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Performance Reviews – Ditch or Develop?

Hosted by: Abbott Laboratories

Are performance reviews a useful tool, or do employees dread the process and leave it feeling less motivated than before? This was the question of the day at Abbott Laboratories in Singapore where The Chapman Consulting Group recently co-hosted Ms. Caroline Palmstedt, Director for Asia of the NeuroLeadership Institute. Attended by over 30 Talent, Learning and Development and Organisational Development Leaders from a broad range of industries, the session was chaired by Matthew Chapman, CEO of ChapmanCG.

The NeuroLeadership Institute is a global initiative, which brings together neuroscientists and leadership experts to build a new science for leadership development. The purpose of the institute is to generate, share and encourage neuroscience research that transforms how people think, develop and perform. Caroline presented on the topic “The Neuroscience of Transforming Performance Management” to HR Leaders from companies such as Microsoft, P&G, Samsung, Shell and Standard Chartered, among others.

Making Changes

Caroline began the discussion with the widespread issue that organisations too often focus on processes, as opposed to people: “Commonly we do organisational change to people, rather than executing change with people. Change processes usually focus primarily on structure and operations, but rarely include how people alter their behaviour as part of the change project. From a brain perspective, focusing on the people aspect of change makes all the difference as to whether the change outcome will be successful or not.”

In Performance Management particularly, many commonly held beliefs on the efficiency and positive impact of performance reviews should be challenged. Studies have revealed that the majority of employees find reviews ‘unfair’ which has a negative impact on productivity. Caroline would argue that this is because many performance management experts do not take the brain reactions into account when building review tools.

Current Practice

A quick survey in the room found that performance reviews were used by all of the companies present, with a particular preference for the 360 review, where feedback is sought from subordinates and peers, as well as supervisors. Ronald Tay, Executive Director, Talent and Leadership, from UBS shared, “In UBS we have 2 reviews per year – during summer the employee development reviews, and at the end of the year the 360 reviews focusing on performance evaluations. We tend to focus far more effort and time on the performance reviews vis-a-vis the development reviews. As leaders, we can surely question the return on investment of this practice and balance this focus.” Tay is right – these reviews remain the primary instrument for performance assessment and bonus allowance for MNCs today, and it is a very time consuming and therefore costly task. It is crucial then to reflect on how we can make the practice a more positive experience and therefore more successful.

Where are we Going Wrong?

The NeuroLeadership Institute has studied the reasons behind the inefficiency of these practices from a brain perspective and has made recommendations for brain-friendly solutions to improve the impact of performance management tools. Following are two of the most common problems with performance reviews:

  1. The primary focus is on results rather than the development of the employee;
  2. The performance reviewer uses brain-aggressive communication, which threatens the employee launching a negative reaction in the brain.

According to the work of the NeuroLeadership Institute, the brain responds to its external environment in one of two ways. If we feel threatened, our brains transition to ‘Away’ mode, which is a form of defence. We respond in this way when we feel uncertain and when we want to avoid a situation. This results in our brain being disengaged, while we focus solely on the problem, making it difficult to think about moving forward in a positive way. Conversely, if we feel safe our brains will transition to ‘Toward’ mode, which is a positive and innovative state. In this state we are engaged and solution focussed, making it likely that we will be able to think through to resolution and making positive progress.

Moving Forward

So what changes should employers be making to the review process to ensure that the brain reacts affirmatively? The NeuroLeadership Institute has identified the following five guidelines

  • Branding: use the right words to avoid making the employee feel threatened; for example, use “casual discussion” rather than “performance reviews.”
  • Reward: focus on and reward the development rather than the results.
  • Involvement: involve the employee in the review agenda and let them speak about their real needs.
  • Open: be open and do not increase pressure by referencing the subordinate relationship.
  • Diffuse: spread the reviews throughout the year to decrease the “big deal” fear.

Of course organisations do need a method of measuring performance, evaluating how employees are achieving and communicating this to the employee. The current practice of gathering information about the employee and feeding this back in a formal meeting once or twice a year is clearly not creating a collaborative environment. By making subtle changes to the process and the focus, employers have the ability to get so much more from both the system and the employee.

All Talent Development Leaders present agreed on the need to reflect on their performance management approaches and refocus the review on the individual. The group also raised some interesting ideas around including social media and continuous or participative feedback with regard to performance evaluation. Clearly the neuroscience lesson was already at work!

A special thanks goes to our host, Caroline Palmstedt of the NeuroLeadership Institute, and to Abbott Laboratories for the use of their facilities.

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