The lunacy of today’s performance management process

The chance is high that you are working for a company which has an annual performance management cycle trying at best to achieve 2 things: reward the really strong performers through merit and bonus attributions and secondly document a development or performance improvement plan for those not in that category. The chance is also high that 80% of the employees are demotivated through the process, disillusioned in its fairness and outcome but above all disengaged. What is also certain is that the process paralyses the company for the better of 4 months, let alone the HR department being very busy with being very busy.

There are multiple reasons why the annual performance management process dissatisfies most stakeholders. First and foremost, the business value is questionable. Do companies make more profit through this tool? Do people actually work harder, even though they know they will never be the top performer receiving a mega-bonus? For 9 out of the 10 people in a team, there is somebody outperforming them, taking the lion-share of the bonus pool. You can argue number 2 or 3 may compete, but number 4 to 9, which is half of the team, is disinterested from the start. Let alone number 10: most of them know halfway through the year that there won’t be a merit or bonus, let alone a job.

Secondly, all individual annual performance management systems sin heavily against common company values, like team collaboration and innovation. Promoting individual performance in today’s work environment puts every team member in competition with each other while the team/company is dependent on the successful collaboration of these same team members. The fact that this is counterproductive and illogical doesn’t seem to bother most managers. What is even more worrying is that this stifles sharing of knowledge and therefore stalling innovation, which is crucial for the wellbeing of the company.

Moreover, business and people do not act in years. Businesses go through cycles, just like products. Variable reward, where it makes sense, should mirror that cycle as closely as possible. If the cycle is 3 months, so should the performance management process be. If the cycle is 5 years, idem ditto. Still, the added value of having a performance process might not be there. What is sure is that the one size fits all approach does everybody wrong.

Performance through people is a people issue, not a budget cycle. People only perform when they are engaged. Engagement comes when their hearts and minds are correctly addressed. Motivation and commitment will never be the result of a performance management process. People need a cause to perform. Performance is driven by emotions as much as reasons. Companies need to deserve performance. Just paying for it reduces the employee to a mercenary and the company to a system to make money.

Also, by its very nature, the annual performance management process looks primarily at the past, not the future. Influencing and changing the future should however be the focus of any management action. Strong managers facilitate future performance by checking-in on a daily basis, by coaching and caring, by creating space for the employee to perform, by allowing them to learn along the way, by relinquishing command and control. With trust, scope and accountability, 90% or more of the employees live up to great performance. You don’t need an annual review paralysing the company for months to single out the few exceptions.

Today, when most of the work in Europe is think-work, not by an individual but by a network of people transgressing team and company boundaries, individual performance reviews are redundant. The network itself will deselect the non-performing elements. You don’t need a manager or a bureaucratic process to address this issue. Just let the network decide.

Tomorrow’s HR department will look radically different

Tomorrow’s HR department will look radically different. Everybody agrees that the administrative, monolithic, support function that HR sadly in many companies in Europe still is, has no future. All CEO’s expect more from HR even if most of them cannot define what more entails. We all intuitively feel HR has a lot of work to do to become the business function it needs to be if it is to be at all.

You know I do not shy away from blue-sky thinking. Let me take you through my initial, albeit unstructured thoughts: As the way we work undergoes radical change so does our experience of the world of work. Not only where we work or when we work has become fluid, so have the hierarchical lines and the once so established processes. The new way of working is based on networks, skipping formal lines and out-dated structures. Flexibility is no longer a buzzword but part of the genome of any work-related concept. Work today is about thinking and sharing your thinking. It’s about communication in its broadest sense.  Boundless in time, space and format, without any established or preconceived rules. Hierarchy, career ladders, perks with titles,: all this is becoming obsolete and pointless just like corner offices.

There will always be the proverbial dinosaur but the new manager will be a coach and a co-worker, not a boss. The new employee will take initiative and demand accountability, not wait to be told when and how with whom to do what. The employee will grow and be productive by constantly improving his thinking output.  Iterative networking will format competencies and performance . With other words, the employee will have to act at a higher level and will need to continue to be relevant in this dynamic network if he or she is to remain economically valuable. Like companies, employees will have to create their own eco-system. We’ll all be associates in one form or another, all part of a dynamic network, both employers and employees, with varying economic interdependencies.

This is not just happening in Silicon Valley or in some brave new world scenario. The economies in Europe form no exception: they have shifted from manufacturing to knowledge, from do-work to think-work. Delocalisation of do-work has been a topic for the past 40 years. Think-work has proven to be no different. Reality is slowly kicking in. The future of work in Europe is brainy and techy but competitively challenged by the rest of the world. Europe’s massive unemployment sadly illustrates its reluctance to adapt to this reality.

Like Europe needs to transform, so do its organisations: systems, structures, processes, people, practices, etc. The work will be processed in a different way. The old practices, remedies and wisdom are defunct and will no longer apply. This has massive ramifications for the traditional and contemporary HR department.

HR in its totality needs to be reinvented. Old Band-Aids, like outsourcing the HR back-office part and putting some business partners in the field, will not do the trick. This is so nineties.

To turn HR into a value-add in today’s economy, a new paradigm has emerged: HR’s prime goal in life is to enrich and optimise the network in terms of talent and output.

This does not mean HR cannot have other goals but all will be derived from or supporting this sole raison d’être.

I will try and demonstrate what this means for HR processes like recruitment, talent management, labour relations, etc.  in future blogs. It’s not just the world of ‘people analytics’, or  ‘data-driven HR’, or ‘statistics and algorithms’, or ‘sociometrics, etc.: it’ s more than science meets HR. Just following the data in this VUCA world is a beginning but not enough for success.

Stay tuned. This new paradigm has arrived.

The weaker sex

In a recent article by the Economist, the author states that poorly educated men in rich countries have not adapted well to trade, technology or feminism.

They have had difficulty coping with the enormous changes in the labour market. As technology and trade have devalued muscle power, less-educated men have struggled to find a role in the workplace. Jobs that reward muscle alone have left the western economies for the East. None are not coming back. Men who today lose jobs in manufacturing often never work again. And men without work find it hard to attract a permanent mate. The result, for low-skilled men, is a poisonous combination of no job, no family and no prospects. In short, all men will need to start developing and maximising their brainpower. The jobs and the money have shifted to brainwork. It also seems to have become the only way to fully participate in society.

This doesn’t bode well for the millions of unskilled workers in the EU. Education in all its richness will not solve the issue. A massive overhaul of our out-dated labour laws and social security systems is inevitable if the EU is to adapt to the new economic and social world order, let alone come out stronger. A key task of the EU is to defend its inhabitants against global threats, something it has failed to do in this very instance.

Our current Labour laws, governing the world of work, are mainly a product of the industrial evolution. As the technology and services industry have taken over, the labour laws failed to follow suit.  New ways of working find the constrictions of 50-year old labour laws unfitting, unhelpful and not with the time. They hinder more than help. This hard fact reduces the social partners, both from an employee and an employer standpoint to marginal players, ghosts from the past. It also makes the rule of law comical as reality has passed it by. Antique, unadapted labour laws are prohibitive to a thriving work environment and economy. Furthermore, the competition is global and has moved on to a different work ethic, culture and practice.

Secondly, our social security systems originate from our industrial age period. You can argue when this age actually started but the first breach in this powerhouse came with the first oil-crisis in 1973. Since then, the economic, social, cultural and political environment has changed dramatically. Our social security systems have not. The current way of financing these systems is flawed.

The EU needs to address both issues head-on. The old man Europe is definitely sick. The lofty goal of bringing and maintaining peace in post-war Europe was a great goal in the 20th century but has run out of steam. We sadly lack politicians with vision and guts who will give the EU an identity its inhabitants can sympathise with and subscribe to. We need a political roadmap defending an integration track through a democratic process. Today the EU is ruled by the EC and the ECB. The European parliament excels in moving from Strasbourg to Brussels and back while determining the font size of a label on the back of disposable packaging. Can we get serious and progress to a modern state?

Any measure however will not save the weaker sex. There is no place for poorly educated men, or women for that matter, in the knowledge economy of the 21st century. There is also no place for a small-minded EU. It’s time the EU starts developing and using its brainpower. Our diverse, complex and delicate civilization demands it. The army of poorly educated men and women is sadly likely to grow but correctly looking to the EU for solutions.

Have you had enough of the golden advice?

Have you had enough of the golden advice that comes in numbers? Like the 6 digital traps a CHR should avoid? Or the 7 leadership competencies a CEO should have? Or the three transcendent values companies should spell out? Or the 4 components any L&D strategy should consist of? Or the top 5 reasons why employees don’t do what they are supposed to do?

It seems today’s wisdom and learning comes in numbers, ranging from a minimal 2 to maximum 12. Why 12 is a riddle but I suspect the number 13 to be too unpopular and too much of a hurdle to get to 14. Or maybe we cannot fathom anything higher than 12 when it comes to one-liners promising you how to address any HR issue.

I understand our HR guru’s are just trying to simplify their undoubtedly well-studied and researched knowledge for us mortals to understand. Sadly, most of their simplifications are unhelpful to the day-to-day’s HR professional in the field and on rare occasions just a plain insult.

Just for fun I googled ‘ the 8 habits’. Of course the first 7 or 8 hits were related to Steven Covey’s The 8th Habit®.  What appeared on page 2 was more diversified. The ones which caught my eye were: ‘the 8 habits of highly productive people’, ‘the 8 habits of extremely successful entrepreneurs’, ‘the 8 habits of highly effective Google managers’, ‘the 8 habits of highly effective bloggers’, ’the 8 habits of lousy listeners’, and ‘the 8 instinctive habits of remarkable leaders’.

Without going into detail, one might conclude that whenever the number 8 appears, you will become highly or extremely something. There’s magic in that number 8. Also, the internet swarms with well-numbered 8 advice.

Of course, I could not resist to dig a little deeper and sought refuge and help in Excel, the ‘ number 1’ tool HR professionals have come to love and hate. I listed, sliced and diced all 8 habits of all 6 categories and looked for common themes. To my surprise, there were few,  if any. It seems there is no correlation between being a truly remarkable leader and a highly productive person. I will spare you the analysis but not my conclusion: from an HR practitioner standpoint, I have learned absolutely nothing. Like all business people, I know that you have to set timelines to be productive, just like I know you have to communicate to your team to be effective, just like I know you have to set the example if you want to lead, jut like I know you have to automate everything if you want to be efficient, just like I know that lousy listeners change the subject on you.

There seems to be 1 exception. Effective bloggers are concise, analytical, focused, consistent, planning ahead, persistent, lifelong learners and self-starters. Just the kind of habits I thought extremely successful entrepreneurs had. Or highly remarkable leaders.

Maybe I should have googled the number 10. I would have learned all about the 10 qualities of really amazing employees or the 10 personal things employees do at work. Even better, I would know what the 10 habits of genuinely charming people are.

Just a question, would playing 8-ball pool help to be an effective blogger?

A 29th social security system

Do we need a 29th social security system in Europe? Is this even a relevant question? Let me take you through my thinking. Promise, it won’t take long.

Today, we technically have in Europa a free labour market: any national of an EU member state can go work in another EU member state, without having to obtain a work permit or anything of that order, like a residence permit or a sponsoring company.  Nothing, at least in theory, stands in the way of a current graduate to live and work in the 28 different countries the EU is rich.

So why isn’t this happening in large numbers? Why do we not see massive mobility in the EU workforce? What’s stopping these graduates, or anybody for that matter, to pack up and go work somewhere in Europe where the labour market is somewhat decent? Is it the language? Is it the culture? Is it a personal thing? Could be all three. And that’s just fine.

What it can’t be however is anything related to work like labour laws, social security systems, pension systems, health insurance, etc… nor anything with educational degrees.

Let’s focus on the first barrier: working in 10 different countries fragments and disrupts first and foremost a normal pension build-up and transparent health insurance, 2 vital life components. This hinders mobility and puts up an unnecessary barrier to the freedom of labour. It also comes with a high administrative burden and cost. Detrimental to all those impacted, except the consulting firms who benefit financially from this inefficiency.

Today we have 28 different systems that govern the world of work in the EU. All quite alike but all very different, no matter whom you talk to. There is also absolutely no point in trying to harmonize these 28 different systems. You cannot defeat 28 established bureaucracies nor can you convince any national parliament to abandon their version of the holy cow. This won’t happen in my lifetime, nor in that of any of my children or even grandchildren. The last thing I want to be is Don Quichote tilting windmills.

So, what about introducing a 29th system employees and employers can opt in for addressing all the mentioned issues? A system that is transnational and valid in every country that signed up for the benefits of a unified labour market? If there is a unified labour market, why not a social security system and a labour regulation system reflecting that unified market, on top of all the current systems, uniquely designed for the migrant worker or company?

What I am proposing is not new and already exists for the happy few: the European functionaries in Brussels already enjoy this transnational system, superseding the one of their country of origin. Let’s just open it up to all European citizens. Not only to those happy few. It might need solid reform first but that should not stop us. We have a European Parliament bored out of its skull looking for something useful to do.

Not only would the mobile ex-pat/im-pat employee benefit but also the employer:  isn’t every business, competing in the EU looking for a level-playing field? The tax on labour is by everyone’s admission too high in most EU-countries. This could be a gentle incentive to start shifting that burden. My guess is that only mobile employees would opt in, just like employers in need of those qualified resources.  It may become the dominant system over time. And if I may dream a little, it could be the system my grandchildren enjoy.

I’m a Europhile

I’m a Europhile. Not by sentiment or delusion but by conviction. I believe the European countries to be a 19th century invention with no value-add on the political and economic front in the 21st. I fear Europe is slowly turning into a museum against the background of a desolate economic landscape. Europeans need to stop wishing the world would go back to like it was fifty years ago. I have to agree with Larry Page of Google that it is hard to build a company of global import in Europe, just like decisions contrary to the global system of capital need to be taken consciously. I’m also convinced Europe can build its own future if it stops looking back into the mirror. The only future for European countries is to fade out into a bigger, stronger, more diverse but definitely more agile political, social, cultural and economic democratic powerhouse.

Does that mean we need to lose our identity, history, culture, values, languages, and ways of life or anything that truly defines us? I would think not. Our heritage is our richness and strength. It is an incomparable pool of resources, personified in the millions who live the European identity today. Education, creativity, knowledge are plenty. Nor on critical mass: we’re hundreds of millions. In short, we have probably one of the richest bases to build upon.

Does that mean we need to open our minds to a new reality? I would think yes. The rest of the world is moving at a pace we’re oblivious to. We need to put our education, creativity and knowledge to work in a new and resourceful way. Europe cannot globally compete in a straightjacket, which is the obsolete industrial model imprisoning employers and employees in antique legislation and labour practices. We need a 21st century model. This will be a recurring topic in future blogs.

Another illusion is that you cannot be a Europhile and still criticize the Brussels’ moloch for grabbing decision power without involving its citizens. The current democratic deficit in Europe is huge and needs addressing before we lose the hearts and minds of its inhabitants. The lack of transparency in decision making of this undemocratic giant, with its labyrinth of institutions and lobbyists, makes it suspect and misunderstood. Again here, we need a 21st century model its citizens will support to govern and legislate the EU. We definitely do no longer need 28 constitutions with 28 national flavours and as many holy cows.

I also understand that questions that really matter in life are slow questions and that debate, dialogue and due process have their place. But resistance for resistance’s sake or for some misguided romantic notion of a 19th century construct of a country is unhelpful, counterproductive and not bettering anybody’s life. European countries cannot continue to ignore the world has become a village and continue to play silly games. A unified market needs unified rules. A house divided cannot stand.

I’ll be blogging about anything and everything related to working in the EU. Most countries face massive unemployment, slow growing economies, lack of foreign investment with no improvement in sight. In the EU, we have an army of graduates struggling to find a job like we have millions of experienced men and women sitting idle whenever they turn 55. It’s high time we mobilize these resources and offer them a perspective of a full life, including work in some shape or format.