No one wants to be rated on a five point scale.
Particularly if that five point scale is restricted in the amount of top scores it can offer offer. Your whole year’s work; blood, sweat and tears, is reduced down to a single number (which, if you made a one off mistake last week isn’t likely to reflect of the good work you’ve done for the other 364 days).
Does this sound like a positive, motivating way to engage your workforce? Nope, some have even gone as far to describe it as a “soul crushing exercise”.
But wait, there is good news, business leaders are recognising that today’s performance reviews don’t work and are looking for a change. Fewer than 30% of all organisations feel their existing process drives any level of performance or engagement at all. So what does change look like, where do we go from here?
There’s a dramatic shift away from “forced ranking” and “numeric ratings” toward programs that facilitate continuous feedback and encourage coaching. But we’re still looking at performance of individuals when the bulk of work in today’s workplace is done in teams.
Individual reviews and rewards create competition. This is counter intuitive when it’s been proven that, for a team to be successful, they should be working towards a common goal. If there’s an element of competition, a hint of “only two of us in the team can get a raise, it’s every man for themselves” there’s no common goal. So while one team member may ‘succeed’ it’s going to take longer and be more difficult to make progress towards the business goal.
Can we take the shift in performance management one step further? Instead of individual reviews and rewards, we should be incentivising the team to work well together.
The benefits of team performance management
1. Shared purpose and goals
Team based rewards require objective goals, fair processes and measurable rewards criteria to ensure acceptance. Therefore team based incentives encourage best practice in planning and encourage processes that boost efficiency and productivity. Goals create alignment, clarity, and job satisfaction, but they have to be revisited and discussed regularly.
2. Less competition more collaboration
When people are rewarded as a team they are rewarded for their contribution and skill rather than their position. Having shared and visible goals also creates trust between team memebers which is key to high performance.
At Google everyone’s OKRs (Objectives and key results) are public, so it’s easy to see what the CEO or your peer is holding himself or herself accountable for. At Google, this creates alignment because employees can see who is dependent on their work. People feel comfortable that they know what to do, they see what others are working on, and the measurement of their performance is clear.
3. Faster progress
Being part of a team can dramatically increase people’s motivation and enjoyment, leading to greater perseverance, engagement and even higher levels of performance. Team based compensation programmes are likely to enhance members’ pro-social behaviours and as a result, boost capabilities, flexibility, responsiveness, and productivity.
4. Reflects how we work today
40% of people in developed economies now work in teams. The structure of organisations has shifted from a hierarchy to a team of teams.
Functional structures are becoming obsolete. Instead, team based structures drive more innovation and better customer service, and with technology, they’re much easier to manage than ever before.
5. Autonomy and accountability
Intrinsic motivations of autonomy, mastery and purpose can have more impact on performance and motivation than monetary incentives. Team based performance management provides the opportunity to cover all of these bases. Giving people more autonomy, decision-making power, time, and support, can have positive effects both for the employees and
Like other organisational changes there are potential pitfalls to be managed — in this case, ensuring the team is the right size, the link between effort and reward is clear and there’s a strong basis of trust to avoid free riding. However when we look at the way we work today the positives far outweigh the risks.
It’s time to recognise that teamwork is fundamental is to performance and productivity. This is what will ultimately enable us to drive our businesses forward.