True Disruption Begins With Your Employees - Here's How 52% of the companies on the Fortune 500 in the year 2000 no longer exist today. Simply put, they were disrupted. If you want to survive and thrive, you need to learn to be the disruptor, and that starts with your employees.
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Performance management is not just about a system, it's a culture. At its very core it shows what a company values and what it does not. It's a means through which we reward and encourage certain behaviour and provides a process that enables us to correct behaviour that is not considered helpful in the business.
If a company rewards both quality of client relationships and sales targets for example, it displays a different culture to a company that only rewards sales targets. The way in which companies reward behaviour, be it individual bonuses, team bonuses or incentive trips demonstrates what values they hold.
It's therefore imperative that businesses begin this process by first defining what they want their performance culture to look like. What does "good' look like and how do we recognise it? I recently read that the best way for top talent to figure out if they want to work for a potential employer is to ask the interviewer how they reward and recognise talent.
This will indicate the type of culture a business has and whether you may be a good fit. From a business perspective, it will determine what types of employees you attract, and how customers are treated by your organisation.
There are a lot of reasons why more than half of the Fortune 500 companies from the year 2000 no longer exist today, but one of the most important is that their decline is simply indicative of disruptive times. In disruptive times we experience changes in the workplace that fundamentally shake up and change how we do business.
The most disruptive times force us to take an honest look at ourselves and reconsider what we need to change to survive. Those that do not adapt often die. But it's also true that in moments like these industries, societies and cultures move forward.
IN-TUNE WITH CULTURE
One of the biggest areas of reflection for businesses in recent years has been our traditional methods of managing performance. Performance management is considered to be one of the most important functions of a business, no matter the industry or size.
The outcomes of how we manage performance may be the most impactful events in how we get the best out of people, define and execute strategy and ultimately survive as a business. As times change and we move into the next industrial revolution, the pressure has started to mount on many companies that have to reengineer a dated system.
They are being asked to align it with the actual dynamics of work and reflect the nuances of how business has changed. This is even more important when we consider that most of today's traditional yearly target-review processes stem from the first industrial revolution, which occured a century ago. A survey of global executives recently admitted that they had only a 4% approval on current performance management processes.
THE BRAIN AND THREAT
If we consider that most employee performance review techniques are linked to a basically antiquated system, then how we understand the brain can determine what modern-day performance management should look like, starting with how we review our employees.
A major breakthrough in neuroscience has led the field in reengineering performance. It's been discovered that traditional performance reviews trigger the same threat networks in the brain as those that are triggered when we are being attacked by a lion in the wild.
When these networks are triggered the brain does not prioritise its higher-order thinking and rather resorts to instinctual, unconscious behaviour in order to ensure survival. This has commonly been known as the fight or flight response. In this state the brain's best thinking is not prioritised as the brain relies on the quick and instinctive thinking needed to ensure survival.
What's important to remember here is that the brain uses the same neural networks for both physical and social threat. This explains how the same areas of the brain light up when we feel socially threatened in a performance review and when we hurt ourselves physically. It also explains why social isolation is used as an effective form of punishment in prison.
The challenge with performance conversations is that a crucial outcome of the conversation is for the brain to be at its best to prioritise its best thinking. A successful performance review occurs when individuals think reflectively about performance feedback and are able to adjust behaviour and move forward with a plan of action.
The problem is that most performance conversations do not achieve this result successfully because traditional performance reviews trigger a threat response that prevents the brain from being at its best.
Our work at the NeuroLeadership Institute has cumulated in a model of social triggers that can be used to better understand how these social triggers play out. The SCARF model was developed by Dr David Rock and focuses on what triggers a threat state in the brain and what can be leveraged to put the brain into its best state. These could be summarised in the questions:
- Am I being valued and respected? (Status)
- Am I in the loop? (Certainty)
- Do I have a sense of control? (Autonomy)
- Do I belong? (Relatedness)
- Am I being treated fairly compared to others? (Fairness)
A typical performance conversation is started with something along the lines of "Come in, let's do your performance review," or if you would like to start the conversation, "I need to give you some feedback." This may trigger all five of the SCARF triggers and put the brain into a natural fight/flight mode.
There is no sense of what the conversation is about and no degree of control and there is a clear distinction made between manager and feedback receiver. However, by being aware of these triggers we are able to structure the same conversation in a different way.
You could begin the conversation by saying, "I need to give you feedback about X and I need 20 minutes of your time. What time is good for you today?"
This conversation puts the brain into a state where it can prioritise its best thinking and is better prepared to actually think differently when given the feedback — the desired outcome of most performance management conversations.
THE PERFORMANCE PROCESS
At the NeuroLeadership institute we have found that many of our clients are trying to reengineer their performance culture and change the three most critical stages of the performance cycle.
These are Goal Setting, Performance Feedback and Rewards. The changes have largely been influenced by an understanding of threat states in the brain.
There are a number of ways that companies are experimenting with changing performance that include removing performance ranking and decoupling bonuses from performance discussions — some of the things that actively trigger the brain's natural threat network.
We recommend starting the change where you are in your performance journey. Some industries and cultures are more fertile for more radical changes, while others are not. In some cases, you cannot take away ratings or individual targets as the business model does not allow for it.
Some cultures are not always ready for 360o-feedback right away and some remuneration schemes are not always ready for group or shared bonuses. Further technical and system constraints may also impact what is possible. One thing everyone is ready for is to improve the quality of conversations and have them more often.
BEGIN WITH THE END IN MIND
When we think about the performance conversation, we have to remind ourselves what the point of it is. They often deteriorate into conversations that attempt to justify performance or fight for an increase. This is why a lot of businesses are decoupling bonus or remuneration outcomes from the outcomes of conversations.
When we do so, what do we really speak about then? Performance and behaviour change, not a fight or an attempt to justify a salary or performance. We have found that it's useful to separate conversations. A salary discussion should ideally happen once a year and check-ins and progress conversations should happen more often. There should be more conversations about performance in a year, done in a brain-friendly manner.
It can sometimes be more stressful for the feedback giver than the feedback receiver and that is why we often delay a conversation until it's necessary to have one and it becomes a tough conversation.