impacts observed?

Édith :

The shift that the City has initiated in terms of managing the performance of its executives began with a vast consultation of managers (105) from all hierarchical levels and from all environments. It was a certain challenge but it was necessary for the City to arrive at a transversal approach.

This is what gave us a common language and which will allow us to create bridgesbetween our very diverse realities.

If we want our people to evolve within the City, it takesalignments and common bases, it takes common benchmarks. We must be able to compare the performance of managers from different environments but who belong to the same organization [the City]. This is the richness of our approach.

We had to know if we had a common leader identity or as many leaders as environments. The consultation allowed us in particular to give ourselves a Portrait of [our] leaders: 4 unanimous characteristics are now considered in the definition of what a successful manager in the City is: Benevolent, Determined, Agile, Unifying. The introduction of leader behaviors into the definition and assessment of the performance of our managers is the central element of our shift.

Concretely,

we position performance with regard to 2 axes: we continue to consider the achievements of executives (deliverables, results) but now, their behaviors as leaders (Portrait of leaders) have as much weight in their overall performance. This forms a performance matrix (3×3), which gives 9 performance nuances.

Managers told us that they wanted exceedingto be highlighted more: we have 2 remarkable performance levels and 1 exceptional.

In contrast, our consultation revealed the importance of managing non-performance. We therefore added a 10th box, attached but outside the matrix, which sends a clear message as to the importance and specific strategies that must be put forward to manage non-performance.

Now,

we do not pretend that this system is perfect! It was designed with few resources. Our form (Performance Log) is an in-house form, developed on Google Sheet, the equivalent of Excel. Our “ratings”, or the words that were chosen, are not the right ones for everyone. The famous “fully satisfactory” will never be strong enough. Managing and evaluating performance is not everyone’s cup of tea! It is a shift that must take root. There is still some enabling work to be done so that the “Meeting Points” are carried out more continuously. We are only in year 2. We are currently doing a post-mortem to target actions in order to make it more usefulfor our managers (evaluators or evaluees).

On the other hand, it was designed with our world in mind. And what we are told is that it responds more to the needs for flexibility expressed on the ground. Self-assessment, which is now formalized, brings its share of challenges, but it is a step which allows everyone to take ownership of the management of their performance and which allows for equal exchanges. on par with the manager.

Performance management is a powerful tool for making things happen and at the City, we decided to use it not just to achieve results but also to communicate what is expected of our leaders today ‘today and tomorrow.

Julie :

Thank you very much ladies for this battle of odds which allowed the highlighting of different relevant and updated systems.

Biographies

Julie Tardif, CRHA

Co-founder and Partner

ICEBERG MANAGEMENT

Graduated in communications and business administration, certified green belt in Lean Management by the Mouvement québécois de la Qualité and member of the Order of CRHA, Julie Tardif co-founded Iceberg Management with her partner and specializes in resource management humans for over 15 years.

Sandra Houillier, PMP, CRHP

Associate, Human Capital

DELOITTE

Sandra Houillier is a partner at Deloitte in Montreal, specializing in organizational transformation and human resources in multiple sectors. She is passionate about the trends that push organizations to innovate and change the game when it comes to the future of work, workers and work environments.

Édith Boyer, Ph.D.

Senior Advisor, HR Strategies and Projects Division

Human Resources Department

CITY OF MONTREAL

Holding a doctorate in organizational psychology, expert leader and project manager in a large company, Édith Boyer has made performance management her preferred approach to supporting the development of people and achieving ambitions organizational. Create, simplify, touch; this is what drives him on a daily basis and allows him to make a difference.

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